Importance of Investment

Investment generates income in two ways: saleable physical assets like motor vehicle, land, building etc. and second, financial securities like stocks/ shares and treasury bonds that generate income through dividends and interest paid quarterly or annually depending on the company.

Therefore, an investment is an asset created to allow money to grow. The returns generated depends on the type of asset.

Below are the benefits of investing:-

  • It helps meet your needs.

Revenue received from investment helps boost income shortages and meet financial needs like loan repayments, school fees payment and purchase of other assets.

  • Reduce income stresses

The recent pandemic and the consequent income losses and inflation it caused, drove home the importance of investing. To avoid the stresses caused by unexpected circumstances such as these, one should have a solid plan in terms of investments. 

  • Invest early to reap the benefits

It is advisable to start investing early because you have few responsibilities and thus have a better chance to experiment with different investment types and leverage those that suit your requirements. The earlier you invest, the more time your investment has to grow. One important advantage that young people have is time. They usually have more time to allow an investment to increase in value than older people.

  • Secure your finances

The primary objective of investing is to provide safety for your finances, generate a boosting and sustainable income and ensure that capital breeds return to the investor. 

  • Protects one from inflation effects

Investment also generates an inflation guard to protect one from the effects of inflation in the economy. For instance, when an asset appreciates its value, it profits the investor with a higher return yield than the saving plan since the cash value drops when inflation occurs. It has also proved to be a better solution to the uncertainties in the economy.

  • Provides a regular income for retirement

Investing helps you plan for your retirement over time. To have a comfortable and secure retirement you need to build the financial cushion that will fund it all.

  • Investing enables you to be aware of risks and become averse.

Though minimal, all investments carry some degree of risk. They are majorly caused by the uncertainties in the economic developments affecting the markets. As a seasoned investor, you become knowledgeable of the risks associated with the different classes of investment. By better understanding the risks, you are able to manage your risks and put yourself in a better position to meet your financial goals

In conclusion, there is no need to allow your money to lie in your account for years with no returns at the end because it exposes you to frustrations when the cash loses its value as the economic trends are always unpredictable.

Having that in mind, consider acquiring an investment plan, which will help you have an extra source of income, finance your retirement, and cater for you in case of a financial crisis. A scheme allows you to grow your wealth and increase your purchasing power to meet your financial goals.

As 2021 comes to an end, ensure that you have a well-written investment plan for a brighter future.

“ It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” Robert Kiyosaki


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