Why you NEED to invest
Here’s how investing should work – you put aside money from your working bucket into other buckets – stocks, bonds, real estate, etc. Then, when you stop working, you get paid.
Potential for long-term returns
Investors have found rewards over longer terms with investments that come with a level of capital risk. That means the risk that you might lose some or all of the amount you initially invested. Of course, these rewards are not guaranteed.
Volatility in the stock market, when stock prices change rapidly over a short period of time, isn’t necessarily a bad thing. In fact, volatility can sometimes offer investment managers the opportunity to buy attractive shares at a cheaper price and get better returns in the long term.
Outperform inflation
In order for your savings to grow in real terms over time, they need to earn a rate of return after tax that’s greater than the rate of inflation. If you don’t invest and grow your money, you’ll actually end up losing money over time. This is all thanks to inflation.
It is worth considering investments which have the potential to outperform inflation.
Investing Will Help You Build Wealth
I think this should go without saying, but I’m going to say it anyway: Investing is how you build wealth. There are a hundred and one ways to invest and grow your money. If you’re serious about building wealth then you need to create an investing plan that suits you and your goals. The wealthy invest, the broke do not.
Provide a regular income
There’s a range of investments, including equities, bonds and property, that can provide you with regular income that’s often higher than the rate of inflation.
The more you invest the more you’ll be able to take advantage of the power of compound interest.
What you need to know about earning a PASSIVE INCOME
Passive income is earnings from a rental property, limited partnership, or other business in which a person is not actively involved.
There are three main types of passive income streams:
Investing: generating a return from investing money in saving accounts or the stock market.
Asset sharing: selling or renting out assets you own, such as your house or car.
Asset building: examples could include adding revenue-generating affiliate links to your blog or website or selling resources such as ebooks, educational content, music and photos online.
What is the 30 day rule
The 30 day savings rule is simple: the next time you find yourself considering an impulse buy, stop yourself and think about it for 30 days.
If you still want to make that purchase after those 30 days, go for it.
This rule works because by forcing yourself to wait on all your non-essentials, you remove the emotions from your spendings.
Integrate the 30 day savings into your finances by identifying your needs versus wants, setting up a savings account, and creating an entertainment fund.
What is the difference between good debt and bad debt
Good debt has the potential to increase your net worth or enhance your life in an important way.
Examples of good debt are taking out a mortgage, buying things that save you time and money, buying essential items, investing in yourself by borrowing for more education or to consolidate debt. Each may put you in a hole initially, but you’ll be better off in the long run for having borrowed the money.
Bad debt involves borrowing money to purchase rapidly depreciating assets or only for the purpose of consumption. Unfortunately, that describes many of life’s basic necessities, like clothes and cars. Examples also include Credit cards and Payday Loans.
Determining whether a debt is good or bad sometimes depends on an individual’s financial situation, including how much they can afford to lose.
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