Planning on getting married in a couple of years? Have plans of putting up your own business someday? Travel Plans? Want to be able to retire comfortably and not just rely on your Social Security Cheque? Then you need to Invest, and do it NOW!
There are so many reasons why we need to invest, but let me give you my Top 5 Reasons why.
1. Better Returns than a Savings Account
A savings account will typically give you .25% interest per annum for your savings. By investing your money in instruments with higher returns such as Corporate Bonds, you can get as much as 5-8% per year which means that your money will grow at a much higher and faster rate than just putting it in a regular savings account.
2. Achieve your Financial Goals Faster
If you’re planning to get married in the next 5 years or buy a house after working
for 10 years, or even go to your dream destination someday, then you need to invest. Like it or not, there is always a Financial Cost to the things we want to do in life, and it helps to be prepared financially. This is where investing your money can help you. The higher rate of returns will allow you to achieve your financial milestones faster.
3. Save for Retirement
Less than 10% of Filipinos are financially prepared for retirement. Most Filipinos expect the government to shoulder their retirement expenses by relying on the Social Security System (SSS), while the others will simply rely on their children or other relatives for financial aid. Let’s get a few things straight here. First of all, the monthly pension that you will receive from the SSS or GSIS will not be enough for your daily needs, especially when you require medical care or aid due to some illness. Second, it is YOUR responsibility alone, and not anyone else’s to prepare for your retirement. Your children should NOT be your retirement fund. After all, who doesn’t want to retire comfortably, enjoy time with your grandkids and just have the freedom to travel and do whatever you like after working for so many years, right?
A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.- Proverbs 13:12
Time is of the essence! The more time you have until you retire, the more time you have to grow your investment and prepare for your comfortable retirement.
4. Beat Inflation
Inflation is the rate at which the cost of goods and services increases every year, resulting in the loss of a currency’s buying power. Allow me to use a simple example. Back in the ’90s, you can buy a burger meal from your Jollibee or McDonald’s for only PHP 25. Now, it costs you around PHP 70-80. PHP 2000 back then can already fill a big shopping cart. Nowadays it’s only good for a few bags of groceries. So what does this mean for you? Unless you invest your money in instruments that yield a rate of return that is higher than the inflation rate, your money will lose its value over time. By investing it in stocks, or bonds and other high yield investments, you can effectively beat inflation, and possibly double your money in a few years.
5. Grow your Money Faster
Ever heard of the Rule of 72? Compound Interest?
Rule of 72- By dividing 72 over the rate of interest that your money grows, you can determine the number of years it will take your money to grow. Say for example you have money in the bank, around PHP 1M. Based on the current interest rate which is .25%, it will take 288 years for your money to double in value. If you invested that in a fund with an annual growth rate of 5%, your money will be worth PHP 2M in 14.4 years. How is this possible? Compound Interest! Through compound interest, your money is able to grow at a much faster rate. The higher the interest rate, the quicker it grows. The same can be said about debts. If you’re borrowing money at a high-interest rate, you’re going to end up paying double the amount that you borrowed.
Simply put, if you choose to invest your money today, you will definitely be able to reap the benefits when the time comes. The earlier you start investing, the better.
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.- Albert Einstein.
There are a number of ways to invest your money in order to achieve your financial goals, but each investment also has its own level of risk that you need to consider. Always make sure that you know what you’re getting into before parting with your hard-earned money.
