Why is investment important?
Almost every modern person wants to receive more money than they already receive. There are two ways to achieve this goal: work more (or change your job for a better paid one – it all depends on your abilities), or start investing. Many people think that you can only put the money in stocks, but in reality, you’re able to invest in stocks, bonds, futures, mutual funds, options, real estate, precious metals, small business, or a combination of it all. You’re potentially missing out on a big opportunity for growing wealth if the investment is suitable for you and you haven’t already put money aside for investing. Remember that there is a possibility of losing all your savings, but if you approach investing wisely, you’re able to increase them many times. So, why should we invest? Let’s find out.
1. Grow it yourself
If you rely on banks and your savings account to generate income for you, they may disappoint. Interest rates have been low for a while. Investing allows you to take income generation from your money into your own hands. As we said earlier, the investment will potentially help you increase your savings. For example, many of the investment vehicles we have listed above may return money in the long term. But don’t invest all of your money to the last penny in the hope of getting rich quickly.
2. How to get away with inflation?
So, you put the money into a savings account and think that they’re safe and you have nothing to worry about. Well, it’s not true. If you put money in for a long time (for example, for 20 years), be prepared for the fact that you’ll lose some of it due to inflation, that is, the currency will lose value.
Let’s say you put £ 100 in your savings account and the interest rate is 2%, but you forgot that inflation is 3%. Thus, by the end of the year, you’ll be left with exactly the same amount of money in real terms, as you’ll lose £ 1 because of it. You may even have to pay tax on the 2% interest. Unfortunately, investments don’t guarantee the absence of inflation, but this is one of the known ways to get around it.
3. I want it – I got it
You have a big financial goal, like buying a house or a car, or perhaps you want to start your own business? Try Orca, an online investment app, which will make investments easier for you and help to generate money. There you’ll find education and investing helpful tips, trailing stop feature, which will protect you from losing money, postponed order will allow you to put the money even during market close, detailed insights into your portfolio and a thematic collection of assets (this feature especially helps new investors). With that you’ll possibly achieve your financial goal faster both in the long term and in a shorter time frame.
4. Investors are heroes
If you enjoy helping others and would like to contribute to the creation of new jobs and new products, then you’re able to become an investor that supports business owners, manufacturers or artists. The process of creating something new and turning it into a successful business, we can call it ‘growing assets’, may potentially provide you with a significant return on investment. Be the Batman in the investing world.
5. Passive and not aggressive
Have you ever heard about passive income? It’s when you’re earning an income and doing almost nothing. We think that many people have that mate who bought an apartment and rents it out. This can be attributed to passive income.
In investing, there are two main ways to generate passive income:
- you buy a cheap share and sell it high;
- with the help of dividends that companies pay to their shareholders.
Hope we answered why it is important to invest money. Remember that in order to make money on investments, you need to keep track of your investments all the time and think carefully about what and when to sell or buy. You should understand one thing: investing it’s easy. Don’t be afraid to act and make decisions, do your best to be successful. You may know about Javad Marandi demonstrates how investing can be extremely successful.