Why It’s Important To Make Investments (Even During Uncertain Economic Times)

Investments are often associated with keeping your money safe. With all the talk about recessions and inflation this past year, investing may be low on your priority list. If you’re able to budget your money well and have something leftover each month, investing some of your money is still worth considering.

An investment is making your money work for you and at the same time generating more. Here are some of the reasons why investing is a wise idea.

1. BRIGHTER FUTURE

The main question that most people should have in their mind is what happens if your income ever becomes threatened whether due to job loss or another issue. Do you have a fall back plan? This is where investment comes in handy; as it prepares you for a soft landing once you quit employment.

I recently read The Simple Path to Wealth for a second time and I really resonate with the author’s take on having what he refers to as ‘F-you money’. It’s important to set money aside for the future even if it’s uncertain. In the book, the author mentioned having been through several periods of not working. Nevertheless, he and his wife were able to meet their basic needs due to having saved and invested for their future.

Your daily demands will not reduce as you grow but rather, they will increase regardless of whether you are employed or not. This makes it wise to invest for your future, as it will enable you to attain your financial freedom.

2. ALLOW YOUR MONEY TO EARN MONEY

Let your money earn more for you. The hard-earned cash from your daily activities should not remain idle in your pocket, bank account or safe box, but rather you can invest it in a more functional way.

For instance, you can channel the money into a mutual fund, insurance or any other venture just to keep them active. Most of these institutions offer compound interestthat will reward you in the end for your investment efforts.

3. INFLATION

There comes a time when we buy so much less with the same amount. On the other hand, the same prices of the same products can skyrocket thereby causing inflation. This is what a lot of us have witnessed this past year whether you noticed it at the grocery store or at the gas pump. When investing, the general rule of demand and supply should always apply there too.

Whenever something is scarce you tend to fight for the little available. The same principle applies to money. When you keep the money in your pocket or bank, it is not circulating it is being, therefore, causing scarcity. Hoarding of money contributes to inflation but investing does not.

When you invest, you’re helping your money be worth more in the future so it helps combat inflation.

4. GOALS

Life goals are what drives us and keep us focused. Every one of us should have goals as they remind us of the purpose of why we are living. Many life goals are available including education, buying a home, going on vacation and many others. These goals are easily achievable with the right type of investment plans.

Money is not everything, but it can help us reach our goals and attain the lifestyle we want to have. Investing is an actionable way to support your goals and bring them to fruition. For example, if you’ve always wanted to get into real estate and own rental properties, you’ll need to invest in a good property to meet this goal. It can seem intimidating at first, but investing in your goals will help you make progress and even learn from mistakes along the way.

5. CREATING WEALTH

It is not easy to create wealth on your own. The best and easy way to do that is by investing your money in the right people and businesses. When you do that, your cash is aggressively put in the market in term of bonds or insurance to generate more. These professionals can be stockbrokers, insurance. They work extra hard to ensure that you get the best out your cash.

Another book you may want to read is The Automatic Millionaire. It simplifies the process of building wealth by putting your investments on autopilot. Even if you start small, you give your money the opportunity to grow over time.

MANAGE YOUR BUDGET FIRST, THEN CONSIDER INVESTING

There are different ways to invest your money. But before you focus on investing, it’s important to make sure you’re meeting your basic expenses and paying down debt. Once you have a solid budget that allows you to control your money and stay on track financially, you can focus on These may include stock, insurance, mutual fund, bonds, and more.

However, regardless of your investments plan, the main target is to generate more money so that you can achieve life goals and financial targets. Choose an investment today and see your money grow.

This article originally appeared at Everything Finance.

Category: Personal Finance