It is very interesting to note that investing appears to have become increasingly important over the years. The reasons for this are many. In the USA and Western Europe, as the future of social security benefits becomes increasingly unpredictable, many are finding solace in one type of investing or the other. In Nigeria, bank interest rates on deposits are depreciating, in many cases, as much as from about 10% in 1982 to 2% in 2012! Nigerian Banks' lending rates have increased to levels beyond the reach of the SMEs while inflation is also hitting hard on the global economy.
People want to insure their futures, and they know that if they solely depend on Social Security benefits, and in some cases retirement plans, that they may be in for a rude awakening when they no longer have the ability to earn a steady income. Investing is the answer to the unknowns of the future.
You may have been saving money in a low interest savings account over the years. Now, you want to see that money grow at a faster pace. Perhaps you’ve inherited money or realized some other type of windfall, maybe a lottery or a Football Pools win, and you need a way to make that money grow. Again, investing is the answer.
Investing is also a way of attaining the things that you want, such as a new home, a university education for your children, or expensive ‘toys'. Of course, your financial goals will determine what type of investing you do.
If you want or need to make a lot of money fast, you would be more interested in higher risk investing, which will give you a larger return in a shorter amount of time. If you are saving for something in the far off future, such as retirement, you would want to make safer investments that grow over a longer period of time.
The overall purpose in investing is to create wealth and security, over a period of time. It is important to remember that you will not always be able to earn an income… you will eventually have to retire.
You also cannot count on the social security system to do what you expect it to do. As we have recently seen with some companies, you also cannot solely depend on your company’s retirement plan either. So, again, investing is the key to insuring your own financial future, but you must make smart investments! However, whatever you decide to do, you have to carefully make up your mind as to what to invest in... Bonds, Mutual Funds, Treasury Bills, etc.