Why invest? Wouldn’t it be better to put it in the bank and not risk losing it?
That is a question you may be asking yourself.
Quite simply, people invest to make their money work for them and to create wealth.
When investing, people look to the power of compounding returns.
For example, if you take $2000 dollars and invest it into a fund that gives you 10% interest per annum, at the end of 30 years, you would have $34,898.80.
In comparison, the interest that banks offer you range anywhere from 0.1% to 5%, depending on which country you are from.
Moreover, there is such a thing as inflation. Inflation means that the prices of goods will constantly increase, the price of oil is a good example. Normally, the inflation rate every year is around 3%-5%, which means that the average price of household products is going up by at least 3% ever year. Hence if your returns on your money is less than that, you are actually losing the value of your money!
Therefore it makes more sense to invest your money, rather than leaving it in the bank.
Here are a few need-to-know information before you venture into investments.
I will explain them in the days to come.
1. Know Your Goals
2. The Power of Compounding
3. Types of Investment Vehicles
4. Your Risk Profile
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