6 Reasons Why You Should Invest

In a Blackrock Survey done in 2019 on US residents, among the non-investors who don’t invest:

• 64% find information about investing difficult to understand
• 60% say they don’t have enough money to start investing
• 47% are too worried about their financial situation today to think about the future
• 31% are afraid of losing everything

What about Singapore? At first glance, it seemed we did better. However, in 2019, OCBC first launched their Financial Wellness Indicator, and found that

• 34% of respondents do not invest, and of the rest who invest, 36% have investments that do not perform to their targets.
• another 27% of the respondents speculate for quick gains.
• 33% think of investing as gambling.
• an average of 37% do not know the best way to grow their money.

The result is that they shy away from investing. Yet, 4 in 5 have underestimated how much they need for retirement averagely by 32%. Also, their survey found that 3 in 4 are falling behind in their retirement plans.

Why is that so?

Inflation as the silent killer

For every 3% of monetary value you lose to inflation, you need to gain 3.1% to make up for it. As 3% can compound, 3.1% can also compound with time. Hence, when you don’t do anything with your savings, and the longer you wait, the harder it will be for you to catch up.

Can you lose money with investing? Possible, especially when you don’t have any strategy for investing. It is important to note that investing is not speculating. Contrary to common belief, you won’t need large sums of money to start investing. You can start by contributing a small sum of money regularly to your investment portfolio. It also doesn’t have to take up much of your time. Today, it is much easier to start. You have so many choices today.

Money is the root of all evil. Really?

There’s a saying, money can only amplify the person you are. Some people demonise money saying “money is the root of all evil”. This perspective is exacerbated by the survey results where 27% treat investing as speculative activity for quick gains. If so, I’d like to suggest, as Ann Rand puts it “what then is the root of all money?” Money is just a tool, and it started as a convenient replacement for barter trade.

Benefits of Money

The accumulation of wealth starts with the right mindset. What can having wealth/money bring you?

1. It allows you more choices and better options.
2. It gives you a more comfortable lifestyle, so you can occasionally indulge in simple luxuries / pleasure. If you have no choice but to be frugal, you’re likely to hesitate and have less opportunities to socialise in your golden years.
3. It gives you a peace of mind, because you no longer have to worry you don’t have the means to pay your bills. This also equals stability & security. And less stress too.
4. Wealthy people have more freedom. Money can’t buy happiness. However, you can use it to buy time.
5. It can be your source of motivation, when you define what Wealth means to you. As an example, being wealthy allows you the means to give back to the society
6. Wealth is the result of self-improvement. It certainly can give you a sense of accomplishment.

You can do DIY investing, or you can leverage on someone who does. But, there just isn’t a good reason not to invest. Especially in today’s high inflation, low interest rates environment, in order to reach your retirement goals, it is only made sense to do so.

More reading:
http://morningstardirect.morningstar.com/clientcomm/S.Wendel_NYC.Forum.Nov14.pdf
https://www.straitstimes.com/business/banking/1-in-3-singaporeans-do-not-invest-most-financially-unprepared-for-retirement-ocbc
https://www.ocbc.com/assets/simplyspoton/pdf/ocbc%20financial%20wellness%20index%20report.pdf

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