Question of the week: Why should I invest?

In your life, there are only two ways to make money. You can work for your money or you can make your money work for you through investing. The best way to reach your financial goals is to do both. You’re going to work, but you need to invest too. 

Maybe you’re not convinced that investing is necessary to reach your financial goals. Maybe instead you leave your money in a savings account or hidden under your mattress. The problem with that scenario is while your money resides in the savings account or stuffed under the mattress it is actually losing value due to inflation.

If you put $100 cash under your mattress it will always be $100. Over time due to inflation the value of that $100 is decreasing because what you can afford to buy with that $100 is shrinking. Let's look at an example where inflation is 2 per cent annually. You put your $100 under your mattress at the start of 2016. When the year ends and the calendar flips over to 2017 the goods or services you were able to buy with that $100 in 2016 has now risen is cost by 2%. Your $100 of goods now costs $102. Since you still only have $100 under the mattress the value of this money has decreased.

If you had invested this money you could have given your money the chance to maintain or increase its value. By not investing you’re losing money over time by not putting it to work for you. Investing does not come with a guarantee that you’ll earn money, but it at least gives you the possibility.

Investing also gives you the chance to create wealth overtime. Wealth you can use to reach your financial goals of buying a car or house, taking a vacation, helping your children go to college or retiring. If that’s the goal, or for some people the dream, where do you go now? Now that you know why you should invest where do you start? Keep coming back and we’ll answer that question for you in future blog posts as we look at how to get started investing, some common investments and what questions you should be asking to make your start in investing easier and safer.