Investing is the process of making your money grow over time to help reach financial goals, such as buying a home or funding retirement. Investing brings with it risks, but the earlier you start and the longer you keep investing, the more your money can grow.
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How much you invest and when you choose to do it are also important considerations. Many people find it easier to make small regular investments over a long period of time rather than investing large lump sums all at once. Regular investing can also smooth out market returns – your fixed monthly investment buys more shares when prices dip, and less when they rise.
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Other investors may be looking for income from their investments, which can be paid as ‘dividends’ on shares or ‘coupons’ on bonds. These payments can either be used to buy more shares or bonds, or they can be reinvested for further growth.
Investing can provide more opportunities to grow your money than simply saving in the bank, especially as savings rates have been low recently and may not keep up with inflation. However, successful investing takes time, research and realistic expectations. In addition, it is essential to consider your overall tax situation – the taxes you pay can impact on the return you get from your investments.
