The Main Benefits of Investing: A Basic Guide

Investing. Some view it as a risk but others view it as an opportunity.

In the United States, about 53% of families invest some of their money in the stock market.

For those of you on the fence about putting your money into an investment, you may be looking for reasons to invest or to see the benefits of investing.

Well, here are some investing benefits.

Inflation Protection

One benefit to investing is that you have less risk against inflation. Some people may decide to put their money into a bond or a general bank account and collect a little bit of interest.

Well, the truth is, right now, you would be lucky to get even 1% interest in a year for the money you put in. In the long-term, if inflation were to keep up its current pace, that would mean that you would lose financial value with the money you have in your portfolio.

Investing allows you the opportunity to get bigger returns and get enough profit to potentially protect yourself against inflation in the future.

Building Towards Retirement

Another benefit is that you get to speed your pace to retirement. Let’s say you currently earn about $50,000 per year and put away about 10% of that towards savings.

Well, with investing, you can take some of that money that you would normally put into savings and invest it towards your long-term goals, aka retirement. One way you can do this is by getting involved with 401K and having an employer contribution towards your account there.

That essentially means that you are getting free money that you can stash away for retirement at a later date and get to your retirement goals faster than not doing anything with your money.

Tax Breaks

Depending on how you invest your money, you can see tax breaks applied towards your annual income. One example of this is with the 401K mentioned above.

With that option, you can set aside money to invest before you even get to your income taxes and not have that money count towards the percentage of tax that you have to pay.

With the above example, if you are putting $5,000 towards a 401K every year, that means that you are being taxed on $45,000 of annual income rather than $50,000, which reduces the amount of money that you have to pay in income taxes.

Foreign Opportunities

Sometimes, the best financial opportunities for you in your current situation come from abroad. But, what if you are not in a position where you can drop everything and leave your country?

This is where foreign investment comes in. You can invest directly in a foreign market with resources like Monex, you can invest through mutual funds, or get depositary receipts.

No matter how you go about it, investing can help you make money from foreign assets that you would otherwise not be able to do.

See More Benefits of Investing

These are just some of the benefits of investing. Are you ready to jump into this world having a better idea of what is out there?

Check out some of our other articles for more related information.