Doing investment is important. If you are doing hard work for money then your money should work hard for you. Investing is a way to take charge of your financial security. Investment is important because it helps you to grow your wealth and also makes an additional way to make income. You can invest your money through various sources such as stocks, real estate, and bonds will help you to grow your income. In this article, we will learn about why investment is important? Read along.
Investments can mean different things to different people. For example, for some people, it simply means putting your money to get more profit and for some others, it can mean that investing time or effort into some skills or health is a future benefit. Now, in this article, we will answer your question: why investment is important through the top 5 reasons and also we discuss the disadvantages of investments. So, read along.
5 reasons why investment is important?
Now, we will tell you why investment is important by giving you the top 5 reasons. There is an English proverb that is “you reap what you sow” it simply means that before getting the benefits of reap in the future you first have to sow. So, let’s discuss those top 5 reasons why investment is important.
- High investment returns.
Investing funds can involve a tradeoff as the investor who is investing foregoes tha use the funds in the present for some high utility.
Investment can lead in stock to return you through two ways, the first one is through dividends and the other one is through capital gains.
As investors to get benefits invest in a bond through regular payouts or else through coupons which are provided during predetermined time schedules.
Investing through a real estate can give benefits to investors by capital gains, and rental income. You can get high investment returns that’s why investment is important.
- Fired or retired.
Many people invest for their retirement purpose. Mostly, people rely on their salaries to meet their required needs, for them, it becomes so hard to survive in their lifestyles after their retirement. That simply means that every person should invest a part of their income during their working days to ensure that they can meet every requirement in their retirement years.
And as we know, our government and some companies have pension plans for their earlier employees but now one has to rely on a defined contribution plan. Many young people are there who want to retire at an early age so they have to invest a large portion of their income to meet their needs. Nowadays, many people strive for “financial independence, retire early”, which is nothing but a fire movement. Getting retired at an early age is a good choice, that’s why investment is important.
- The efficiency of tax.
Through investing you can also save taxes as there are accounts like TFSA, 401K, RRSP, Roth IRA, and others that reduce or vanish your taxes on your investments. As we know, the government has reduced the number of fundings for their citizens in retirement years, so they have created such accounts so the citizens can get help from here. Getting efficiency of tax that’s why investment is important.
- Beat the inflation.
Investments are also crucial to beat inflation. For example, if you do not invest part of your income and leave it in your savings account then the money will be reduced in purchasing power as inflation will eat your value of money. While reporting the inflation is quite low nowadays, the real inflation is high as healthcare and education expenses are increasing rapidly faster than reported inflation. The well-known Canadian banks are not even giving 2% on your savings which simply means that if you do not invest then your money will lose value.
- Achieve your financial goals.
Investment is one of the best ways to achieve your financial goals. As an individual can grow through their life. Usually, it starts with purchasing a house. If the individual funds a house through a loan then there is the requirement of a down payment. Through investing a person can make the required money for the down payments. Another major investment goal can be your child’s education in college.
Disadvantages of investments.
Every coin has two sides investments have too. So till now, we have read that why investment is important. Now, we discuss the second side of investment that is the disbenefits of investments. Read along.
As we know there is no such thing that has no risk of getting loose. There is always a risk of loss in everything in investments too. Even the government securities which are known as the safest investments are not risk-free. So, losses are one of the downsides of investment. But it is not like that every time you get loose. And getting loose is not a good reason that can stand by the importance of investment and the answer you get above on the question why investment is important?
- It requires knowledge of investing.
Before investing in anything do get enough knowledge about investments like why investment is important. Investment required knowledge. Experience also plays a huge role in investing. As we know, not everyone has the basic knowledge regarding investments and that’s the reason for their loss. Remember, getting knowledge and experience can change the game of your life. So, do invest and eventually learn why investment is important.
Investments are the modern way to earn nowadays. To do investment make sure you have better knowledge regarding it. Through investing you can make additional income for yourself. In this article, we have discussed why investment is important. I hope you learned the importance of investments. Thanks for reading.
Do you know how to invest? If not, then read along with this article to get knowledge about how to invest.