Investments are necessary because just earning money is not enough in today’s world. For the money you earn, you work hard. But to lead a comfortable lifestyle or fulfil your dreams and objectives, that might not be adequate for you. You need to make your money work hard for you, too, to do that. That’s why you’re investing.
Money lying idle is an investment wasted in your bank account. To get good returns out of it, you should invest your money smartly. Investing provides long-term financial stability for the present and future. Financial protection and income can be given by the money created by your investments.
One of the ways investments like stocks, bonds, and ETFs provide income is by way of a dividend. This is an amount paid to shareholders simply for holding the investment. Because many investments pay monthly, quarterly, or annual distributions, you can enjoy passive income that ultimately could replace your paycheque.
In investing, the most important thing is what you are investing in. Depending on your investment approach, asset allocation of things you have heavily studied and have facts to support an increase or decrease is crucial to the survival of a successful portfolio. Obviously, the firm is the most important factor. It’s what makes you money, so I advise you to look into it.
For good retirement life:
You’re going to retire one day, right? When you retire from a good job, you have no solid or regular source of income during retirement years. But your expenses will be there and cost of living will keep increasing. Retiring doesn’t mean your living expenses or costs will also stop. Right?
Think about how you will live after retirement and why it is important to plan for it. Use your savings and start investing in different options like mutual funds, stock market, FD’s and real estate. So that you can live your life during retirement with help of this profit / passive income.
Basically, investing helps you live your retirement life comfortably.
To protect yourself financially from any unforeseen event:
Life is uncertain emergencies come when we are expected it least. If you are investing and saving money in your emergency fund for any such uncertainties/emergency like losing a job, disability etc. then it can help you to protect yourself financially in such situation.
Take the example of the present situation. Many of you know that some people have lost their jobs and their salaries have been reduced due to the current pandemic. In such an unfortunate situation, your investment can help you survive and buy essentials like food, gas, electricity, etc., for a while, until the situation improves.
Money cannot be disguised:
Everything can be disguised but not money. When you have a financial problem, you can’t say or do much about it. After a point financial aid is not useful or there are limited ways to get financial help.
To increase your wealth and financial assets:
One of the main reasons why one should invest is to increase one’s wealth and financial assets. And who doesn’t love extra money or little profit?
To achieve various financial objectives:
Investing can help you achieve different financial goals. If your money earns a higher rate of returns than a savings account in investments, you will earn more in the short term. one can use this invested money to buy a house, buy a car, start your own business or educate your children etc.
To gain financial freedom:
You know what? You can’t have financial freedom without investing. Saving money in a bank alone does not give you financial freedom, but investing gives you real freedom. Because investing offers passive income or returns that helps you achieve financial dependence.
Investing helps build confidence:
If you are investing and can see positive returns, it helps to boost your confidence that you are not dependent on anyone for money. You can take care of yourself now and in the future.
Investing helps in reducing your taxable income. You can invest your savings in various investments avenues which provide tax benefits.
Any advice provided by Laverne is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.