5 Excellent Wealth Minded Benefits of Investing Your Money

Benefits of Investing

Ever thought, “Maybe I don’t really need to start investing right now; I still have awhile before I retire.” Or maybe this has been more your thought, “I know I should be investing, I’ll eventually get around to it.”

Whatever your reason for not investing yet, I’ve got 5 benefits of investing to help motivate you to get started on your investing plan.

Benefit of Investing #1: Peace of Mind

Give yourself peace of mind about the future. Stop the worrying going on in your head. If you’re nervous about your future then get your investing plan going so you take some stress out of your life.

My co-worker and I were just talking the other day about how it’s hard to tell how much money we are going to need when we retire. Sure, there’s estimates out there, but how accurate are they really? We were thinking we are going to need more than we think because we need to take into account inflation and how much more things are actually going to cost. We thought, we are glad we are investing for retirement, but thought, we could probably increase our investment.

No matter where you are with investing, no plan, somewhat of a plan, you can start or improve that investing plan today. If you start investing now, you can begin to reduce the stress of not knowing where your future will take you.

Benefit of Investing #2: Retire Comfortably

Did you know only 7% of women are “very confident” in their ability to fully retire with a comfortable lifestyle.(1) Seven percent is a frightening statistic. I don’t know about you, but I want to retire comfortably. I don’t want to worry about working, or having the energy to go to work, when I get older.

There was an older lady I used to work with. She was at least in her later 70’s and she had a hard time keeping up with everything. The computer system we used, who handled what, etc. She had told me she got divorced a few years back and didn’t have any retirement money of her own. She was living in her daughter’s basement and trying to make ends meet. We eventually had to let her go because it just wasn’t working. It was such a heartbreaking story.

It made me realize, even more so, the importance of making sure I was going to be taken care of for my retirement. I need to be investing right now. There’s no one else for me to depend on and even if that comes later, it could be gone again. You never know what life will bring, but if we are prepared, we will be better off to handle unexpected situations.

Benefit of Investing #3: Not Being a Financial Burden to Others

Another reason to start investing is so others won’t have to worry about taking care of you financially. Like I mentioned above, about my co-worker. She had to live in her daughter’s basement and it was a difficult situation. My co-worker is a celiac, so she can’t have any gluten whatsoever. There was only one kitchen in the house, so she would have to clean the whole kitchen down and then cook her food and her daughter couldn’t be making sandwiches for her kids at the same time. Of course her daughter was willing to help her mom, but it was a burden on both of them.

I was also thinking about my parents. They are retired and have been really good about having their finances in order. They’ve ordered their caskets and paid for their funerals so it won’t be a financial burden on any of us kids. They planned ahead and didn’t want to be a burden on any of the family members, which we all appreciate. Of course we are willing to help, it’s just so nice to not have to worry about how much things would cost and where we’d get the money.

Being able to invest in your future right now, helps take the financial burden from your loved ones.

Benefit of Investing #4: Take Advantage of Compound Interest

Of course, this benefit applies if you’re investing money in something like a Roth IRA, but it’s still a great benefit. Burton Malkiel in The Random Walk Guide to Investing, said “Procrastination is the natural assassin of opportunity. Every year you put off investing makes your ultimate retirement goals more difficult to achieve.”

Don’t get me wrong, I’m not saying it’s too late to even start. Starting now is definitely better than never starting. I just want to share a quick example of how much of a difference it makes to take advantage of compounding interest at a younger age.

Let’s say, 20-year-old Emily makes a one-time $5,000 contribution to her Roth IRA and earns an average 8% annual return. If she doesn’t touch the money, the $5,000 will grow to just under $180,000 by retirement age, 65. Not bad.

Let’s say, Emily waited until she was 40 years-old to make her one-time investment. That $5,000 would only grow to less than $40,000. So waiting 20 years will cost her more than $130,000 in compound interest. Time is the key ingredient here.

Something that makes compounding interest even more powerful is regular investments. It is great that a single $5,000 IRA contribution can grow to almost $180,000 in 45 years, but check this out. Let’s see what can happen when Emily makes saving her consistent habit. If she were to contribute $5,000 annually to her Roth IRA for 45 years, earning an average of 8% return, her retirement savings would grow to more than $2 million.

$2 million is quite a bit different from $180,000….So let’s get started investing sooner rather than later and make sure we are consistent about it.

Benefit of Investing #5: Investing Becomes a Habit

If you start investing now, it will continue to get easier and easier to do. It becomes second nature. You won’t miss the money and it will become an automatic process, just part of your habits. It’s easy to set up an automated monthly transfer from your bank to your Roth IRA account.

Also, when you get married, it won’t be an extra adjustment you’ll need to make (I’m sure there’s other adjustments you’ll be making…). It’ll already be part of your practice, part of your life and you can just continue with it.

Hopefully these 4 benefits of investing helped to inspire you to get your investing plan going. Stay tuned, because next week we are discussing things you should have in place to make sure you’re ready to start investing. What motivates you to have an investing plan?

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