If you’re new to the finance world, you may be wondering – why do people invest? There’s no single answer to this question. Instead, there are a lot of reasons why investing is one of the best ways to grow your savings.
Investing does come with risk, but there are ways to mitigate this risk. Plus, the benefits of investing are enough reasons why so many wealthy people have investment accounts. Take a look at the top motives for why do people invest.
Higher rate of return than a savings account
Investing always comes with some amount of risk. However, in exchange for taking on risk you’re aptly rewarded.
If you keep your money in a traditional savings account, your money is FDIC-insured and protected. However, the average savings account earns only 0.04% a year, which comes out to only 4 cents for every $1,000 saved.
Since 1926, large-cap stocks on average have generated returns of 10% per year. There is some volatility expected, and some years might see negative returns while other years could earn over 30%. However, over time, investing is long-term to generate a high rate of return on your savings and grow wealth.
Take advantage of compounding interest
Say you have $1,000 invested and it grows by 5%, or $50 – leaving you with $1,050 at the end of the year. If you left your investment alone with no additional contributions you would then have $1,102.50 in your account – just for keeping it in the account! Compound interest simply means earning interest on interest. Just imagine if you had made monthly contributions using Auto Invest!
Compounding is one of the most important ways your wealth grows over time which is why it’s so critical to begin investing early. The longer you keep your money in an investment account, the more powerful the compounding effects will be. You’ll have more time for your investments to grow, and reap larger returns as a result.
It’s also smart to get in the habit of budgeting, saving, and investing early on, so you can get a head start on building a nest egg and planning for your financial future.
Get closer to financial freedom
It’s not enough to secure a high-paying job. You need to invest some of the money you earn in order to build wealth and achieve financial freedom.
Investing isn’t an overnight get rich quick scheme, but consistent savings coupled with plenty of time can generate exponential growth. You’ll be one step closer to achieving financial freedom.
Financial freedom can give you the opportunity to do things you love, go places you’ve always dreamt of, help people in need, and afford to take care of yourself and those you love without worry.
Money doesn’t always make you happy, but money can give you more choices and more autonomy over your life. You won’t need to make as many compromises and instead gain more flexibility on a day-to-day basis.
Smart money management moves coupled with investing can help add an extra layer of financial security. When you know your savings are in a position to grow over time, you’ll feel more confident about the future.
Reach financial goals
Whether you want to buy a house, a new car, save for retirement, or create a college fund for your kids, investing can help you achieve your financial goals. By taking advantage of the high rate of returns an investment account offers, you’ll put your money to work for a better chance at reaching your goals.
Investment accounts grow best when you make consistent, regular contributions. If you’re an impulse shopper or have trouble remembering to deposit money into your investment account – you’d benefit from auto-pilot investing.
Auto-pilot investing is a feature incorporated into MoneyLion’s investment accounts. It allows you to choose a set amount of funds you’d like to have deposited from your bank account to your portfolio on a regular basis. It’s entirely customizable and you can change it at any time.
MoneyLion offers fully managed investment accounts to help you build an investment portfolio tailored to your risk tolerance and personal goals. For only $1/month and no minimums – it’s the best way to to invest without the headache or expensive costs.
Start investing with MoneyLion
Hopefully by now you have a good understanding of why do people invest. If you’re ready to start investing and looking for the most affordable, straightforward way to do so – look no further than MoneyLion!
MoneyLion’s investment accounts can help you boost your savings and get on track towards long term financial gains. Plus, MoneyLion offers stellar cashback rewards through RoarMoney. You can earn cash on everyday spending and from top online merchants to put towards your investment portfolio.