"The biggest risk of all is not taking one." — Mellody Hobson
What is investing?
Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit. It typically involves buying assets such as stocks, bonds, real estate, or other securities with the hope that they will increase in value over time. Investing can also include other activities such as starting or investing in a business, or investing in commodities such as gold or oil. The goal of investing is generally to grow wealth over the long term.
What types of investments are there?
Cash
Cash is the most easy and understandable investment asset. It not only gives investors precise knowledge of the interest that they’ll earn but also guarantees that they’ll get their capital back.
The downside of holding cash, however, is that it typically has a lower rate of return compared to other assets such as stocks or bonds. Additionally, cash is subject to inflation, which can deteriorate its purchasing power over time. Holding too much cash in an investment portfolio can also limit potential gains and miss out on opportunities in the market.
Mutual funds
Bonds
Exchange-Traded Funds (EFTs)
Stocks
Alternative investments
Why would investing be beneficial for you?
So, you‘ve heard all about it but why should you actually invest? Well, there are numerous benefits investing can bring, especially if you are young, these include:
Time in the market: The earlier you start investing, the more time your money has to grow through compound interest.
Risk tolerance: Investors which begin early typically have a longer time horizon, which means they can afford to take on more risk in their investments. This can lead to higher potential returns.
Building wealth: Investing can help you build wealth over time, which can provide financial security and independence in the future.
Retirement savings: Investing in your youth can also be beneficial for retirement savings. The earlier you start saving for retirement, the more time your money has to grow and the less you will need to save each year.