It is often said that investing does not come naturally for most individuals especially the younger generation who have the perception that investing is an “old mans game”. We are consumed with the idea that time is on our side and do not see the financial impact this decision may have on our lives. Sure, some individuals may argue that investing possesses risk however it has been proven that over the long run, you can enjoy financial freedom. It is always for your best interest to take control over your finances and start planning your income and expenditure as soon as possible, the younger the better. This will help to create a savings culture, which we as human beings struggle to make a habit of.
Herewith some benefits of investing:
- The power of compounding:Generally, the idea is that the longer you invest your money the better growth and return you can expect to receive from your investment due to the interest that is reinvested.
- The power of financial discipline: As an individual you get into the habit of putting a side part of your income each month towards your investment. In the process of investing you learn to how differentiate between a need and a want, you thus start to spend less of your money on luxury products and focus is shifted to the necessity.
- The power of having an emergency fund: We cannot control certain events that take place in our lives however, in the event of an unforeseen circumstance you are guaranteed funds that will be available for you to access and provide for the emergency.
- The power to settling debt: It is almost impossible for one to go through life without borrowing money to get a head, more especially for a young individual who has just finished varsity and is planning to start their life. In this case, having saved money for so many years can relieve you from this debt. The money saved can be used to settle debt such as credit cards, loans and mortgages.
- The power of retiring comfortably: We all want to reach retirement having saved enough money to ensure that we can sustain our current lifestyle. The longer you can stay invested the less you need to top-up in the final years of your working life.
John Poole wrote; “you must learn to save first and spend afterwards”, therefore if you want to achieve your financial goals and enjoy financial independence the first step can be taken today, save.
- Article by Pumela Mpi