The importance of investing

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Ethan Laurin, Staff Writer

Reading Time: 3 minutes

It is common for adults to tell younger generations that saving money is an essential factor in successful living. Whether it is saving over a period of time for a long desired item, or for a long term goal such as retirement, saving money will always be a vital aspect of life, especially growing closer to adulthood. Yet, saving money may be seen as difficult or overwhelming to some. This could be for a number of reasons; most commonly, saving is made difficult due to outside expenses. As a young adult, there are various payments that are prioritized above saving, such as possible tuition fees, rent, and other day to day living expenses. Finding a feasible balance between saving and essential spending is a long-term process, with smaller, easier steps along the way.

It is easy to assume that the first avenue of saving money is just keeping it in a savings account. While it is important to set aside money for a rainy day, it may not be the best avenue in terms of interest. Many savings accounts are free to open, but according to Matthew Goldberg, a consumer banking reporter, the average return on a savings account can be anywhere from 0.1 to 1.7 percent interest. While some online banks offer a higher return rate than 0.1 percent, it is safe to assume that most will offer around that low of a rate. While this may seem fine on paper, there are much better alternatives that will have your money working for you. 

Through the stock market, an individual can earn an average return rate of 10% or higher, rather than 0.1%. The stock market is an easy and interactive way to save money, and have your money make itself back over time. As you invest a certain amount of money, over a period of time, your investment will grow and actually become profitable.  

There are many different strategies to invest. The safest strategy is investing in companies that show long term growth and success. For example, the ever famous FAANG stocks. These stocks consist of Facebook, Apple, Amazon, Netflix, and Google. Some strategies consist of “day trading” or “high frequency trading”. This strategy is where you invest when the market opens, and pull out by the end of the day hoping to make a return. It is not necessarily advisable to trade in such a way because it is risky, and it can be difficult to time the market. 

While taking on the market may seem daunting, it can become fairly easy by simply doing research. Keeping up with daily news is one way to keep an eye on the market while deciding what is worth investing in. Tony Robbins, a motivational speaker and life coach, advises those to stay in the market, even on a bad day. Robbins says in a CNBC interview, There will always be booms and busts. You cannot really time the market. It doesn’t work 99 percent of the time,” It is much more valuable to keep your money in the market, even through a tough period because, ultimately, you will still gain more money in the long run, from return rates of the market. 

Robbins further explains that if you invested just three hundred dollars every month from the age of nineteen to twenty seven, you would make 1.65 million dollars by the time you were sixty five. Twenty seven thousand dollars can mature into over a million dollars purely because of the interest it would collect on the stock market. Interestingly enough, if you were to start investing just a year later, and continued to invest, you would actually make less of a return. 

There may be many different ways to save money, but it is important to keep the power of investing in mind. Investing can be used as a long term tool to help build a life of success in the future.