We asked you why you invest. What are your goals – greater returns, helping your kids… or having fun?
Whatever your goals, be it saving for your first home or money for retirement, investing has been proven time and time again to be the best way to build up a pot of money for the future.
Despite this, investing is often something that is easily put off for another day, as it can seem complicated and daunting at first. But if you take your time, do your research and have a little patience, it can reap fantastic rewards.
We asked Moneywise readers why they think investing is important. One reader tells us: “Investing matters because, just like gardening an allotment, you have to keep digging, keep an eye on the weeds and have patience.”
But that’s not always as easy as it sounds. Earlier this year, the stock market took a dip as nervousness around Brexit negotiations caused people to worry about the outlook for the UK economy. It’s easy to feel discouraged when the stock market falls, but Moneywise readers know that the best strategy is to hold your nerve and not panic.
One reader says: “I like investing in stocks and shares as it makes each day interesting – even if they’ve gone down.” The important thing when it comes to investing is to remain focused on the long term. Experts say the most successful investors are those who ignore short-term ups and downs in the stock market and stay invested for years.
A reader says: “Investing has become even more important as state pension values have fallen and life expectancy has increased. History has shown us that investing over a long period easily outpaces inflation and means you become wealthier in real terms if you have a well-diversified portfolio and don’t take on too much risk.”
Even professional investors don’t get it right all of the time, but having a well-diversified investment portfolio means you have money in a range of different assets – such as company shares, bonds and property – across a number of regions. The idea behind this strategy is that these disparate investments won’t all rise and fall at the same time, so if one takes a hit it should be compensated by the others.
One reader explains: “I was once told that the difference between the best and worst performing fund is only a year. You need to start investing early and just keep going. I wish I’d had someone nagging me to invest over the years – I would have been able to retire a lot earlier.”
Moneywise readers also told us that they see investing as being important as it beats keeping money in a bank account.
One reader says: “Leaving your hard-earned cash sitting doing nothing is not the best way to use it. Even low-risk, low-reward investments are better than leaving your money in a low-interest bank account.”
Another adds: “Investing is more fun than keeping your money under the mattress and it gives you the opportunity to generate returns, which can give you freedom to get off life’s treadmill.”
Generating greater returns is particularly important at a time when interest rates and wage growth are low, and inflation is pushing up the cost of living. Many readers say investing is the only way to generate so-called real returns, which keep up with the rate of inflation.
But investing is not just about today’s costs but those of the future.
One reader says: “At a time when money buys less and less, only investing for the future will cover your living expenses for the rest of your ever-longer life.”
While many Moneywise readers may be well-informed these days, some regret not having had the opportunity to learn more about money at school. Today, personal finance is part of the national curriculum and lots of parents and grandparents are doing their best to help get their kids into good money habits at an early age. But financial education isn’t taught in all schools and there’s always more that can be done, which is one of the reasons why Moneywise launched its Get Financial Education Working campaign.
One reader told us: “Children can be taught from an early age in a simple way how to invest money and these financial lessons will be with them for life. Savvy investing means they will be able to get on to the property ladder and know how to ride out any financial crises.”
Starting an investment Isa for your child, as well as being sure to talk to them about finance on a regular basis, can help teach them crucial lessons about the value of money. You can invest up to £4,260 into a Junior Isa in the current (2018/19) tax year, which is a great opportunity to get them interested in finance and picking funds before they can take control of the account at age 16.
Enlisting the help of technology, games and apps can also ensure good money habits; reader favourites include prepaid Visa debit card goHenry, virtual piggy bank app Jangle and Entreprenaws, a game designed to teach kids about running their own business.
As well as the good that investing can do for your own savings and those of your children and grandchildren, Moneywise readers are keeping in mind the other benefits it can bestow too. One says: “In its rawest sense, investing is the oldest form of helping other people. It can benefit businesses and give people opportunities they might otherwise not have had.”
Another agrees: “Investing enables individuals and societies to increase their wealth by producing goods and services, which are necessary for progress.”
Whether you are motivated philanthropically or simply trying to build a nest egg, investing matters.
One reader concludes: “Investing is about preparing for the future, whether it’s for a rainy day, a mortgage or a comfortable retirement – and it is never too late to start.”