How investing can help you live richer
Day 13: GOBankingRates wants to help you Live richer. Throughout July, we’ll be sharing daily tips on how you can get there, with tips on budgeting, saving, investing, maximizing your career, and managing your debt, as well as financial advice for every phase of your life. Check back every day during our 31 days of richer life to learn everything you need to know to prepare for financial success and live the richest life possible.
Here is day 12: How to make investing part of your long-term financial plan
Go back to day 11 of Living richer: Top investment advice from Mark Cuban and other financial experts
Staying on a budget, saving money where you can, and spending wisely are all aspects of a richer life, but investing is also a big part of the equation. Although you may not immediately reap the rewards of the investment, your future self will thank you for helping it live richer. To understand how, I asked a few of my favorite experts why they think investing is an essential part of a wealthy life.
It helps you make your money grow
“Investing is a great way to put your hard-earned money to work and grow it in ways that money can’t,” said Leslie Geller, Wealth Management Strategist at Capital Group.
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“Investments will literally help you live a richer life,” said Jon Bradshaw, founder of Code base. “The truth is, you’ll be hard pressed to grow your money in a way that really benefits you and helps you achieve your goals if you don’t put your money into something. How and where you want to invest is up to you, so find something that’s right for you and get it done. Don’t just let your money sit there. You will regret it later.
Yenn Lei, Head of Engineering at Calendar, added: “I applaud all those who faithfully put money into their savings account each month. However, there are smarter ways to grow your money outside of a traditional savings account, and I encourage everyone to consider these options. Something as small as an HSA, Roth IRA, or money market [account] can grow your money faster than any high interest savings account.
Investing allows you to multiply your savings over time.
“The reason everyone should invest is to increase your net worth,” said Lukas Gemeinhardt, co-founder of Friends of finance. “By investing what you don’t need right now, you can see your savings multiply. On the other hand, not investing means having to live your future with more frugality. So, once you’re out of debt and set up an emergency fund – enough for three to six months of spending – everyone should invest their extra money. If it is done correctly, [investing] can grow your assets exponentially.
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The reason investing can make your money grow exponentially more than holding it in cash is because of compound interest.
“The sooner you can start investing, the better, because compound interest is often called the eighth wonder of the world,” said Adam Green, CEO of YieldX. “Time in the market far outweighs the timing of the market, as interest and capital gains compound over time.”
It can increase your income in the long run
“Investing provides an opportunity to help grow income over the long term,” said Beth Wood, senior vice president and director of global marketing at Principal Financial Group.
It helps you meet future needs
“For goals that are years away, like retirement, educational planning for kids, etc., consider investing some of your assets,” said Winnie Sun, CEO of Sun Group Heritage Partners.
Investments are better for long term goals than holding money in cash due to the aforementioned concept of compound interest.
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“Investments and cash are both important, only for different purposes,” said Roger Young, senior financial planner at Price T. Rowe. “For long-term financial goals, the growth potential of investments is much better than cash. “
One of the best ways to invest for the future is to contribute to a retirement account, said Misty Larkins, president of Relevance.
“Start spending a percentage of your monthly income on this,” she said. “You can be as active as you want. While you need to be patient before you reap the rewards, it will definitely pay off when you are ready to quit a full-time job.
And while it may seem like sacrificing now isn’t worth it, it will be when you’re ready to live rich in retirement, said Steve Gickling, founder of ETLrobot: “If you invest now it may seem like you are depriving yourself of things you might have now, but when you retire and can afford a vacation home, it will be worth it in the end as well.” “
It helps protect you from inflation
“Money can give you a sense of security when you worry about the uncertainty of the market, but believing that silver is a good long-term investment is a mistake,” said Jay Shah, president of Personal capital. “By holding too much cash, you are essentially losing money to inflation every year.”
Return to day 1: Top 3 Expert Tips on Budgeting
“The old adage ‘money is king’ is now proving incorrect in everyday life, as the purchasing power of that money is weakening every day,” said Bryan Slusarchuk, chairman of Turmalina Metals Corp. and CEO of Zacatecas Silver. “The reason is that inflation now exceeds the interest rate that banks are willing to pay savers for their cash. So, although you may charge minor interest on your cash balances, the cost of the goods and services that you use to buy money is increasing at a faster rate.
“So, with money more a poor man than a king, what to do?” He continued. “The key is to make sure that you are putting the money into investments that have positive inflation-adjusted returns. In other words, investors must ensure that the return they receive on the investment positions exceeds the rate of inflation. “
Where to put your money: Savings or retirement?
Dariusz Godlewski, a Chartered Investment Advisor representing and Chairman of Financial Wealth Alliance, said this can be achieved through a well balanced portfolio.
“Cash equivalent accounts have not produced above inflation returns for a few years now,” he said. “The well-diversified portfolio is expected to produce an average rate of return of 6-8% over a longer period of time and at least keep pace with inflation. “
It provides a feeling of security
“Investing is a lifelong endeavor that will pay off throughout your life and help you live richer,” said Ben Weiss, CEO of CoinFlip. “By investing over time, you will increase your financial security and equip yourself for any expenses that come your way. If an emergency arises and you don’t have the cash to pay, your investments will help make those expenses possible. If an opportunity presents itself and costs a little more, you can count on your assets to give you that support to splurge a bit.
Charles Payne, host of “Make money” on FOX Business Network, notes that investing offers more financial security than long-term cash.
“Investing or putting your hard earned money to work is the only way to change your economic fortunes,” he said. “Cash loses purchasing power over time, so while it can provide a sense of comfort, it does not provide security.”
Chalmers Brown, former technical director of Of, said investing in tech stocks has helped him feel secure about his ability to someday retire.
“Do you dream of traveling the world or playing tennis all day? I did, and that’s why I chose to invest my money in growing but relatively stable sectors like technology, ”he said. “Even if Google or Facebook stocks collapse a bit, they will bounce back in the long run. I stay away from new tech products and focus more on services and platforms that have a certain history behind them. Yes, it’s expensive to buy, but it’s less risky for me and I’m less afraid of losing everything in a giant crash.
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Feeling secure for the future can give you peace of mind for today.
“By investing, you can live a rich and confident life in the present because you know you also have a plan for the future,” said Andrew McNair, Investment Counselor Representative, Insurance Professional and President of SWAN Capital.
In addition to investing in retirement and brokerage accounts, some experts have found other ways to grow their money.
“When a friend was looking to renovate his house, he decided to take a tenant for a year,” said Stephen Dalby, founder of Gabb wireless. “They had a spare room in their basement and allocated the rent to their upstairs renovation project. It was a way for them to raise funds quickly. Yes, there is a risk because you never know who you will get as a tenant, but every off-the-beaten-path investment opportunity is worth considering.
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John Hall, CEO of JohnHallSpeaking.com, also recommends investing in properties that can generate rental income.
“I started out in real estate,” he says. “I bought a rental property and when it turned out to be successful I bought other properties. It’s not glamorous, especially when a water leak goes unnoticed by tenants for a week, but it can definitely pay off. If I ever get tired of owning the property, I can sell the properties and know that I will make a lot of money when the market is on fire like now.
Day 14: Join us tomorrow for our Live richer series when we look at the side jobs that can bring extra income.
Gabrielle Olia contributed to the writing of this article.
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