Well, you don't. Actually.
That is if you don't mind working for the rest of your life, wondering if you'll ever escape the rat race and struggle with rising costs and inflation for the rest of your life.
But if you're like most regular people who value financial security, freedom and independence, then investing is vitally important to you achieving your financial goals.
Here are 4 core reasons why you need to invest
(besides the fact that you might be an evil megalomaniac intent on taking over the world - and you need the funds to do so). Anyway, let's proceed!
1. Your income is limited if you do not invest
As a worker whose income is tied to the number of hours you work, the only way to make more money is to spend more time working for it. But no matter how hard or long you want to work, there's a cap to how many hours you can work in a day. Pretty soon you'll hit a physical limit that no one can overcome: There are 24 hours in a day and you need at least half of it to sleep, recuperate and watch viral cat videos on YouTube.
2. Investing gives you potentially unlimited, passive income
Unlike being tied to a job that makes you trade a finite resource, time, for money, investing gives you the ability to make unlimited passive income. The more you invest successfully, the more wealth and income you'll make. There's virtually no limit to how much you can make. And because it's your money (instead of you) working for you, your investments will generate passive income for you whether you're enjoying a holiday, sleeping or watching viral cat videos on YouTube.
3. You can't work forever, you know
As young, hot and virile as you think you are right now, there will come a time when you look as attractive as a bucket of smashed crabs and you can't physically work any more. If you didn't invest, the moment you stop working is the moment you stop making money. In other words, you need your investments to provide you with passive income to fund your living expenses when you retire.
4. Inflation will kill you
Ah! Inflation. The big word that economists use all the time to talk gibberish about the economy, except this time it really is true. Every dollar you save will only be worth about 61 cents in ten years time at an annual inflation rate of 5 per cent. That's almost half your wealth gone! On the other, inflation actually helps investors. As prices of goods and services rise year after year, so do the sales and profits of the biggest companies in the world and in turn their stock prices. That's why the stock market index always rises in an inflationary environment in the long run. Rather than let inflation eat away at your wealth as a saver, why not let inflation help you as an investor?
Take a look at the top 500 richest people in the world and you'll notice that all of them built their wealth not by earning an income but by investing and owning assets. Similarly, if you want to build your wealth, you need to focus on investing and owning assets over just increasing your income. There will always be a limit to how much you can make by always trading your time for money.
Now if investing is already your thing or if you're just starting out and you want to learn how to invest, start by looking around this site and see whatever interests you. You can also download a few of our investment reports and start learning how to research and analyse a stock. All in all, have a good time exploring and we hope we can help you level up your investment knowledge.
The Fifth Person is a digital investment magazine that publishes the latest investment news, stock analyses, AGM reports, and financial education.
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