What is Investing and Why Should You Do It?

by James Hendrickson on May 12, 2016 · 1 comment

calculator-428294_640In today’s world where everyone is trying different ways to make money since internet has made things so simple, investment is quite a common word. Starting businesses are looking for investments and businesses that have been around for some time need investment to expand even more. Even the biggest food chains of the world are never stagnant. In fact, they are always looking to expand. While some might think this way, investment is not something exclusive to big businesses and corporate entities. It is just as viable for an individual sitting at home as it is for big businesses.

What Exactly Is Investing?

Investing is spending the money to buy something that will have an increased value in the coming times. Of course, you have to spend some money but when it comes to investing this money is spent to make more money. You do this by buying something that you hope will have an increased value in future. In the simplest and plainest terms, investing is a way to make more wealth. You will buy an asset because you are hoping that you can sell the same asset for more money than you are spending today.

Spending Vs Investing

Spending and investing are two completely different things. When it comes to spending alone, you do it to buy things that you have a status utility for. You spend your money to buy food because you have to live or to buy a TV because you want to maintain a good status. On the other hand, the value of investment lies in future and it can be somewhat said that it is like a loss at the moment when you are making an investment. The true value of investment is obtained when your purchased asset has its value increased.

Investing Vs Gambling

When you invest in something you have done your homework to know that the value of what you are purchasing will increase in future. Even if your speculations are not right you will have your purchased asset in your possession that you can sell for some money. On the other hand, gambling is like a blind shot that you are taking to make instant money. You either get everything you are gambling for or nothing at all. You can say that investing is like taking a bullseye shot whereas gambling is taking the same shot blindfolded.

Why You Should Invest

The idea is pretty clear why you would want to invest. Investments are made to make more money because you want to be wealthy, financially stable and have plans after your retirement. Investment requires big risks to be taken. However, there are financial institutions such as investment banks that are doing the speculations and anticipations for you to reduce the risks for you. If you are saving money in your retirement savings account, you will be at a loss when after 10 years the value of your saved money will have been eroded badly by inflation.

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{ 1 comment… read it below or add one }

1 Cathy @ Monetize My Minutes May 12, 2016 at 2:57 pm

This is a wonderful overview of what can be a very complex topic. So many people misunderstand what investing truly is, especially as to how it compares to savings or gambling. While both investing and gambling carry an inherent amount of risk, there is a level of knowledge behind investing that allows you to determine if the risk is reasonable. Otherwise, you might as well be throwing your money up in the air and hope more of it lands in your hands than you had before.

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