While saving means setting aside part of today’s money for tomorrow, investing means putting your money to work to potentially earn a better return over the longer term.
Investing is like making your money work for you instead of simply sitting back. It is increasingly a necessity of modern life. By investing your money wisely you can make a profit that you can then re-invest or put aside. A good return on an investment can maximise earning potential.
This guidebook will let you know why we think investing your money is rewarding.
Potential for healthy long term returns
Growth of assets such as shares and property, have the best overall returns of all asset classes but also have bigger peaks and troughs. As an investor, there is the potential to earn capital growth over the longer term as well as an ongoing income return like dividends from shares or rent from a property.
Inflation is the ongoing rise in the cost of living over time and it can impact on our financial wellbeing.
One way to help outpace inflation and generate positive returns over the longer term is by investing in assets that are not just capable of delivering higher income returns but also offer the potential for capital growth.
Earn additional income
It is possible to earn extra income by investing in quality investments. The return on your investments might be used as a source of regular extra income for daily living. You might choose to reinvest the money to further grow your wealth.
Helps you build wealth
There are many ways to invest and grow your money. If you’re serious about building wealth then you need to create an investing plan that suits you and your goals.
Investing will get you to retirement
In order to have enough money to retire you need to make your money work for you and leaving your money sitting in savings will actually work against you. The more you invest the more you’ll be able to take advantage of the power of compound interest.
Helps meet other financial goals
You can consider investing to help grow your money to meet other financial goals. For instance, investing in your child’s school fund. When you have a long term goal of ten or more years it may make sense to invest that money to help you reach your goal faster!
Tailor to your changing needs
You can design your investment portfolio to achieve different goals as you go through life, e.g. you may prefer less risky options as you get older. With careful planning you can tailor your portfolio to reflect your changing goals and priorities.
Invest to fit your financial circumstances
As your financial circumstances change over time, you can change how you invest to suit your needs. You can invest lump sums as and when you can, or smaller regular amounts in a monthly investment plan. The sooner you invest, the longer your investment has to grow.
However, the major disadvantage of investing is that it is always possible to lose money on whatever investment you make.