Investment Benefits We Need To Know
We all need to know, investing has many benefits that can change a person’s habits or life drastically regardless of the instrument. You may have heard of various kinds of instruments for investing. There are investments such as stock investing, gold investment, mutual fund investment, and bonds. Even though investment is not a word that sounds unfamiliar to Indonesians, not a few people do not recognize the benefits of investing. In fact, investing properly can improve the quality of people life and investment can even provide financial freedom. Then, what are the benefits of investing? Below is a full explanation.
Adding A Source Of Income
Investing no doubt, can increase your income. For example, when you get a monthly salary, then you can set aside a little money to invest. So, your income will be able to come from various sources. Then you also no longer depend only on monthly salary income. While the investment amount can vary depending on how smart you are in managing the investment. The more you understand and are able to predict investment opportunities, the more likely it is to increase value through the percentage of investment returns.
With Investment Can Prevent Us From The Impact Of Inflation
The inflation in a country will always occur almost in every year. This inflationary state can make the value of money always decline. So, in order for us to avoid this inflationary state, the interest rate, or the profit on each of your savings have to be higher than the percentage of the country’s inflation. But at this time, the interest rate on savings is low and it also does not cover the increase in the percentage level of inflation. Because of this, investing can be one type of means to prevent the effect of inflation in the country. With good money management and also good investment, you can grow your money by compounding its interest to be higher than inflation in each year.
Investment Can Increase The Value Of Money
Continuing the investment topic above, investing can also increase the value of money. You can try to think that when you save in a bank, the money continues to erode over time. This is because the investment interest earned is only enough to pay administrative costs. Plus, the money that you put in your savings turns into a passive type of money. Through investment activities, you can manage your money and also increase the value of the money you currently have. Your money will be both more beneficial and profitable in the long run. For example, if you invest in gold, the gold price will increase in the long term which can be the best investment.
Got The Compounding Effect
When investing, you have the opportunity to maximize the value of profits by utilizing a compounding effect. This compounding effect or rolling interest is the interest earned from the investment that was previously reinvested. Then in the end it can generate interest in investment back. It could also be a condition when you get a return on your capital and your benefits and interest. You can then reinvest the capital so that the interest you get back can generate interest again. In other words, through long-term investment, you can enjoy income from the previous source of income.
Preparing The Need For The Future
If you invest, it can help you prepare the necessary capital for future needs. For example, let’s say that there are costs for marriage, children’s education costs, medical expenses, and other costs. By investing, you can overcome the increased costs for these needs.
Better Prepared To Retire
We will not work for a lifetime; with an investment you can prepare for the future. Our old age can be better prepared by investing when we are young. While you are young, then prepare your future better. Apart from saving money, you can also invest and then take advantage of the compounding effect discussed above. So that to be able to prepare funds for retirement.
Reaching Financial Freedom Condition
So this ‘freedom’ is your condition when you look at it financially. This means that your income is sufficient to be able to meet various daily needs. This condition can be achieved in various ways. One of them is investing, with the right investment, you can get big profits in a very short time.