You've probably heard that investing is a good idea. Heck, if you read my site everyday, you know that I think investing is a good idea. But you may not have given any thought as to why investing is a good idea. You just assumed it was.
So, instead of just taking my word for it, I thought I would reach out to some other great financial minds and ask the simple question, “why do you think investing is a good idea?”
Open-ended questions are a lot of fun, so check out some of the great responses to this simple, yet complex question, from some amazing investment and personal finance gurus:
David Ning, Money Ning
Investing for the long term is a good idea because it allows an individual to share part of the profits that businesses generated over the long haul.
Follow David at MoneyNing or on Twitter.
Sam Dogen, Financial Samurai
When stocks go up, like they have been for the past four years in a row, everybody is a genius and investing is definitely a great way to boost one's net worth. The question is whether investors will keep the faith during an inevitable pullback or freak out? The only way to know is to put your money where your mouth is and invest!
One of the most fun things about investing is the ability to buy stock in companies you use. Having a portfolio of Johnson & Johnson, Google, and Apple have done fantastic for example. When you make money, it's like getting to use those products for free. The markets are clearly “risk-on” now, and I'm looking for laggard names in laggard countries to invest. One of the most attractive places right now is China in my opinion.
About 35% of my net worth is in stocks and it will remain that way +/- 5% for probably my entire lifetime. Investing in stocks in my early 20's was what helped me buy my first rental property. Now real estate is also roughly 35% of my overall net worth with the remaining being in long-term CDs that have a blended annual return of around 3.5%. Here is my net worth mix recommendation by age and work experience I believe well help folks outperform in good times and bad times.
Follow Sam at Financial Samurai or on Twitter.
Luke Landes, Consumerism Commentary
Investing is a powerful way to grow wealth over the long term, and anyone can do it. Whether it's putting aside a little bit here and there to build a future for yourself or buying a large stake in a company you really believe in, investing prudently gives you the opportunity to move towards financial independence and can create a better world for others associated with the investment.
Follow Luke (Flexo) at Consumerism Commentary or on Twitter.
Michael Piper, Oblivious Investor
To me, it's simply a question of what's the alternative? Spending every dime I earn, but then having to work my entire life — assuming I'm even able to do so? No thanks!
Follow Mike at Oblivious Investor or on Twitter.
J. Money, Budgets are Sexy
Investing to me is like brushing my teeth. Yeah it can be annoying to stay on top of all the time, but the end results are just too damn good to pass up. Nothing's sexier than a healthy smile and bank account!
Follow J. Money at Budgets are Sexy or on Twitter.
Joe Udo, Retire by 40
Investing is not just a good idea. It is essential to building wealth and beating inflation. If you are not investing, your saving will slowly lose value due to inflation. Investing is more risky than just stashing your money in the bank, but it can pay off handsomely as well. It also takes a lot of time to get better at investing so the earlier you start, the better off you will be in the future. Don't wait, learn to invest now.
Follow Joe at Retire by 40 or on Twitter.
Jeff Rose, Good Financial Cents
Investing opens up the door to many more possibilities down the road. Whether you're investing in yourself, your business, or the stock market, it adds to the bottom line for exponential growth.
Follow Jeff at Good Financial Cents or on Twitter.
Philip Taylor, PT Money
Investing, specifically passive, long-term, tax-advantaged investing is certainly a good idea. It's a good idea because when you get old you won't be able to go out and work for a living. But you will still need money. A great way to get this money instead of relying on others is to have it saved through periodic passive, long-term, tax-advantaged investing contributions.
Follow Philip at PT Money or on Twitter.
Now It's Your Turn
Now, it's your turn to share why you think investing is a good thing. Tell me why you do it, and why you choose to invest versus just savings? Do you think it's a good thing – and how did you come to that conclusion? Have you ever really thought of it before?
Investing is planning for your future. Even if you have a job that you enjoy and WANT to go to everyday, you still need to invest the money you are earning now, so you have a future that you control. By building your nest egg, you can be prepared for any emergencies, any disasters, anything really.
If you never have to tap into it, that is great for you. But imagine being 80 years old, having spent every dime you ever made, and having to get up every morning and go to work at a fast food restaurant or a big box store, because those are the only places that will hire you.
Investing is truly the only way you can make your money work for you. Whether investing in the stock market or investing money back in to a business you own, you are making your money work. You truthfully can’t retire without investing these days, unless you fall into a pile of cash.
Investing is an advanced form of saving. You don’t need to invest per se, though, most people see the need to save money for future expenses.
However, if you look at our economy, it is easy to see that wages are stagnating due to globalization, mechanization and technology. More of worker productivity is realized in business capital not wages (this is a fancy way of saying that your increased productivity shows up in the company stock price versus your W2).
Some people yearn for a by gone era when workers got more of the profits but that cat is out of the bag. As a matter of necessity, workers need to own capital just to keep pace so that their future standard of living doesn’t stagnate. Fortunately for us, we live in a society where companies are for sale and can be bought by anyone.
That’s a great saying, investing is an advanced form of saving.
Investing can take several forms! Stocks, bonds, mutual funds and other financial instruments. You can also invest in a business or rental property. A home can be an investment too. I believe in all of these investments because they helped me achieve financial independence.
Everyone has their own reasons why they invest but I think it all goes down to one thing: security. To put it specifically, financial security.
I have to echo what a lot of the comments. Investing is only way to beat inflation. I am going to start investing later this year for the first time but I know that my .75% interest in my savings account is losing me money.
All great answers.
I love Michael Piper’s answer because it’s simple. It’s being future-oriented instead of present-oriented.