Keeping your heard-earned savings in the bank is always a good idea— perhaps, even a safe one. However, keeping it instead of investing it will devalue your money to at least 3% because of inflation. Being dependent on a savings account will financially cripple you in the long run.
Here’s what you’re missing when you choose not to invest your savings:
1. Retirement Funds
While you may have your retirement money sitting idly in a bank, that amount of savings is far from enough to cover everything you will ever need or want. If your goal is to at least maintain your current lifestyle or standard of living, you need a growing retirement fund as the years go by before your actual retirement.
When you choose not to invest, your retirement fund is less likely to grow enough to be able to support you when the time comes.
2. Potentially Doubling your Money
Most of you claim that you don’t have enough money to start investing. But the truth is, you don’t need a big amount to invest and potentially reap thousands in a couple of months. Just investing a small percentage of your income can go a long way.
Interest rates of savings accounts will note make a big impact on your savings compared to investmets. So if you depend solely on your bank account, you’re losing out on the opportunity of earning more for only a small portion of your income. Consider this as passive income that you won’t have to worry about too much.
3. Developing a Solid Financial Plan
Instead of spending your hard-earned money on something you don’t actually need, why not put that money into an investment? Once you start investing, you become more conscious of your money flow which in turn inspires a budgeting system that works well for your lifestyle.
The key is to always keep the future in mind. Investing inspires self-discipline in your finances. This then inspires financial freedom potentially earlier than you planned.
Probably the most important thing you’re losing is time. Money can come and go, but time, once it passes, can never be taken back again. The longer you put off investing, the more you lose the time to make your money grow. Take note that every minute matters in investments. So why not start now with even the smallest capital? Each minute you waste makes it longer for you to achieve the ultimate dream of early retirement.
You may have a number of personal reasons why investing is not for you. But at the same time, you need to take a step back and think of your long-term goals and how investing — no matter how small — can actually help you reach your goals easier and faster. The key is taking small and calculated steps.