Updated: November 7, 2020
People usually work all their lives to buy all the things they want and to provide for their family. To do that, they go to school and get a good education. Once they finish that, looking for a job becomes a priority.
In time, they earn money and start fulfilling their goals. This point in most people’s lives is where most commit the biggest mistake when it comes to finances.
Most people tend to become content with what they’re earning. Of course, hard-earned money can really improve the way you live. Instead of settling for the status quo, people should invest in the future, or in most cases, for retirement.
Sure, you’re earning a six-figure salary every month. But how long can you keep up? People certainly can’t keep working forever. This fact is the primary reason why most people should save up for retirement. Now aside from an aging body and diminishing skills, here are more reasons why you should invest for your retirement.
Even if you don’t retire yet, you can at least have an alternative source of income. The sad truth is that there’s no guarantee that you’ll have a job forever. Even though you’re an excellent employee, factors such as plunging market trends, accidents, unexpected events, etc. can cut your career short.
What will happen if you lose a job prematurely? Sure, you can get a new job, but what happens if that fails again?
Invest in other forms of income, such as a small business, to at least have a small source of funds when unexpected hardships come. You should also take care of your business as it can grow, which can potentially become a lifesaver once you retire from work.
Interestingly, compound interest is why most financially-sound people start investing early on in their careers. Compound interest is a process of “growing” money due to rising interest rates that come with time.
Say you invested $1,000 towards a long term bond. Agreements made by you and the other party involved with the investment can agree on how much your money grows annually.
Usually, rates can go from 3-10%, depending on economic conditions. From that $1,000, you’ll get to raise $30 from it if you agree to a 3% rate. You know have $1,030 in just one year.
Since everything adds up, you’ll get another 3% from your current $1,030. It might not be much in the first few years, but just let your money do the work for you. When the time comes for your retirement, you’ll find that the money you left has already grown, ready for your withdrawal.
To Pay for Debt
Sadly, most people incur debt even throughout their retirement years. When you’ve invested at the very start of your career, you can certainly use the funds that have grown over time to pay off loans.
It may seem unlikely but, mortgages are typically expensive and often take a lot of time and extra money to pay off totally.
To Enjoy Life
When you grow old, one thing you should do is to have fun and enjoy the more beautiful things in life. All your life, you’ve worked hard for everything you have. All those sleepless nights of toiling away all lead up to your state of life once you retire.
To enjoy life after in your later years is probably one of the best reasons for saving for retirement. Buy that sportscar you want. Go on a world tour. See the different beaches and islands. Try something new. Enjoy life. You’ve certainly earned it.
Death is another inevitable thing that’ll come for us, sooner or later. No one can escape it, and no one knows when it’ll happen. The truth is, no one ever brought their riches to wherever they go when they die. With a good investment, you at least leave something behind for your family. You can certainly leave your finances as an inheritance.
Before you meet your maker, you’ll be happy to know that your loved ones will continue living comfortably. In a way, you’re leaving behind a legacy for your sons and daughters to follow.
Investing at an early age is crucial if you want to retire to a comfortable life. You may have a good-paying job, but the truth is that you can only do so much. Time will eventually catch up to your body.
Investing early ensures that you still have a sizable amount of funds to live life the way you want to.
This article is contributed by Carlo of LiveWell.com