Do you want to get rich?
In order to do so, investment is important.
Whether it is stocks, bonds, mutual funds, index funds, real estate, bitcoin, a business, etc. You need to put your money to work.
I used to believe that investing was for old rich people in formal attire. That is not the case. Investing is for everyone.
If you’re working a regular job and are not investing in something for the future, your future self will pay the price. Pun intended.
I would to discuss some reasons why you should invest your money.
Inflation Deflates Your Money
A dollar today will not have the same buying power tomorrow. With the rate of inflation running at approximately 3%/year, your money loses 3% of value every year. To offset this, while working a regular day job, you will need to earn 3% more every year.
For some, this is not possible.
It is Super Easy
We now live in a time where access to information has never been easier. You can learn anything you want, when you want.
This is how I got started.
I read a book which inspired me to seek out professionals in the finance industry. I learned that you can invest with as little as $5. If you’re researching how to invest, chances are you’ve come across articles or videos with someone telling you to “put your money in an index fund and forget about it.”
Well, they’re on to something. Which brings me to my next point.
A Sexy Return and Compound Interest
The S&P 500 index has returned an average of 7% adjusted for inflation. At this rate, you will double your money every 10 years.
Using your most valuable asset, time, your money will grow exponentially. If you invest $100/month for 30 years, the future value of your money compounded over time will be around $117, 000.
Bring that number up to $1000/month and you’re a millionaire.
You Will Not Always Be Able to Work
It is always good to have an emergency fund in the event that life decides to happen. Having your money invested can provide further peace of mind.
You will not be able to work forever, and why should you? Investing will allow you to retire in peace and maybe early.
Having your money invested is great way to generate passive income. Who doesn’t like making money while they sleep? I know I do.
Your investment portfolio can pay you dividends depending on the type of assets you hold. Whenever possible I DRIP my investments to take advantage of the compounding effect.
DRIP= Dividend Re-Investment Plan. The dividends paid out automatically buy more shares.
If you haven’t started investing, start as soon as possible. Your future self will be glad that you did. Time is your best asset and you should take advantage.