Investing essentially is adding your resources to something now, of which you will reap benefits later. Investing is much like growing an apple tree. You watering it daily is an investment; it bearing the fruit years later is the return from which you benefit.
What really is investing?
Investing financially means that you are committing money to a financial asset or a certain form of security like a mutual fund or a stock. You do this with the expectation that in the long run; it will make you more money than what you put in.
It is this potential of receiving more money than you put is why people invest in the first place.
Why does Investing matter?
The why is actually pretty simple – the prospect of getting more than what you put in. When you think about compounding effect of investment, it is clear why people invest. The idea behind compounding interest is simple: the returns you have gained from your investments can be compounded and then those returns start you earn you returns as well.
How is investing better than simply saving?
Sometimes people consider investments to be risky. An investment is actually different from savings. An investment is more active and the compounding is relatively much higher than what you could ever get by simply storing money away into your savings account.
Investments are essential in today’s world as it is your sure-fire way of getting financial ahead in life and getting towards that early retirement you always dreamt of.