Why invest?
Do you dream of becoming financially independent? That is, to reach a point in your life when your lifestyle and living expenses are more than covered by the income you earn, without you having to physically work for it.
A few people may be lucky enough to achieve financial independence by receiving an inheritance, others from winning the lottery — but for most of us, the only way to achieve financial independence is through saving as much of our income as we can, and investing it in growth assets that will significantly increase in value over a long period of time.
Investing can therefore be thought of as the process of making your money work for you, rather than you having to work for your money. There are two ways to make your money work for you:
• Make your money earn money and provide you with income.
• Use your money to buy something that should increase in value, providing you with capital growth.
One secret to investing successfully is compound interest. Compound interest is where you earn interest on the money you save or invest, and then when that interest is paid to you, it is added to the amount you reinvest, and it earns interest too. This results in you earning interest on a higher amount of money which includes interest already earned, so the interest compounds and increases exponentially instead of at a fixed rate over time.
Reasons for investing ...
