Investing is a way to grow your wealth by putting your money into assets that have the potential to earn a return. An investment is when you buy an asset at a lower price and hope to sell it at a higher price, a process known as a capital gain.
In addition to capital gains, some investments also generate income, such as dividends from stocks or rent from a rental property. These investments can provide a regular source of income without requiring you to sell the asset.
But why invest in the first place? One reason is that holding cash in a savings account may not be enough to preserve its value over time. Inflation can erode the purchasing power of your money, which means the same amount of money may not be able to buy as much in the future as it does today.
Investing, on the other hand, can help your money grow over time through the power of compound returns. This means that the returns you earn on your investments is added to your principal, and then the new total earns returns as well. Over time, this can lead to significant growth in your investment portfolio.
Of course, there are risks involved with investing, and it’s possible to end up with less money than you’ve started. However, history has shown that over the long term, the market tends to go up after every economic downturn. This means that the potential upside of investing can outweigh the risks for most people.
If you’re new to investing, it’s important to do your research and understand the different types of investments available. You may also want to consider working with a financial advisor to help you create a personalised investment plan that aligns with your goals and risk tolerance. With a disciplined approach and a long-term perspective, you can start taking advantage of the benefits of investing.
Accumulating wealth is a slow process, but remember the key to achieving financial wellness is to save and invest consistently. As the saying goes, sikit-sikit lama-lama jadi bukit. #YouCanDuit