Can You Afford NOT To Invest?
Hello everyone, my name is Dave. I operate the blog Wealthlenial. I appreciate Andy giving me the opportunity to post on Penny Less Dad and reach out to all of you. So, let’s start with a question: Can you afford NOT to invest?
Investing is a scary topic for most people. People tend to be comfortable with what they know: small ways to save money via coupons, shopping sales, etc. But the unfortunate reality is that these things will not bring you long-term financial wealth or more importantly financial freedom.
Benefits of Investing
There are several massive benefits to investing (especially from an early age). These benefits include:
1. Time: Specifically, the more time you invest, the more gains you can make.
2. Compounding returns: This is where an investor makes their money. Investors, especially successful ones, do not make their millions overnight and retire into the sunset. It takes years of compound growth (the most powerful force in investing) to create massive gains. However, these monetary gains compound on themselves to make you increasing sums each year.
3. Investing provides a cushion: If an emergency comes up, investing can help you weather it. While it may not be ideal to sacrifice your investment, it would be good to have an additional option in dire situations.
Why People Don’t Invest
1. Fear: Let’s start with the obvious. People are afraid of what they don’t know. They may hear stories of people making or losing millions, but they don’t understand how it relates to them. It is simply easier to avoid something you do not fully understand than risk your money.
2. Lack of Education: Getting started with investing takes some degree of self education. Without this, there is a huge risk of losing your money and becoming disheartened. Before investing anything, invest your time in education.
3. Listening to the wrong people: Who has not heard from a coworker or friend who thinks they know how the market works and which stock to pick? If it sounds too good to be true, it probably is. The natural response is to shy away from these people, along with the subject they are talking about.
So, Why Can’t You Afford Not To Invest?
1. Planning for the future: For some retirement is far away. However, planning ahead for your retirement or even just the next 10 years is very important. Having an additional safety cushion is critical for unseen future events.
2. Working towards achieving your goals: If you have a dream to buy a house or build a portfolio, you need to consider looking into investing. This can provide you with plenty of passive income – enough income to meet your needs without working. In the end, who wouldn’t want their money to be generating wealth?
3. Find what works for you: Not all investments involve the stock market. Real estate is another viable method of investing, although it can require a lot of work upfront. Bonds are very stable and low risk. CDs (certificates of deposit) are another option that provide stable returns over the long term. There are plenty of investment vehicles out there and at least one would work for you.
In closing, investing opens up multiple avenues toward achieving financial freedom. The more you plan ahead and intelligently deploy your money, the better things can turn out. If you’re considering starting investing, I highly recommend you begin with education. Learning from others’ mistakes will save you some pain of learning these on your own.