For many people, it is enough that they save money. To them, it is hard enough saving money, it is doubly harder finding an investment they can trust to put their money in. As a result, they are more than content to put their money in a mattress and sit on it. For years.
This strategy is not a strategy at all. In fact, it can only lead to a fiscal tragedy.
Here are 3 reasons why you should be investing your money instead of sitting on it.
Inflation slowly rots your money. Your money is able to buy less and less stuff every passing year. The time will come when a certain amount of cash that was saved years back will buy very little, almost nothing, in the future. That’s how serious inflation is. Putting your money in the bank and forgetting about it is the same as letting inflation destroy your money: don’t do it.
With that said, many people are afraid to invest. They think that their money will be stolen by the Bernie Maddoffs of the world or the market might crash or some other fear. The truth is that the more risk you take, the more rewards you can reap.
While it is certainly true that there are scammers out there that are out to separate you quickly from your money, there are many ways you can vet and check out the people who might be handling your money so you can reduce your risk. As for the market crashing, the market can also rise later. The key is not to pull out when everyone else is panicking.
Money Works Harder Than People
You can only work, at most, 16 hours in a day. Your body gets tired. Your mind gets tired. Not money. Money can work 24 hours and 365 days a week. It doesn’t take a paid leave. It never gets sick. Invested money works for you all the time. Instead of you straining your muscles and racking your brains to make cash, make your cash make cash.
That’s how investments work. Your cash does the work so you don’t have to. Of course, this doesn’t mean you have to stop working. You can continue to work but work in tandem with your cash. Don’t work alone.
Compound Interest Is Unstoppable
The great news is that when you are investing, time is on your side. When you are working, time is against you. When you are working, you have to work a certain amount of time. Time is a quota. Time is a task master. In other words, time is a hassle.
When you invest in bonds or in stocks, time is your buddy. Sure, stocks can crash but time heals these wounds and there is a high chance the market will recover and the value of your investment will increase. When it comes to bonds, time is an even bigger friend because time yields interest and the interest you earn generates even more interest thanks to compound interest.