Forty-six percent of Americans do not own any stocks or stock-related investments, such as mutual funds, according to a recent Gallup poll. Why are investments important?
Individuals may cite different reasons for not investing, but with important long-term financial goals, such as retirement, in the balance, the reasons may not be good enough.
Why Investments Are Important:
1. Make Money on your Money
You might not have a hundred million dollars to invest, but that doesn’t mean your money can’t earn interest or dividends. Share in the same opportunities available to others! You work hard for your money; make sure your money works hard for you.
2. Achieve Self-Determination and Independence
When you build wealth, you may be in a better position to pursue the lifestyle you want. Your life can become one of possibilities rather than one of limitations.
3. Leave a Legacy to Your Heirs
The wealth you pass to the next generation can have a profound impact on your heirs, providing educational opportunities, the capital to start a business, or financial support to your grandchildren.
4. Support Causes Important to You
Wealth can be an important tool for impacting the world in a meaningful way. So whether your passion is the environment, the arts, or human welfare, you can use your wealth to affect positive changes in your community or around the world.
Why Investments Are Important: A Framework
The decision to invest is an acknowledgement that it comes with certain risks. Not all investments will do well and some may lose money. However, without risk, there would be no opportunity to potentially earn the higher returns that can help you grow your wealth.
To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal.
Because investing can be complicated, consider working with a financial professional to help guide you on your wealth-building journey.
Also, for investments and how contributions relate to taxes, check out our 2024 tax brackets quick reference guide.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.
