Investing for the future has become increasingly important in recent years, as the future of social security benefits becomes increasingly unknown. It has also become much more of a burden on the individual, as corporate investment schemes have either fallen prey to unscrupulous executives, or have become just another perk to vanish from the workplace in all but the most robust corporations.
It is logical to want to protect your futures given the many examples we can see daily of people who thought they had done everything they could to provide for their retirement, only to find that they had fallen short in some way.
We also need to consider the fact that the average life expectancy is 81 years for men, and 84 years for women.
With people living longer than ever before, this puts a strain on social security. With health care costs soaring as never before, we not only have to consider our living expense, but ongoing health, housing, long-term care, and even death expenses.
Many people might believe that they have set aside enough to be well off, only to be faced with rising inflation and unexpected events like soaring gas costs.
Retirement calculators tell you that when you retire, you’ll only need about a third of what you were earning. But is that realistic?
Many retirees are actually carrying credit card debt to try to make ends meet, and social security is actually taxable.
Investing now is the best answer to the unknown questions 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 some money or realized some other type of windfall, and you’d like to find a way to make that money grow. Again, investing can be part of the answer.
Investing is also a way of attaining the things that you want, such as a new home, a college education for your children, or luxury items such as a new car, second home, or boat.
Of course, your financial goals will determine what type of investing you do, which is why we recommend in this series of articles that before you invest in anything, you sit down and make a list of your investment goals.
Once you are clear on your investing goals, then you can decide on the kind of investment strategy that will help you meet those goals.
For instance, 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. Greater risks bring greater rewards.
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 by having your money earn interest, and that interest snowballing to create still more wealth.
It is important to remember that you will not always be able to or wish to earn an income–you will eventually want to retire. It’s also important to consider that there a lots of different ways to pay for a college education, for example, such as scholarships, but little or no financial assistance of that or any other sort when we retire.
Therefore, in terms of goal setting, your retirement, rather than your kids’ college education, should always be at the top of your list.
In these precarious financial times, it is no longer a safe bet to count on the social security system to be there for you and meet all your needs in the future. Even if it were working well, the amount per month is not exactly conducive to a luxurious lifestyle.
As we have seen with Enron, you also cannot necessarily 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. That means educating yourself with your goals firmly in mind, and carefully setting out a road map which will help you reach your intended destination, without getting lost.
With so much free information now available, and investing easier than ever before thanks to online tools, you might be tempted to just launch in. But just as no one expects you to ride a bike successfully your first try, so too with investing. Study, gain knowledge, look at what you can realistically afford to invest—or lose!
Investing can bring great rewards, but you always need to balance it with possible risks. However, these risks can pay off if you are prepared to put in the work to achieve your financial goals.
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