Why Invest?

Submitted by Marco Palmero on 7 January, 2010 - 11:02

Why Invest

Why invest? Why does anyone bother moving money around? Well because by investing your money you can have your money work for you. There are three main reasons to invest: to beat the inflation rate, to reach your financial goals and for retirement. This website is all about share trading, but trading is only a part of the whole investing game. To invest your cash in a way that is aligned to your personal goals and risk appetite will keep you financially ahead of the rest.

There are many options to invest your hard earned money. Each investment vehicle offers a different return potential as well as risk. Your options in investment vehicles include: savings, term deposits, bonds, property, shares and stocks, mutual funds and business investment.

If you choose to keep you money in a savings account you’ll probably be aware that their interest rates barely keep up with inflation rates – which means your money is losing its buying power. If you think it is safer to keep your money in a bank account – you are better off looking for one of those internet high interest at call bank accounts or a term deposit.

The whole world is again weary of the risk of the stockmarket busting since the Global Financial Crises of 2009. In boom times, the market tends to forget about the potential for busts – but that’s another story. However, stocks have been to known to provide long term capital gains and cash flow. With mutual funds, funds and superannuation – you should be able to tune and customise your investment mix to your risk appetite and invest your money in either cash heavy investments, local or international stocks and other options.

There are different investment strategies for different people. It all boils down to your financial goals, age and risk appetite. If you are young, you can afford to be a little riskier as time is on your side. Any potential losses, you can work off over time. While people who are older, may need to be wiser with their money, taking only smart risks. We were only reminded of this recently when many people lost their life savings and a large chunk of their superannuation from the stock market falling greatly in 2009.

There are many ways to invest your money. Why invest is such a simple question – many people tend to invest because other people are doing. While other people don't bother doing it because they are scared of the possible consequences. This hopefully will set you off – start reading about it – educate yourself about investing and about making your money work hard for you.

More about