Why Is Investing Important?

Investing for your future is not just a good idea, it’s a need if you wish you provide for your future life needs.  Saving money for the future is an excellent idea and no financial expert on earth would advise against it.  What is given much advice is what to do with this money.  The importance of investing is paramount not only to have money for the future, but to protect the money you already have.  Inflation on average outpaces the low interest one can accrue by keeping their money in savings account.  For this reason the importance of investing should be obvious: your savings are actually get lowered each year they sit in a bank account.  Yes your bank or credit union is paying you interest on this money, but the amounts are not enough to cover the inflation gap.  So in essence each year you have money sitting in savings, it is not just sitting get stale, it is actually decreasing in buying power.  The amount is the same, actually more with the interest the bank pays you.  However the buying power is key; the rule of inflation.  Use this example.  If you were to have saved $1,000 in the year 2000 just for buying gas in 2010, this amount would have bought you on average 500 gallons or so at $2.00 a gallon, the national average for that year.  In 2010 this same $1,000 would have the equivalent buying power of only getting you just over 300 gallons at today´s average price of $3.25 per gallon.  While gas is only one example of inflation, food, vehicles, and everything else under the sun will only go up in price over time.  The importance of investing is huge: your money must grow at a rate to outpace inflation or you are losing money each and every year on those hard saved dollars.

Why Invest?

If you still need a reason to invest, consider this: the money placed in savings accounts in banks and credit unions is not kept in bank vaults.  The money in fact is used by the banks in stock investing.  So whether you invest your money yourself, or let the bank do it, it will find its way to stock investing.   The only difference is that if you do it yourself, the potentially unlimited profits could be yours to keep, rather than the banks.

Related posts:

1. How Does Investing Benefit?
2. Is Investing Important?
3. How Do I Start Investing My Money?
4. How To Start Investing In Stocks?
5. What Is A Retirement Account?