Tying up your money for a long period of time is a daunting task. However, investing your money has a number of benefits. Investing has the ability to put your hard earned money to work and build your wealth for your future. If you invest your money wisely, you have the ability to reduce the impact of inflation. 

So let’s get into it…

Why is investing so important? 

According to WellsFargo.com,

“Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.”

Source: WellsFargo

Let your money do the work

Instead of holding your money in a savings account, try to invest small amounts of money. Each month, as with your savings account, you can add a small amount of your salary/income. As you add more money to your investment fund, the larger and more compounding interest and growth it could generate. 

Why is compounding interest so important? 

According to CentralBank.net,

“Compound interest causes your wealth to grow faster. It makes a sum of money grow at a faster rate than simple interest because you will earn returns on the money you invest, as well as on returns at the end of every compounding period. This means that you don’t have to put away as much money to reach your goals!”

Source: CentralBank.net

Beat inflation

Let’s be honest here, we all despise inflation. To put it simply, inflation increases the cost of all goods and services. In order to curb inflation, the government intervenes by increasing the interest rate. Currently, inflation is at an all time high in South Africa. This means that money you earned yesterday will most likely be less valuable the next day. Shocking isn’t it? Therefore, investing your money can save it from the effects of inflation over a long period of time.

Plant seeds for the future

We all know how important it is to plan for the future, especially when it comes to finances. Investing now will plant the seeds for your future, and provide yourself and family with wealth. Each time you invest more, the larger it could grow through compounding interest. This has the greatest potential to build wealth for your future and your family’s future. 

Plan your retirement

If you already have a retirement plan/fund in place, then well done! Having an investment that works for your retirement will allow you to retire comfortably. Continuously re-invest it when you can, add more funds to it each month or on a yearly basis. 

Do South Africans invest or save? 

Interestingly enough, a survey done by BusinessTech in 2022 indicated that 35% of middle-class South Africans are not saving. Furthermore, 61% of the survey group are allocating less than 10% or less to their savings. Additionally, 23% of the survey group are saving more than 20% of their salary each month. It seems that saving is something that is becoming increasingly difficult.

Investing is an important aspect of your financial journey. It is recommended that before your start your investing journey, that you repay your debt. The team of debt experts at Vantage Debt Management will gladly assist you in finding the best suited solution. Contact us today.