Getting Started In Investing
March 3, 2010
2. Why You Need To Invest
The first step in choosing an investment is deciding what you what to achieve. For example, are you saving to provide your kids with money or a better education? Are you investing for your own retirement or just looking to make the most of your money?
For most people the main reason for investing is retirement. The real value of the Basic State Pension dwindles each year it seems. In the UK, the government taxes the employed and uses that money to pay out pensions. Years ago, everything was tickety boo because there were lots of employed people and relatively few pensioners. However, our population is ageing and the sums simply don't stack up anymore.
In order to relieve the pressure, pension increases are now relatively modest and the age at which we can collect our State Pension is being pushed back.
The message is clear, we can't rely on the government to fund us through our twilight years. We have to do that ourselves.
Don't you wish that you had had a lump sum when you turned 18 or 21 to get started in life? Perhaps you did and now you realise what an enormous difference that made. Investing is most powerful when you start early and you can't invest much earlier than when you are still wearing nappies.
You might want additional funds to give your kids a better education, or to pay for university fees. With forethought and planning, investing can give you this option.
Many of us get a lump sum at some point in our lives. It may come from an inheritance or a bonus. You want to put it to good use but, having never invested such a large amount before, you're at a bit of a loss as to what to do.
The key here is to take it slowly. There's no need to invest everything immediately. Instead, drip your money into a variety of investments so that you can get comfortable with how they work and what level of risk and return they offer.