How to invest money wisely

Perhaps you’ve heard the phrase “an idle mind is the devil’s workshop”. Now, allow me to give you a bit of a twist on that old favorite. Here goes; “idle money is…”. Ok, fine…I don’t have a catchy saying for that. But you should know how to invest money and just as I don’t know how to finish that sentence, many people don’t know how to invest their money. Worse still, many don’t know why they should invest their money. Money should never be allowed to remain idle. A safe is a safe, and banks will always offer a sense of security. Heck, you might even get something negligible by way of interest. But that doesn’t mean an ordinary savings account is the way to go.

Talk to any financial planner, and chances are he (or she) will tell you that “time is money” at some point or the other. What financial planners mean by that is that value and time have a causal connection. If I were to give you $100 today, it will not purchase the same amount of commodities as $100 two years from now. Inflation makes the value of money relative. That’s why you must grow your wealth; to stay ahead of the inflation curve and make sure your money doesn’t remain stagnant and static. And this is why you must know how to invest money.

The same principle applies when repaying a loan. If you pay it off today, it has more value. Paying a loan off later means that interest would have accrued on the loan and that you will need more money to pay off that loan. In this financial climate, banks offer very little by way of interest. Even high yield accounts are no exception to this. By investing that money you can rake in as much as 10% a year and stay ahead of inflation while growing your money. I can’t begin to tell you how many people I have met with plenty of money in their savings account. It beggars belief. Why won’t they invest in even a fixed deposit or in some debt instruments that will see their money returned?

At worst, they will get 6-7% interest on their money, more than a bank would give them. This is why time is money, and this is why the opportunity must always be taken to invest money astutely. Simply put, if you don’t invest the money correctly, it will end up losing value at least partly, at best. If you don’t you will be earning money below the rate of inflation. And that means the value of your wealth will be eroding. Take for instance an inflation rate of 5%. If you are earning just 2.5% by keeping the money in your bank (and you’re not) then you’re losing money hand over fist. Invest in equity today and ditch that anti-investing stance; it’s time to learn how to invest money wisely.