You have a lot of choices when it comes to your money. You could buy something fun like a flat-screen TV or a boat, you could remodel your house or you could even take that dream vacation around the world you’ve been dreaming of. On the other hand, if you wanted to be a little more practical, you could put your money to work for you and invest it in the stock market.
Let’s face it. Spending your money is a lot more fun than saving your money. So why is it that you are here learning how to save and invest your money instead of out somewhere spending your money? The answer: benefits.
Investing in the stock market provides many benefits to individual investors. While this list is by no means exhaustive, we will be discussing the following benefits:
- Compound Interest
- Time Value of Money
- Tax Deferral
Compound Interest is a miracle of the financial world. Compound interest, when given time, helps your money grow faster and faster.
Time Value of Money
The Time Value of Money is a simple concept. Basically, it means that the more time you give your money to work for you, the more your money will make for you.
Tax Deferral is the greatest investing benefit the U.S. government has given to individual investors. The ability to delay paying taxes on your money can virtually double your investment power.
Diversification enables you to spread out your risk so you don’t have to put all of your hopes and dreams behind the success of a single investment.