0

Why Investing is a Must

PUBLISHED Apr 22, 2022, 4:02:24 PM        SHARE

img
imgOwen Rust

We hear about investing and investments on a daily basis, from the news to movies and TV shows to social media. Unfortunately, there is often a lot of confusion about what it means to invest. As a result, millions of people may avoid the concept entirely and stick to a simple savings account. While savings accounts are great for protecting your money, they do little to increase it.

The simple truth? If you want financial security, especially as you approach retirement age, you need to grow your money. Unless you have very high income, your savings won't be enough to fund your retirement. Fortunately, investing is now more user-friendly than ever, thanks to modern technology and convenient sources of information about investments!

The most basic investments are securities, meaning stocks and bonds. A share of stock is a unit of ownership in a corporation. When you own a share of stock, you often receive dividends, or a share of the corporation's profit, every quarter (3-month period). Shares of stock are typically much easier to purchase than bonds, because bonds may cost thousands of dollars. Many stocks can be purchased for less than a hundred dollars per share, and some investing apps allow you to purchase fractional shares, which are fractions of a share. So, even if a share of stock costs $400, you can buy $20 worth and begin investing!

Buying stocks is an easy way to begin investing, and can be done from your smartphone. Instead of having to go through a broker, you can buy and sell shares of stock on your own using the Internet. Ideally, you should buy many different stocks from many different industries to diversify your portfolio. Your portfolio is the entire group of a type of investments, such as a stock portfolio.

A diversified portfolio is likely to be very stable and avoid crashing (losing value rapidly). If your portfolio is not diversified and consists of only a few stocks, those companies could experience crises and see a plunge in value. Having many different stocks reduces the risk that all of those companies could experience problems at the same time!

With a diversified portfolio of stocks, you will enjoy the strong growth of the stock market. As a whole, the stock market tends to grow much faster than the interest rate paid on your savings account at your commercial bank or credit union. According to investing site Motley Fool, the stock market return has averaged 10 percent per year over the past 50 years. Smartasset reveals that the average annual interest on a savings account today is only...0.06 percent!

Not only does this small interest rate not compare to the healthy gains of the stock market, it is actually too small to even maintain the value of your savings. The problem is inflation, or the rise in the price level. Across the board, it is common for prices to rise every year on everything from groceries to new cars to houses. The Bureau of Labor Statistics reveals that inflation typically averages above 2 percent per year...when the economy is growing slowly! When the economy is growing quickly, or when there is stagflation (rising inflation due to problems with supply chains and the cost of energy), the annual inflation rate can be much higher.

Basically, if your money is not gaining at least 2 percent per year, it is actually losing value! Savings accounts are a good place to hold some money for emergencies, when you need liquidity (money that can be spent right away), but any money that is not needed for a possible immediate emergency should be invested to protect - and grow - its value. And, thanks to modern technology, money invested in the stock market is more liquid than it used to be. In an emergency, you can sell stocks and transfer the cash to your checking account in days if necessary.

Now that you know the importance of investing rather than simply saving, spend some time learning about which stocks, mutual funds, and ETFs (Exchange Traded Funds) are right for your portfolio! Happy learning!



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
The Investor's Guide To Decentralized Finance
Image

This article will demystify everything there is to know about Decentralized Finance in an ever-changing world.

Market Musing 4-19-2022, Earnings Season, Higher Interest Rates
Image

Market musings from George Crawford on earnings and interest rates

How to be happy in life
Image

7 tips to be more happy

GameFi and the Metaverse: The next steps in the evolution of Cryptocurrency
Image

In this article, we will be looking at how GameFi and the Metaverse will change the cryptocurrency industry as we know it!

How to Make Buying a Home More Affordable
Image

Rising interest rates and home values are making the decision to own more difficult.

Market Musing 4-12-2022, Inflation, Earnings, and Bond Sales oh my
Image

Market musing from George Crawford @GeorgeCrawIN

F45 vs CrossFit
Image

Attached is an article excepted from Pretty Brave Fitness, a group training organization for girls, on the differences between F45 and CrossFit. It focuses on which program could be best for women/girls but the information can be useful to men as well (i.e. cardio vs strength training) to determine the best option for your fitness goals.

A Guide to Investment Costs for Beginner Investors
Image

It's wild how affordable investing is today. Once you invest in stocks, holding stocks is free. Earning dividends is free. Your main costs will be commissions, which is the cost of buying or selling a stock. You also have to pay taxes on your earnings. In this article we walk through every cost you can occur investing in stocks.

Will Dogecoin be Beneficial to Elon Musk's Twitter?
Image

Elon Musk has always been an advocate for Dogecoin and one of its main influencers. The world’s richest man just acquired the largest shares of Twitter. It is believed that as Elon Musk becomes the major shareholder, some changes are about to come to Twitter. In this article will be exploring possible options for Dogecoin on Twitter and new heights that Elon Musk might take it to!

5 Tips for Great Social Media Content
Image

Learn how to use social media to promote your small business

Sentiment Versus Reality
Image

Yahtzee.....LOL COAL MINING COMPANY

How to Find Quality Stocks to Buy
Image

You can find quality stocks using this easy step-by-step guide. Stock investing was once complex, but with a little bit of engagement and some patience, beginners can find investment opportunities. The key is knowing what investments are right for you.

How to Setup an Assets Spreadsheet
Image

You can setup an assets spreadsheet using google docs or Microsoft excel. In this guide, we'll walk step-by-step on how to setup a successful assets spreadsheet that will work to growth your wealth

Personal Finance for Beginners
Image

You can manage your personal finance today in 6 easy steps

What does it Mean to Own a Stock?
Image

When you own stock in a company you are an owner of a corporation. You've delegated management to an executive team led by a Chief Executive Officer. Their goal is to make money for the investors, which you are one of. The investors elect a board of directors to govern the company.

A Beginners Guide to Stock Investing in 5 easy steps
Image

Thanks to technology, investing in the stock market is easier than ever. In this guide we'll walk through 5 easy steps you can do today to start investing.