So you may be wondering, what is investing all about? And why can’t I just leave all my money is my savings account? Well the reason is investing allows us a way to grow our money over time, and allows our money to work hard for us while we work hard for it. And also investing helps us fight inflation, that nasty little thing that erodes the purchasing power of the dollar overtime.
For example, inflation averages about 3-4% per year in the US. So if you have $100 today, that $100 won’t be worth the same 10 years from now due to inflation.
So investing in stocks, bonds and real estate which historically have the potential for higher return rates than inflation will help preserve the value of your money and give you the potential to grow your money faster than the rate of inflation.
The reason is because of compounding interest. Compounding interest works like this:
- It grows your original investment and then also the gains on that investment.
In the beginning it may not seem like a huge difference but over the course of say 10, 20, 30 years, you really start to see the magic behind it.
The earlier you start to invest, the more time you have to allow compounding interest to work in your favor. You either have time or you have money, and the more you have of one, the less you need of another. So even if you can only save $50 per month into an investment by starting now, you will have time of your side.
Also, as women we have to keep in mind we live on average 7 years longer than our male counterparts, which means we will need to accumulate a larger nest egg to support our income needs in retirement. So investing for the future should always be a top priority.
Because investing can be somewhat intimating, I encourage you do some homework and learn the basics of investing. Also, you may want to consider working with a financial professional who can help educate you on your investment options.
So educate yourself today and make investing a TOP Priority!
Disclosure: No investment strategy assures a success or guarantees protection against loss. Investing in Stocks, Bonds and Real Estate involves risk, including loss of principal. Past performance is no guarantee of future results