Why is investing a good idea

Follow J. Money at Budgets are Sexy or on Twitter. 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.

Follow Joe at Retire by 40 or on Twitter. Investing opens up the door to many more possibilities down the road. Investing, specifically passive, long-term, tax-advantaged investing is certainly a good idea. 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.

Tell me why you do it, and why you choose to invest versus just savings? Have you ever really thought of it before? You can learn more about him on the About Page , or on his personal site RobertFarrington. He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.

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Help with meeting goals, tax-friendly saving, saving for children. Wondering whether you should save or invest? This guide will help you work out how to build up your savings and what it means to invest money.

It also covers the basics of planning out your finances for short-term savings and long-term investments. You usually save up to pay for something specific, such as a holiday, a deposit on a home, or to cover any emergencies that might crop up like a broken boiler.

Saving usually means putting your money into cash products, such as a savings account in a bank, building society, or credit union. This is taking some of your money and trying to make it grow by buying products that might increase in value over time.

For example, you might invest in stocks, property, or shares in a fund. While the gains from investing can be bigger than saving, the value of investments can go down as well as up. Not sure how much you spend every month? To get a clear picture of your finances and work out where you might be able to cut costs, use our free Budget Planner. This should include rent, food, school fees and any other essential outgoings. Budgeting and Saving Facebook group. Set yourself savings goals and put away enough to buy what you want.

This could be a house deposit, a wedding, or a trip. For instant money guidance based on your circumstances, get started with our Money Navigator tool. That means you could lose money. For your short-term goals, the general rule is to save into cash deposits, such as bank accounts. The stock market might go up or down in the short-term, and if you invest for less than five years you might make a loss.

For the medium-term, cash deposits might sometimes be the best answer. This is where the interest you earn on your savings fails to keep up with the rate of inflation so the buying power of your money is reduced. If your needs are more flexible, you might consider investing your money. For longer-term goals, you might want to consider investing. This is because inflation can seriously affect the value of cash savings over the medium and long-term.

Stock-market based investments tend to do better than cash over the long-term, providing an opportunity for greater returns on any money invested over time.

You can lower the level of risk you take when you invest by spreading your money across different types of investments. This is called diversification. MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper. Download app: WhatsApp. For help sorting out your debts or credit questions. For everything else please contact us via Webchat or telephone.

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