Why Investing is Important

Even if you’ve never tried or simply thought of investing yourself, you likely know someone who has— and with good reason. Investing is beneficial and important for a variety of reasons. The first is you want to ensure that you won’t have to work forever. Depending on where you live, the retirement age keeps rising, which means you’ll have to work longer before you can access your retirement.

You also want your money to work for you, instead of having to always work for your money. This is also known as earning passive income (i.e., the income you don’t have to work for). Investing allows your money to work for you by earning returns.

Investing today is also easier than it was decades ago. There are also many ways you can invest and have your money make money. If you’re not investing, you’re missing out on free money— especially with it being so easy to get started. Here are three areas you can invest in, even if you don’t have much money.

#1: Real Estate

Believe it or not, you don’t have to have hundreds of thousands of dollars to be able to invest in real estate— nor do you need to take out a loan. Real estate indeed is one of the most expensive things you can invest in, but investing in REITs (real estate investment trusts) allows you to reap some of the benefits of investing in commercial real estate (e.g., office buildings, malls, hotels, etc.). REITs are similar to mutual funds; big companies own the REIT (and the property), and the investors who own a piece of it receive payments from it regularly. Investing in REITs also gets you familiar with the real estate market in case you’d like to directly invest in properties one day.

#2: The Stock Market

Don’t think that just because you don’t have a lot of money you still can’t participate in investing in the stock market. In today’s digital world, investing in the stock market is more widely available and all you need is a few dollars to start. This is a great way to get your feet wet and familiarize yourself with how the market works, without much risk. You also don’t need a stockbroker or have to pay commissions with various trading platforms available.

You can also invest in partial (also known as fractional) shares with some companies. This means that you only buy a part or a fraction of their stock, which means you spend less money while still reaping some benefits. This method also allows you to diversify your investments.

#3: Your Own Savings

Invest in yourself by opening a savings account. Many banks don’t require a certain amount you have to deposit into savings, so you can put back as much money as you want. Banks even offer interest on your savings if you don’t withdraw money from them often. For the best interest rates, you’ll want to look into opening an online savings account because online banks offer higher interest rates and less fees than traditional banks, which means you get more money.

You can also look into apps that transfer your change to savings (some online banks do this as well). Soon, all of your transferred change will add up and you’ll even earn interest on it if you do this with an online bank.

It’s important to note that while now is a good time to try any one of these methods of investing, you may need to do some things before your start. For example, it’s always good to build an emergency fund before you start investing since investing of any type carries some amount of risk. The good news is that investing in a savings account builds this emergency fund with little to no risk. Next, you’ll want to pay off as much of your debts as possible, especially if it’s high-interest debt.

Finally, make sure that you do your research before you start dipping into any type of investment. As easy as investing is these days, you’ll still need to do your research to ensure that you’re likely to get some returns. You should also understand and make a list of our goals and why you’re choosing to invest. The last and most important tip to remember is that you must be patient because it does take some time to earn a profit and see returns on your investment(s).