How to Get the Most out of Investing

A portfolio of quality investments can help you achieve your long-term goals and get ahead financially.

It's easy to mistakenly think of "saving" as investing. Although they often go hand-in-hand, they work in a different ways.

"Investing" is more than just building rainy-day savings

Savings can be described as putting away money for the future. This is what economists call "forgone consumption." This means that instead of spending all your money, you tip it into a savings account to be used later.

Because it allows you to buy various assets, saving is a good starting point for investing. However, investing can help you reach your personal goals by providing three important benefits.

Potential for long-term returns that are healthy

Savings are a way to save money for the future, but investing is a way to put your money to work and potentially earn more over time. Different types of investments—fixed interest, cash, property, and shares—can generate different levels (depending on the risk).

These historical returns are compared over the past 30 years. You can see . . .

While property and shares have had the highest overall returns, they have also experienced larger peaks and valleys. Investors have the opportunity to generate capital growth over the long term and ongoing income returns (such as dividends from shares or rent from properties).

Although "defensive" assets like cash and fixed income may not have produced the same level or longevity of returns as growth assets, they have had lower returns and more variable returns with smaller peaks and troughs.



Inflation can be stopped

Inflation refers to the continuous rise in the cost of living. It can have a negative impact on your financial well-being.

You can help to outpace inflation by investing in assets that not only offer higher income returns but also have the potential for capital growth.

Additional income

You can earn additional income by investing in high-quality investments.

You might use the return on your investments to provide regular income for your day-to-day life. You might also choose to reinvest the money to increase your wealth.

Savings are essential. The benefits of investing depend on how risk-averse you are.