If you’re thinking of investing, but aren’t sure if you should, then here are the reasons why you should start investing. Investing is a very important and lucrative way to grow your savings passively. Many people think investing takes a lot of work or knowledge, but the truth is it’s pretty easy.
Reasons You Should Start Investing:
1. Increasing Inflation
This is probably the number one top reason for why you should start investing. The average rate of inflation each year is 3.22%. This means, that the price of goods and services is continuously increasing each year. If you have hard cold cash sitting in a bank account, it’s not being affected by this inflation rate. Your money is staying stagnant.
It’s possible to allow your cash to grow along with the rate of inflation by investing. Investments long term do better than just cash.
2. Tax-Free Saving
When you invest your money into a 401k or a traditional IRA account, you can save money that is untaxed! That’s right, you can have money allocated into your 401k from your paycheck each week before it’s even taxed. With a traditional IRA you can write off all your contributions as a tax deduction when you file your taxes.
It’s definitely better to save your money, and not have to pay taxes on it. This will allow you to save even more. Some employers even offer 401k match contributions, so it’s smart to take advantage of that opportunity.
3. Increased Opportunities
When you decide to start investing, you’re allowing yourself to become familiar with new stock options. Giving yourself the open door towards new business investments can only be a good idea. You never really know what stocks will skyrocket, but you can never have the opportunity if you don’t give it to yourself.
This is not saying you should buy risky stocks in the hopes they take off. Instead, this option allows you to notice market trends and see which companies are doing well and have a strong rate of growth. Imagine if you had invested when Amazon, Apple, or Tesla were all worth $5 a share.
4. Retirement Saving
Saving for retirement is important for everyone to do, but even more so with younger generations. As inflation increases and social security dwindles, we are facing the possibility of not receiving social security after retirement. This is why it is so important to start as soon as you’re able to.
By investing your money especially into a retirement account, you’re securing it to compound and grow. If you invest $1000 today and don’t touch it, in 30 years with a 7% annual compound interest rate, you’ll have $7,613. You have gained $6,613 without actively doing anything.
5. Improve Your Financial Habits
Overall, investing will help you to improve your life financially. By saving for the future, you are learning earlier how to budget out investment contributions. Learning saving and investing strategies early on will only be beneficial to the future.
Most people who begin investing wish they had only started earlier. The more financial security you have at an early age, the better you will feel about yourself and your future. Most people’s major stressor is their finances, so don’t let that apply to you.
For more help, tips, or anything regarding financial security and saving, be sure to check out the Finance page. I also recommend setting up the Mint app, to track your savings and budgeting. Mint also shows you what you have in investments.