Why Investing Is a Better Idea Than Saving

People are well aware that they need to save money. That being said saving in itself is not really going to help you; you have to do something with the money. That means that you will need to invest your money. A lot of people are afraid to do this but there is really no reason to be afraid if you know what you are doing.

The main reason that investing is a better idea than simply saving your money is that it will allow your money to grow. In fact if you invest your money wisely you will likely find that you end up with a lot more in investment earnings than you actually saved in the first place. This is because of the huge power of compound interest which should not be underestimated. One of the basic rules of compound interest is that if you earn a ten percent return your money will double every seven years, clearly this is a powerful way to make money.

Of course investment and saving are not separate things; in order to have money to invest you will need to save it. The important point is that you are better off investing the money that you do save rather than simply putting it under your mattress. In order to make sure that you have money to invest you need to make sure that you have a savings plan. The best way to do this is to make it part of your monthly budget.

One of the reasons that people don't invest their money is that they are worried about losing it. While this is not an unreasonable fear it is important to keep in mind that not all investments are risky. In fact some carry virtually no risk at all. If you are worried that you are going to lose your money you will want to make sure that you stick to very safe products like certificates of deposit or guaranteed investment certificates. That being said if you are willing to take on a little bit more risk you will earn a much larger return. As long as you properly diversify your portfolio the risk should be minimal.

One other reason that a lot of people worry about investing their money is that they are concerned that they are going to need that money. Again this is a legitimate concern but not one that should unduly worry you. Certainly there are some investments that are not particularly liquid that can be a problem if you need money right away but you would be foolish to put all of your money into these investments anyway. It is important to make sure that at least some of your money is invested in things that you can easily get out if it if necessary.