An investment is an asset or item acquired with the goal of generating income or appreciation. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
An investment always concerns the outlay of some asset today (time, money, effort, etc.) in hopes of a greater payoff in the future than what was originally put in. Investment simply means to use your money to make more money.
Why should you invest?
- Wealth creation
We all want more money and the best way to multiple what we already have is by investing it. Investing your money can allow you to grow it. Most investment vehicles offer returns on your money over the long term. This return allows your money to build, creating wealth over time.
- Reach financial goals
Investing can help you reach big financial goals. If your money is earning a higher rate of return than a savings account, you will be earning more money both over the long term and within a faster period. This return on your investments can be used toward major financial goals, such as buying a home, buying a car, starting your own business, or putting your children. through college
- Save for retirement
As you are working, you should be saving money for retirement. Put your retirement savings into a portfolio of investments, such as stocks, bonds, mutual funds, real estate, businesses, or precious metals. Then, at retirement age, you can live off funds earned from these investments. Based on your personal tolerance of risk, you may want to consider being riskier at a younger age with your investments. Greater risk increases your chances of earning greater wealth. Becoming more conservative with your investments as you grow older can be wise, especially as you near retirement age.
Great investments involve a certain level of risk; this is why great investors take calculated risks, to invest wisely you need to do enough research and be a risk-taker.