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The world is in strange territory right now. As the economic fallout from the coronavirus pandemic sees unemployment surge and businesses close, the stock market and real estate markets have remained fairly healthy. For professional investors, that means their profits are have been relatively well-protected. For the average person, it means that it’s time to start thinking about investing.
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Still on the fence about playing the market? Here are seven reasons why investing in the stock market is a smart decision.
1. Money that sits loses value
First and foremost, a Looney today is worth less than a Looney tomorrow. (Infinitesimally less but less all the same.) Inflation is the slow but steady force that makes things cost more over time, which thereby devalues cash assets. When your money is in the stock market, it adjusts with inflation over time, making it worth more by simply existing in the marketplace.
2. Helps you set better goals
When you’re a consistent, observant investor, you can set better financial and personal goals. Whether you’re trying to save for a house, for college, or just for a new espresso machine, investing and keeping a closer eye on your finances teaches you valuable goal-setting expertise. That can easily be applied to other aspects of your life, as well.
3. Keeps you informed
The stock market rises and falls largely based on current events. Investing based on research or things you hear around your industry can be extremely beneficial. It’s good to be informed, and investing helps you keep your ear to the pavement and your mind on current events.
4. The earlier, the better
The best reason to invest? The earlier you put your money into the markets, the greater the opportunity it has to grow. Investing today gives your money the opportunity to benefit from time.
5. History tells us it’s worth it
And yes, time is kind to the stock market. Stocks have tended to rise over the last 100 years. Despite occasional crashes, pullbacks, and slumping performance, overall stocks have steadily risen. If you invested one dollar in small cap stocks in 1926, that dollar would be worth nearly $40,000 today.
6. Retirement security
Not everybody earns a pension at the end of their careers. If you want to live your dream life in retirement, you’ll need to be saving now. Putting your money into RRSPs is a great start, but greater risk tends to increase your chances of earning greater wealth. Investing in the stock market may serve as a good supplement to your retirement savings.
7. Diversify your wealth
Investing your money can lead to growth. Of course, there is always risk involved with investing. When you invest in the stock market, it allows you to spread your money around to different stocks, so if one goes down, another may rise. The more diversified your portfolio is, the greater you’re protected from major downturns.
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