Investing is often viewed as a tool to prepare for retirement, but there are many important reasons to start building investing knowledge in your 30s and 40s that have nothing to do with retirement. Here are seven reasons why investing should be an essential part of your financial strategy.
#1 Staying Ahead of Inflation
Inflation is the rate at which the cost of goods and services increases over time. If you keep your cash in a regular savings account, it’s probably not going to keep up with inflation. This means that your hard-earned money won’t get you as far as when you originally earned it. Investing can help you beat inflation over time by earning returns that exceed the rate of inflation.
#2 Passive Income
Your job or business likely requires you to trade your time and energy for money. Investing can help you generate income passively, putting your hard-earned money to work for you without much additional effort.
Dividend-paying stocks, rental properties, or even certain types of bonds can generate passive income that can supplement your salary or other sources of income.
#3 Achieving Goals
While it’s not recommended to invest any money you need in the next 3 to 5 years due to normal fluctuations in the stock market, investing can help you reach important life goals.
If in the future you have the goal of buying a house someday, going on your dream trip in the future, or supporting your kids you’ll want to start investing now. Investing can help you get there much faster than just saving.
#4 Building Generational Wealth
Contributing to an investment account like a 529 or Custodial Roth for your kids is a great way to help them get started building wealth. It can also be an opportunity to teach them the basics of investing at an early age.
Getting your children involved in the process early on can be life-changing for them and set them on a path to financial independence and success.
When you take control of your finances and start investing for your future, you’ll not only trade your financial anxiety for confidence, but it will also create more security, safety, and optionality in your life.
By taking ownership of your financial future, you’ll feel more empowered to pursue your goals and dreams.
A donor-advised fund, or DAF, is a charitable investment account for the sole purpose of supporting charitable organizations you care about. This account allows you to allocate and grow a portion of your wealth with the goal of supporting causes you care about most.
By investing in a DAF, you can create a lasting impact on the world and make a difference in the lives of others.
#7 Reducing the Gender Wealth Gap
Women not only make less than men, but as a group, we invest less as well contributing to a significant gender wealth gap. By investing more in our financial futures, we can reduce the wealth gap and have a bigger impact on the issues we care about most.
Investing can be a powerful tool for women to take control of their financial futures and pave the way for future generations.
In conclusion, investing is not just for retirement planning. It can be a crucial part of your financial strategy at any stage of life. By investing in stocks, bonds, real estate, or other assets, you can achieve your financial goals, build generational wealth, create a lasting impact on the world, and reduce the gender wealth gap.
Take control of your financial future and start building your investing knowledge today.
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