Why Should You Invest?

There isn't a single person in their golden years who saved their way all the way to retirement.  Investing makes it far easier to obtain your future dreams.  Whether you are growing your nest egg or saving for your children's college education, there are plenty of reasons to invest in the stock market or just to invest in general.

1. Money Devalues Over Time

The only way to beat inflation is to invest. Since 1913, the US dollar has dropped in spending power over 96%.  The only way to beat devaluation is to invest in the stock market or in comparative investments. The goal of investing is not to keep up with inflation, but to instead beat it. Money sitting in bank accounts or certificate of deposits will not beat inflation over time. The only way to beat the drop in spending power is to produce returns better than inflation. The best way is to buy stocks or a mutual fund that produces returns greater than 6-7% per year. Gold is a great way to beat inflation over the long term, as is any hard asset. Real estate does well too.

2. If Everyone Else is Investing, You're Falling Behind

If the rest of the world is increasing its wealth at a compounded rate, you'll have to do the same just to maintain your standard of living. Without decent investments, chances are that you'll slowly fall behind the curve of the rest of the world. A balanced portfolio of mutual funds and stocks should keep your head above water and build wealth.

3. Wage Increases Will Never Beat the Market

It's unlikely that a yearly raise will ever outpace the world markets. Though you may get 3-4% each year, investing has yielded 10.5% over the long term. The statistics simply don't work in your favor; what are the chances that someone will be paying you $1 million per year to answer phones when they're only paying you $30,000 a year now?  None.  What are the chances that your $30,000 could grow into $1 million in the stock market? Quite possible.

4. Investing is Free Money

Why work for money when your money can work for you? This is the phrase of the super wealthy.  It's impossible to beat the amounts of money that can be made with your own money. Socking $10,000 away in a portfolio of stock mutual funds will generate returns for which you simply did not need to work.  Let your money work for you; don't work for your money.

Whatever the reason, investing is the best thing you can do for your future. Start with just a small amount each week in a mutual fund and watch it add up. When the stock market performs well, you and your savings account will be in great shape for the future.