Investing

What is investing?

According to Investopedia.com, investing is “the act of committing money or capital to an endeavor with the expectation of obtaining additional income or profit.”

Numerous types of investment opportunities exist; however, for this learning resource, investing will be referred to in a broad and general sense.

 

Why is investing important?

  • Accumulate wealth.
    • Grow your money by taking advantage of compound interest.
      • For additional information on compound interest, view the chart on learning resource Avoiding Debt under Finance.
  • Retirement savings.
    • Can live off these savings when you retire.
  • Earn better returns.
    • Can earn higher rate of return utilizing investment vehicles in comparison to savings accounts.
      • You’re encouraged to still maintain a savings account if you’re investing.
  • Earn on pre-tax money.
    • Some investment options allow you to invest your money before it’s taxed.
      • This allows you to save more money (since your paycheck is less after taxes are removed).
  • Take advantage of employer matching programs.
    • Some companies offer employer matches where your employer will match your contributions.
      • For example, an employer may offer a 1:1 match where the employer contributes $1 to your retirement account for every $1 that you contribute.
  • Reduce taxes.
    • If you invest pre-tax dollars (before your paycheck is taxed), your taxable income (the amount of money on which you’re required to pay taxes) may be lowered.
      • If your taxable income is lowered, you may owe less in taxes.
  • Potential to not have to work.
    • Generally, either you have to work for money, or your assets, in this case money, have to work for you.
    • If you invest your money wisely, your money can work for you and generate an income that allows you to not have to work.

 

How can you learn more about investing?

  • Consult a financial advisor.
  • Speak with your company’s benefits department.
  • Investopedia.com.

 

Do your own research! No Longer Silenced Movement encourages you to do your own research about topics of your interest in order to formulate your own educated opinion.