Dictionary corner: What is investing? It is committing money now in the expectation of future profit.
Sounds great Moneycube, but what does it really mean, and is it for me?
If you’ve landed here, you’re probably tired of watching your bank savings ebb away through charges and price rises. Maybe you’ve read one of our inflation eater articles and decided it’s time to do something different.
But investing isn’t for everyone. It’s worth getting clear on what investing involves, and figuring out: what is investing for?
Once that’s done, you can find out the practicalities and then make a start.
A gift to your future self
Some people say that borrowing money is like taking a loan from your future self.
If that’s right, investing is about doing the opposite. Small sacrifices today can mean chunky benefits later.
Not everyone wants to make that sacrifice. And by becoming an investor you are making a conscious decision about your priorities.
Investing is your money working for you
Most of us generate our income by selling our time. Those 40 hours a week turn into a payslip at the end of the month.
The trouble with time, though, is that you can’t make any more of it.
Investing breaks the link between making money and losing time. Your money is working for you even when you’re not.
Investing is not trading
Some people think the answer to ‘what is investing?’ is about making a quick buck, following a share tip, and short term gains.
Nothing wrong with these approaches, but this is trading, or maybe speculating, not investing.
You wouldn’t do it with your life savings.
Investing is taking control
It’s true that you can’t control the performance of your investments. There will be ups and downs.
You’ll know you’re truly an investor if you can accept that, because your investments are part of a financial plan. You’ll be able to accept it because you know that over the long term, investing has always delivered better returns than keeping your money in cash.
The act of investing your money is about taking charge of your financial future, over the long term.
Want more? Read about what investing is not.
Get started with Moneycube today.
