There are several motives to invest. People should invest and be aware of the reasons that motivate to invest. Through this article, we are going to tackle and discuss in detail Reasons and Motives to Invest
Reasons and Motives to Invest
Grow your money
Investing your money can allow you to grow it. Most investment vehicles, such as stocks, certificates of deposit, or bonds, offer returns on your money over the long term. This return allows your money to build, creating wealth over time.
Earn higher returns
In order to grow your money, you need to put it in a place where it can earn a high rate of return. The higher the rate of return, the more money you will earn. Investment vehicles tend to offer the opportunity to earn higher rates of return than savings accounts. Therefore, if you want the chance to earn a higher return on your money, you will need to explore investing your money.
Reach financial goals
Investing can help you reach big financial goals. If your money is earning a higher rate of return than a savings account, you will be earning more money both over the long term and within a faster period. This return on your investments can be used toward major financial goals, such as buying a home, buying a car, starting your own business, or putting your children through college.
Get Tax advantages
Stock investments and related investments may offer tax rebates or other benefits. In France, the Plan d’épargne en actions (PEA) or in Belgium the stocks’ capital gains tax regime are relevant examples. These tax benefits differ by a European country and are governed by laws that are subject to change. While tax benefits for some may prove important to some investors, they are generally not considered the primary reason for investing in equities.
Secure Portfolio diversity
Generally, the more potentially profitable an investment, the higher it is a risk. Stocks may generate huge earnings for a certain period of time, but can also present a high risk for financial loss.
When building an investment portfolio, individual investors often choose to mix distinct classes of assets to lower risk. They also consider an investment horizon: The longer the investment period, the more attractive it can be to invest in to invest in relatively risky assets, such as stocks, whose profits tend to exceed losses over time.
Famous People Do It
The bottom line is that we look up to others as role models — so why don’t we do it financially as well? Just look at the top 10 investors of all time — most of them are well-known, like Warren Buffett. And most of them didn’t start with much. Warren Buffett started investing when he was young with just a few hundred dollars. Yes, that would be equivalent to around $1,000 today, but that’s still not much money to turn into $50 billion!
Be part of a new venture
New ventures need the backing of money, and they look to investors for that backing. Some investors may like the excitement of investing in a new, cutting-edge product or service or being part of something like a business or film that introduces them to a glamorous world.