Why Invest At All?
If you’re a client of ours, you’ve already gotten past this question, but what about those of you who keep all of their money under the mattress (or in a savings account at the bank)? Wait, do people actually put cash under their mattress? Many people are scared of the stock market, simply because they don’t understand it. Driving a car is scary until you learn how to drive. Babysitting is scary if you don’t know how to change a diaper. Well changing a diaper is just scary all on its own. Anything and everything becomes much less frightening once you understand how it works. Except for changing diapers. But the stock market, for sure.
Investing is crucial for a lot of reasons. Mainly though, it’s not to get rich quick, but to at least keep up with inflation. That ten dollar bill in your pocket today will buy you less next year if there is any inflation. By investing in the stock market or other investment vehicles, you are linking your dollars to something that can keep up.
Then, there’s retirement: that never-ending vacation that we all want to come sooner than later. The thing is, it can’t come if you haven’t saved money. Retiring without a financial reserve to supplement whatever social security you may get will be boring to say the least. You don’t want to find yourself in your seventies or eighties going back to work because you NEED the income. Investing early and wisely can help you retire earlier and more comfortably. If you do it right, maybe even take a few trips each year and spoil the grandkids when they stay over. Once they’re out of diapers of course.
Then, there’s the fun part: investing using basic strategies that have been tested by time can make you money, beyond the basic inflation protection. Stocks like Facebook, Netflix, etc. have grown tremendously and relatively quickly. If you were one of those investors who got in early you could have substantial gains in your accounts. Of course there is risk associated with investing. To learn more, take a look at our blog post, “Risk & Reward: What Do I Need To Know?”.