Why Should I
Invest?
WRITTEN BY: Somoy K. Porteous
Over the last few years Americans have watched their investment portfolios go from a positive high to a negative low. With so many investment companies going belly-up we need to ask ourselves if it is really worth investing our hard earned money.
Investing in your future is as important as making the money you spend. If you do not take the time to grow your money, you will only suffer in the end. Imagine being 70 years old, retired, and your only income is a Social Security check. The average retired Social Security recipient receives approximately $1,072 a month, which is $12,864 annually. Who can survive on that? With high prescription costs, increasing cost of living and with every other tangible expense on the rise, we must be wise in our financial decisions.
There are so many investment options to choose from. You can start off small. If you are employed, your company may offer a 401k plan, along with some stock options. Contribute approximately 10-15% of your earnings annually to start, gradually increasing it by 1% each year thereafter. Before you know it you will have saved a couple of thousand dollars for the year. The upside to this type of investment plan is that most companies tend to match a percentage of what you contribute. Your contributions are made pre-tax, which lowers your income and tax bracket. For that life-changing event such as purchasing your home, you can borrow against the funds for a down payment. If you decide to take on another job opportunity, you can certainly roll over your investments. A 401k plan is one of the easiest forms of investment; however, do not let this be your only plan for investing.
Investing in the stock market is a great way to a comfortable retirement. There are several online companies such as etrade.com, tdameritrade.com, scottrade.com and schwab.com. These companies offer online trading with small upfront investments. There is a fee for each trade starting as low as $7 per trade. As with all investments there are risks. Stock trading is volatile and is solely based on the performance of the marketplace. Purchase stock at a low rate, hold onto it, and when it does very well sell it and make a profit. Speak with an investor who can give you sound advice on how to build a profitable portfolio.
The next time you think about stopping the contributions to your 401k or decide that investing in the stock market is too risky, think about what will happen if you do nothing.
We all have been taught to work hard while we’re young and then enjoy a comfortable retirement; this cannot and will not be achieved if we do not invest.
