The One Minute Investor

Why You Should Invest

            When it comes to money, most people consider themselves to be either “savers” or “investors”. Savers are concerned about protecting their principal, while investors are primarily concerned about protecting their money’s purchasing power.

            The purpose of investing is really to do both: protect your principal and protect the purchasing power of your money. Protecting your money’s purchasing power is necessary because of inflation. The cost of goods and services is continually rising, which not only shrinks the value of your money, but in effect, reduces the amount of goods that you’re able to purchase.

            All investors face “inflation risk” which is the chance that your investment returns may not outpace the rate of inflation. In addition, you also have to pay taxes on your earnings unless you are using a tax-free or tax-deferred investment. What’s important to the investor is your real rate of return. This is your net return after you take into consideration both inflation and taxes.

            Investing effectively should enable you to reduce the negative effects of inflation and taxes on your money by producing investment results which over time will exceed both the inflation rate and your tax bracket rate.

Don’t Procrastinate!

         The most important factor is to get started immediately. Do not put it off! Look at The Price of Procrastination graph on the following page to see the consequences of waiting.

            You must be accountable for your actions and take control of your financial situation. The biggest obstacle to an effective investment program is procrastination. Do not try to “time the market”…you can’t! The very best time to invest is always right now. It’s up to you to make it happen.