Why do we Invest!?

Time flies isnt it... 30+ days has gone for the year of 2007. Its already the month of Feb. I did state the reason why we should invest. Now i shall briefly run through how again why one should invest. If you have decided to do so, you better read and think about it again.

In order to be rich, we need to invest! Maybe i should put it this way, in order for your money to work harder for you, you should invest. But many will say investing is risky. I have to agree with those people, just like I agree with those people who made the remark of saying driving a car is risky.

Driving a car can be risky when
1) If you fall asleep while driving,
2) If you drive without hands (searching for things, using handphone, etc),
3) If you are not sober (after drinking session)
4) No knowledge of driving a car

But is driving a car really that risky. In fact it's not, it really depend on the individual who is driving the car. So if an individual do not have the knowledge to drive a car, it would be better off for him to hire a chauffer (if he rich enough) otherwise taking public transport is a wise choice.

So investing is the same, you must have the knowledge. If you dont have, it will be better off if you engage a professional to help you do it. Then you will reduce your risk.

By putting money in the bank, is it risky? In fact the answer is YES!

I believe many of you will argue with me that HOW COULD THIS BE. IT IS IMPOSSIBLE!

Let me just say kindly calm down and listen to me.
Firstly, by putting your money in the bank could be risky because the bank might collapse, close down. Yes, it is rather unlikely, but there is still a slight possiblility. Anyway It did happen a few times in different countries before, so dont strike out this possiblility. For your information banks are all private limited.

Secondly is How much do you earn by putting your money in the account. Not much right isnt it. It will only earn you about 0.125% per annum(for most saving account)and maybe slightly more if the bank has any promotion and / or putting a larger amount of cash in a fixed deposit. If you going to have all your money in your saving account, you are giving yourself a big injustice. Yes, it give you alot of liquidity, because as and when you need the money, you can use it. However do you know of such a thing call inflation? Inflation in singapore is averaging about 3% per annum based on the past inflation rate data for 40 years. Its very high isnt it. However in the recent 2 - 3 years, it is only on an average of 0.5%- 1.5% per annum.

So.... What is inflation ? for the benefit of those who dont understand the meaning, it is a rise in the general level of prices, as measured against some baseline of purchasing power. That means that the value of your money will depreciate over time / over the years. Can you recall that a bowl of noodles cost you $1 during 10-20 years ago. But right now, it easily cost you $2.50 to $3.50 a bowl. That's Inflation!

By putting money in the bank saving account, you are not helping yourself, you are losing out. Inflation is eating up your money. Your hard-earned money loses its value over time. What is $1 today, might not be $1 tml or next year. It is of lesser value. Do you think it is Right? Do you think it is FAIR!? I definately dont think so!

It doesnt make sense that your hard earned money is no longer worth that much. Its your blood and sweat, how can anybody just cut the value of your money just like this. But to be frank, that's the reality of life.

So now, does it make sense to you that by putting your money in the bank is risky? So what can you do so that your money dont lose value but appreciate. The only way is...... to have proper investment strategy.

But how do one invest ??? and investing is still risky despite knowing that investing is beneficial. Knowledge and Information is important. If you know something, you can make a informed decision, a better decision. And like i have mention, engage a professional to manage your investment portfolio would be beneficial to you.

"Since Investing is good, i should invest everything, so that my money would not loses it value. " one might asked.

Although we hate the idea of our hard money would lose value over time, but we still need liquidity afterall, therefore it is very important to strike a good balance between having cash and investing. In fact, by investing a portion of your money, it can potentially earn a better interest, and the interest earned could offset the inflation and gain in value as well.

So think about it. I will cover on the next topic on how one could invest, despit many claiming that they have hardly any money left in their saving account every month. I will also show you some of my portfolio that i am investing.

It doesnt make sense if i dont know nuts about investing and yet i keep writing about investing. Just like it doesnt make sense to listen to a teacher, when the teacher do not understand the topic he/she is teaching.

So stay tune, and get ready to INVEST!