Essential of Investment

Why We Need Invest?

The reasons are very simple and clear. We need to create WEALTH and to achieve FINANCIAL INDEPENDENT in future. Besides, investment can beat the inflation in long term. We create our wealth to achieve financial independent through earning the dividends as the Passive Income.

Let’s think in the future, when your age become old and you need to take care of your parents and your family, how you get extra income to cover your parent’s expenses? Do you plan your children’s education expenses in future? Do you want to achieve your retirement in earlier time and enjoy your life without worry? Would you worried that you lose your jobs due to sickness or unforeseen events that cause you unable to work that affect your income? If you think about these things in your life, then you will be aware the importance of passive income! You can use the passive income as extra income for the above expenses.

Investment can also beat the INFLATION in our daily life! Do you ever think about what is inflation? Well, inflation is a condition that decreases you money “value” in long term without your notice. Let’s look at example. In current time, a movie ticket will cost you $10, but it may cost you $20 in the next 10 years. The buying power of your money decrease in long term!

What is your major source of income? Is it your salary only? You should know that salary as your only income is not secured in your daily life. Salary as your only income will not making you become rich, but is your savings and investment. The combination of these two will make you financial independent if your major income is from salary only.

How much we need to keep in saving account? Based on my opinion, your savings should cover all your fixed and daily life expenses from 3 to 6 months, depend on how conservative person you are, in case you lose your major income or you need money in urgent. So this will not disturb the money which you have put in the investment. By keeping your money in saving account instead of investing it, your money wouldn’t work for you to get extra money in long term. Through investment, your money work for you by earning interest and hence your money will increase in long term! Bank interest is low compared to the investment.

Hence, the earlier you invest, the earlier you make money to achieve financial independent.