Why should you invest?

in investing •  3 months ago

Have you ever thought about investing? Do you invest? Investing is a topic which often is seen as a negative thing at least from where I come from. Some people see it as something greedy people do. Others see it as gambling. The whole idea of gaining more wealth is sometimes frowned upon. Why would anyone want to invest?

Investing is the only way for the majority of people to become wealthy. There are only a few percent who can become wealthy just by earning or saving money. You might think that you're special and you'll get rich because you're special somehow, well not to completely bash your dreams, but most people who become rich, either are relatively rich to begin with or didn't really think about becoming rich, but did something they liked and as a byproduct became rich. Anyway, let's not talk about becoming rich. Dreaming of becoming rich isn't going to make you rich, not even by investing. Becoming wealthy however is a possibility.

What is the difference between rich and wealthy, you might ask. I see the difference like this: wealthy people have a lot of wealth, but unless they are rich they cannot afford to spend money without thinking about it. Being wealthy will mean that your quality of life in regard to money or things you own is above average, but being rich would in my opinion be when you can afford to do what you wish without it affecting your financial situation. Just a quick example: having a million dollars won't make you rich, if you spend a 1000 dollars a day, you won't have any money after a 1000 days, unless you get more. Having a million does make you wealthy. You can invest the million and the million can generate you 50-100 thousand dollars a year. You can then live on those 50-100 thousand and not worry about work or anything.

Now, investing makes this kind of things possible. By investing you can eventually become wealthy. Being wealthy of course depends on where you live and how much you need to survive. For some it might be 100 000 dollars, for some a million. With learning to invest you can transform 1000 dollars a month into a million in 27 years if you manage a decent 8% interest per year. Now this might sound like a hell of a long time, but remember, if you save 1000 dollars a month for 27 years you'll be at 324 000 dollars. If you continue investing for 1 more year after you reach a million, you'll have almost a 100 000 dollars more. This is compound interest.

Have I convinced you about investing already? If not, this article might not be for you. If I did, but you still don't know how to invest. You can start by reading some of my earlier articles. Hopefully some of them will help you get started. Just remember, investing isn't a get rich quick scheme. It is a long term way to build up your wealth.

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what is your favorite investment?

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I like investing in the stockmarket. It is a rather stable market and making 8% interest per year on average is relatively easy.