6 Reasons Why You Should Invest

We all wish to earn more than what we are earning at present moment. In order to attain this goal we have two options in front of us either we work harder or we earn on others hard work. I am sure second one sounds better and easy. Investing, in any of the financial instruments like bonds, stocks, mutual funds, or commodities like gold, silver, is a way we can earn over the long period of time and returns are based on hard work of others. If a country or company, as a whole, performs well their stocks, bonds or currency grows stronger and so does your investment. J

Although ability to earn more is major factor but it’s not the only reason why you should start strategizing your finances. ‘Living in the moment’ may not always be the right approach as far as personal financial management goes, you need to plan for future and be ready to face all the risks you may face. Today I will be outlining some reasons why you should start investing.

1) Don’t let inflation eat your pie: I am sure if you have not invested your money than its either lying in your cupboard or a general saving account. In times like now, where inflation is going at around 7-8% if your deposits are returning anything less you are losing your money. Inflation determines your ability to buy a certain commodity in future. Example if $10 can get you 10 candies now, and if inflation is 10% you will have to pay $11 for same 10 candles after 1 year. Thus your purchasing power diminishes if your investment returns are not keeping pace with inflation. If you ask an economist he will tell you that actual returns on your investment is difference between returns and inflation.

2) Remain rich if not richer: Investing properly makes sure that you keep earning a good sum through-out the life without worrying about the recession or any other sort of turmoil. A friend of mine invested in gold in summer of 2007 and during recession times of 2008 when everyone was going after yellow metal, he made a killing.

3) Retire Rich: During our 30s and 40s, we often postpone our dreams for days after retirement. But how often we come across people who in their retirement are not able to enjoy because they don’t have necessary corpus left with them. Proper financial planning makes sure you don’t lose out on fun even during your twilight years and you are not dependent on others.

4) Variety of Investing Options: We are fortunate enough to be living in a far more globalised and open world. Today options and markets available for investment are galore. Vigilant regulatory bodies have also made these investments safe even for non-technical people. Sitting at home you can invest in Brazilian Bio fuel, just by a mouse click.

5) Invest early and compound you’re JOYS: Power of Compounding can make you richer than you expect to be. But for that it would be great if you start to invest as early as possible. Re-investing your profits (compounding) can have a magical effect on your earning if you remain in game for long duration. A long term approach will reap amazing results, so start early, when you have the ability to work as hard as possible.

6) Tax Savings: Now this one is the immediate benefit of investing. Tax benefits are provided if you invest some amount of your earning in debt instruments and other prescribed sources. I have taken this benefit at last because this should be the last priority on your list of reasons why you should invest.

As a rule of thumb you should invest minimum of your 25% of your earnings per year for a good financial future. Although through-out the article I have talked about investing money but investing in life-skills and education can also reap good benefits too. TIME is MONEY invest it to grow and become successful in life.

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