Investing means putting your money or other resources toward something you expect to earn income, turn a profit or create some other positive benefit. When you invest, you buy assets that you expect to increase in value over time, which can grow your amount of money.
For most people investing means putting their money into the stock market.
Stocks are the most common type of investing as well as one of the simplest types.
It typically gives you a financial stake in the company or other asset in which you invest.
Investing for beginners works in two ways – appreciation and income generation.
Appreciation involves buying stocks or other investments when their price is low and selling them when their price is higher. The value of the investment appreciates over time.
You can also make money by holding on to investments that generate profits. This can happen when stocks you invested in pay dividends.
From a personal finance standpoint, investing is important because it can ensure your financial security in the present and in the future. Investing can let you grow your wealth faster than the rate of inflation.
You can also benefit from compound interest or growth of your investment’s value. And investing may give you tax advantages.
Investing can also provide greater financial security in retirement or provide a path for you to retire earlier than you thought possible. And it can help you meet other financial goals – such as buying a home or sending your kids to college – along the way to retirement.
The earlier you can start investing, the greater your potential profits will be. This is the result of putting more money into your investments over a longer period and the power of compound wealth over time.
The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Alternatively, it can compute the annual rate of compounded return from
