It’s actually pretty simple: investing means putting your money to work for you. Essentially, it’s a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And that’s exactly what most of us do. There’s one big problem with this: if you want more money, you have to work more hours. However, there is a limit to how many hours a day we can work, not to mention the fact that having a bunch of money is no fun if we don’t have the leisure time to enjoy it. As moms, we’re looking for a better work-life balance so that we can spend time with our families. Clocking in long hours at the office isn’t exactly consistent with a happy family life.
Investing Puts Your Money to Work for You
You can’t create a duplicate of yourself to increase your working time, so instead, you need to send an extension of yourself – your money – to work. That way, while you are putting in hours for your employer, or even mowing your lawn, sleeping, reading the paper or playing with your kids, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job.
There are many different ways you can go about making an investment. This includes putting money into stocks, bonds or real estate or starting your own business. Each of these vehicles has positives and negatives. It doesn’t matter which method you choose for investing your money as the goal is always to put your money to work so it earns you an additional profit. This is a simple idea but it’s the most important concept for you to understand.
What Investing Is Not
Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money. Part of the confusion between investing and gambling, however, may come from the way some people use investment vehicles. For example, it could be argued that buying a stock based on a “hot tip” you heard at the water cooler is essentially the same as placing a bet at a casino.
True investing doesn’t happen without some action on your part. A “real” investor does not simply throw his or her money at any random investment, but rather commits capital only when there is a reasonable expectation of profit.
Why Bother Investing?
Obviously, everybody wants more money. It’s pretty easy to understand that people invest because they want to increase their personal freedom, sense of security and ability to afford the things they want in life.
However, investing is becoming more of a necessity. The days when everyone worked the same job for 30 years and then retired to a nice fat pension are gone. For average people, investing is not so much a helpful tool as the only way they can retire and maintain their present lifestyle. True investing doesn’t happen without some action on your part. A “real” investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and then commits capital only when there is a reasonable expectation of profit.
This article was sponsored by WN Wealth Management. At WN Wealth Management we’re committed to helping our clients work towards their retirement goals. For a no obligation, detailed retirement review, please give us a call at 604-643-0118 or [email protected]. www.wnwealth.ca.
WN Wealth Management is an advisory team at Canaccord Genuity Wealth Management, a division of Canaccord Genuity Corp., Member-Canadian Investor Protection Fund.