We
love lists. We
want to know the
10 best pizza
places in town
and the 10 worst
dressed celebrities
at the Oscars.
We long to find
the top 10 movies
of the year and
the 10 most popular
songs of the century.
We want to know
about the richest
people in the
country and the
cheapest brunches
in our city. In
short, the list
of lists could
go on for a long
time, but there’s
always room for
one more ‑
so let’s look
at the Top Five
Reasons to
Invest.
Here
they are, in no
particular order
of importance:
1.
Investing can
help you enjoy
a comfortable
retirement. Most
people need at
least 80 percent
of their pre‑retirement
income to maintain
a similar lifestyle
during retirement.
You’ll get some
of your retirement
income from Social
Security, but
it almost certainly
won’t be enough.
To help meet your
retirement income
needs, you’ll
need to invest
regularly, both
through your employer‑sponsored
plan, such as
a 401(k), and
through an IRA
and other individual
investments.
2.
Investing can
keep you ahead
of inflation.
Over time, even
a low rate of
inflation can
severely erode
your purchasing
power. For example,
suppose you currently
earn $50,000 per
year, and you
assume a 4.0 percent
inflation rate
for the next 30
years. At that
point, you would
need to earn the
equivalent of
more than $162,000
per year just
to keep the standard
of living you
have today. If
you want to stay
ahead of inflation,
you will unquestionably
need to invest.
And you’ll need
to keep in mind
that, when it
comes to battling
inflation, not
all investments
are created equal.
Fixed‑income
vehicles, such
as Certificates
of Deposit (CDs)
and bonds may
be excellent choices
for providing
you with stability
of principal and
current income,
but, over time,
only stocks have
significantly
outperformed inflation.
Consequently,
you will need
at least some
stock holdings
in your portfolio
if you want to
protect your long‑term
purchasing power.
3.
Investing can
help you prepare
for emergencies.
If need a new
car, or you face
an unexpected
‑ and large
‑ medical
bill, where will
you get the money?
By setting up
an emergency fund
of six to 12 months’
worth of living
expenses, and
investing the
money in a liquid
vehicle with strong
protection of
principal, you
can help prepare
yourself for life’s
bumps in the road.
4.
Investing can
help you realize
your dreams. If
you want to someday
travel the world,
own a vacation
home or even open
your own business,
you’ll need sufficient
financial resources
‑ and that
means you have
to save and invest
throughout your
working life.
By following a
disciplined investment
strategy and working
with a professional
financial advisor,
you may be able
to someday turn
your hopes into
reality.
5.
Investing can
help you leave
a legacy. You
work hard all
your life ‑
but you’re not
doing it all for
yourself. If you
have a family,
you want to be
able to leave
something behind.
You may also want
to support a favorite
charitable organization.
To be able to
leave a financial
legacy when you’re
gone, you’ll need
to invest ‑
while you’re here.
So,
there you have
them ‑ five
very good reasons
to be a lifetime
investor. And
the sooner you
start, the better.
