Investing is a way to grow your money.
How should I invest?
There are three main reasons why you should invest:
- To stay ahead of inflation
- To achieve financial goals
- To prepare for your future financial needs
I
nflation causes the increase of prices. When an item at the store goes up from $20.00 to $25.00 or when gas increases in price per litre, we say that is inflation. You need to make more money just to keep up with the rising cost of living.
Financial goals can be separated into two types:
- Short-term goals - Things that you need or want now or within the year, such as a computer, furniture, or a car. Generally, it takes less money to reach these short-term goals.
- Long-term goals - Things that you need or want in a few years or more, for example, funding your children's post secondary education, buying a house, or starting a business. Generally, these goals are expensive and require some planning.
When should I invest?
The earlier you start investing, the sooner you can reach your financial goals. Investing is like "planting" money. A small amount of money invested will often grow to a
larger sum over time. You've heard the phrase, "Time is money." With investing, time also makes money.
What are the risks?
Although investing can make money with money, the downside of investing is that there is a risk of losing your money, depending on the investment choices you make.
The key to investing is to minimize the risk and to maximize the financial reward. For this reason, it is important to understand the many ways to invest money. Learn about a few basic types of investments.