Investing is a good habit to have. When you invest, you’re able to grow your money. You’re making it work for you. And if you do it long enough, you’ll become rich.
But more than that, there are also some not-so-obvious benefits of investing. Here are seven of them.
1. You learn good spending habits.
It’s hard to set aside money for investments if you don’t know how to save. That’s why when you start investing, you become more conscious on how you spend your money.
Do it long enough and you’ll acquire excellent money management skills.
2. You become educated on different investment products.
I don’t recommend investing on something that you don’t understand. That’s why financial education comes first. It’s essential so you can make good investing decisions.
While it can be confusing at first, you’ll get the hang of it after a while. Eventually, your friends will notice how much you know about the stock market, mutual funds, and other investments; and they’ll start asking you for advice.
3. You experience less stress during financial emergencies.
Financial emergencies can happen when you least expect it. You can lose your job or become terribly sick. Your house can burn down or a typhoon can ravage your town. Life is unpredictable.
But because you invest, it won’t be as stressful when it happens as compared to having no savings and no investments. You can focus on improving your situation and worry less about the money.
4. You learn how to manage risks.
There’s no such thing as a risk-free investment. Even the money in your savings account is subject to the risk of inflation. As an investor, you need to calculate and decide how much risk you can afford.
Eventually, you begin to apply the risk management skills you learned from investing to other aspects of your life. In the end, you become better at, and more confident in making important life decisions.
5. You become more patient and disciplined.
Your biggest ally in investing is time. You need to let your money sleep and grow for many years so you can reap the benefits of compounding. And that’s why most successful investors are patient and disciplined.
Consequently, learning these traits are also beneficial beyond personal finance. Ask any successful person — entrepreneurs, athletes, CEO’s, artists — and they’ll all say patience and discipline helped them to become who they are today.
6. You get to have more time to enjoy life in the future.
A P5,000 monthly investment earning at 12% per annum will become P360,000 in less than 5 years. If you earn P30,000 per month, then your investment is equivalent to 1 year’s worth of your current salary by that time.
Theoretically, that’s 1 year that you can afford NOT to work. That’s 1 year that you can use to do whatever you want.
But if you invest the same for 8 years instead, your investment will become around 2 years worth of your current salary. Make it 10 years and you’ll get 3 years worth of your salary. The time just compounds as you do it longer.
And here’s the thing… ask anyone who’s not investing and has been working for 5 years if they can afford to stop working for a year, and they’ll most likely say “No”.
Invest regularly for many years and you’re not just growing your wealth, but also compounding on the free time that you can use to enjoy life in the future.
7. Your life improves as you grow older.
Lastly, the overall quality of your life becomes better in the future if you invest regularly. The wealth and free time that you earned through the years will allow you to retire earlier than most people.
You will not be a financial burden to your children or relatives. In fact, you can afford not to stress about money anymore. You can just focus on being happy and enjoying life, spending time with friends, and loving your family.
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