Why is it important to invest money?

Investing money is the key to building wealth and to accomplish your financial goals. It also acts as a cushion for unexpected emergency expenses. Investing is actually a long-term commitment that one has to stick to in order to see good results. Investing perceptively is the secret to grow your wealth.

Why is it important to invest money? Isn’t saving money sufficient to reach your financial goals? Here are the reasons why one should start investing after saving for quick reach of money for emergency needs. Investing money takes you a step further from just adding money to your account like in the case of saving money to “multiplying” your money which actually grows your wealth. So, if you are interested to improve your standard of living, have bigger dreams about your future, you want to make sure that your family and loved ones live comfortably even if something happens to you and retire like a king, then you should start investing your money. If you don’t invest your money, then you might miss out on the prospects to grow your financial worth. Also, if your money is not invested, the buying power of money will decrease over a period of time.

Here are the important reasons why one should invest money:

  • Investment helps in creating and growing wealth creation. Investing money will allow money to compound and this means earning more money on top of the money already earned. This is creating wealth over a period of time.
  • Investing money helps to beat to balance inflation. According to statics in India, there is approximately 4.5% inflation rate increase every year. This means that you stand to lose that 4.5% of your money every year if it is just kept as cash. The high returns that you get from your investments support in maintaining the purchasing power of money. Simply saving money will not help you in beating the inflation rate and this means that you will be losing money and not gaining money.
  • Your investments help to create that desired retirement corpus. It is very vital that everyone should keep aside money to support them and their spouse after retirement when there is no income. This is made easy with investments rather than saving for retirement as it helps to achieve the needed retirement corpus quickly.
  • Investing money as early as possible helps you to achieve all your financial goals. Investments make it possible to dream bigger and aim to reach higher in terms of your finances. The returns from your investments to achieve all your dreams such a luxury home, a bigger car and your kids’ higher education and marriage and of course a truly relaxed retirement.
  • Some investments also help in reducing your taxable income. This means lower tax liability. Investments such as ELSS funds (equity-linked savings scheme) will help you in this. The money you save is equivalent to money earned and this can be invested again.
  • Investments help you get higher returns on your money when compared to saving money in your regular savings account.

Investing money always has its own risks as it depends on what you invest your money in. Sometimes the companies that you invest in might not do well or even shut down completely. So, it is very important to research properly and analyze the risks involved before you invest. It is best to get help from financial professionals to make the right choices with your investments.

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