Learn how investing can help make your money work for you.
Investing is a strategy to potentially increase the value of your money while also meeting your financial objectives. Consider the following strategies to put your money to work for you:
1. Keeping ahead of inflation
One important reason to invest is to maintain your nest egg growing faster than the rate of inflation. Inflation rates based on the Consumer Price Index (CPI) show rising costs of essential necessities such as food and clothing. Consider the following: In 1980, $20 bought the same amount as $63.72 in 2018. 1 If you invest, you have the opportunity to grow your savings at a similar or greater rate, making it easier to meet your retirement expenses.
2. Compound growth
When you reinvest your earnings, you have the opportunity to benefit from compound growth. Compound growth allows you to receive returns on both your invested investment and the previous profits you reinvested. Assume you've invested $1,000 for a year at a 5% annual rate. In the first year, you'd make $50. In the second year, however, you would multiply $1,050 by 1.05 to reach the new total of $1,102.50. Compound growth can significantly boost the value of your investments over time. As a result, in order to get the largest potential profit, you should invest as soon as feasible.
Getting started with investing is easy. If you learn about the basic types of investments and find the right Stock Advisor, you can begin making more informed financial choices for the future.