Why Invest? The simple answer is people invest their money to make it grow.
But many young people, who came of age during the finacial crisis of 2008, are not eager to invest after witnessing or personally experienceing the loss of jobs, houses and savings. They prefer cash.
Everyone loves cash, but if you stash it under your mattress, pray that your apartment doesn’t burn down. If you don’t mind losing money, the bank is a safe alternative. Today, your bank deposits are earning less than 1%, which is lower than the rate of inflation. So if you leave your money in the bank, it will buy less tomorrow than it did yesterday.
Obviously, too much risk is fool-hearty, but so is too much caution. Do you really want to spend the rest of your life paying off your landlord’s mortgage while your savings lose in value?
Striking the right balance between risk and reward is key. Reading the “The $500 Cup of Coffee” will help you better understand your personal tolerance for risk. It will also help you develop an investment strategy that balances your desire for safety with your need for growth.