Investing is a great way to grow your wealth and build financial security for the future says Greg Van Wyk. Whether you are just starting out or have been investing for years, there are many reasons why you should continue doing so.
Here are 15 of them:
1. Diversification is key when it comes to investing. By spreading your money across different investment vehicles – such as stocks, bonds, real estate, and more – you can minimize your risk and maximize your earning potential over time.
2. Investing allows you to benefit from compound interest – the powerful force that grows your savings exponentially over time. And even small amounts of money invested consistently can result in big returns down the road.
3. Many investment options offer tax breaks, which can help you keep more of your money. For example, 401(k)s and IRAs offer tax-deferred or tax-free growth potential, and some investment vehicles – such as muni bonds – offer tax-free interest income.
4. Investing can help you reach your financial goals faster than saving alone. Whether you’re aiming to retire early or just want to have a cushion of funds available for unexpected expenses, investing can help get you there quicker.
5. Investing is a great way to create passive income, which can provide financial security in retirement or supplement your regular earnings says Greg Van Wyk.
6. By starting to invest now, you’ll be able to take advantage of dollar-cost averaging. This investing technique involves investing a fixed sum of money into a security or securities at regular intervals, regardless of the share price. Over time, this can help lower your overall cost basis and increase your potential profits.
7. If you’re investing in a company’s stock, you become a partial owner of that business. And as a shareholder, you have the potential to earn dividends – which are payments made by the company to its shareholders out of its profits.
8. Many employers offer matching programs for employee 401(k) contributions, which is essentially free money for you. For example, if your employer offers a 50% match on 401(k) contributions up to 6% of your salary, and you contribute 6%, your employer will also contribute 3% – giving you a total of 9% saved for retirement.
9. Investing can help you protect your purchasing power against inflation, which erodes the value of cash over time. By investing in assets such as stocks and real estate, which have the potential to grow in value over time, you can keep up with – or even outpace – inflation.
10. Greg Van Wyk says if you invest in a Roth IRA, you’ll be able to withdraw your money tax-free in retirement. With a traditional IRA or 401(k), your withdrawals will be subject to income taxes.
11. Many people shy away from investing because they think it’s too complicated or risky. But there are plenty of investment options available that are simple and low-risk, such as index funds.
12. Investing gives you the potential to make a lot more money than you could by saving alone. For example, if you invest $10,000 in an index fund that averages a 7% return over 20 years, you’ll end up with $48,700 – far more than the $20,000 you would have if you’d simply saved your money in a savings account.
13. You don’t need a lot of money to start investing. There are plenty of investment options available that allow you to get started with just a few hundred dollars.
14. You can get started investing without having to put in a lot of time or effort. If you’re short on time, there are plenty of investment options that are relatively hands-off, such as index funds.
15. You can invest in a wide variety of assets, including stocks, bonds, real estate, and more. By diversifying your investments, you can minimize your risk and maximize your earnings potential over time.
Investing is a great way to grow your money over time explains Greg Van Wyk. There are many different investment options available, so you can find one that suits your needs. And by starting to invest now, you’ll be able to take advantage of compounding interest and reach your financial goals quicker.