There are lots of different reasons why people invest. It can be personal, and is often tied to your wider life and financial situation. Let’s dive a little deeper into some of these reasons.
When we surveyed a group of investors who use the Sharesies platform about why they started investing, 59% said ‘to feel more financially secure’ and 48% said ‘to get a higher rate of return than my savings’. Other responses included ‘for retirement’ (32%), ‘for my child or family’s future’ (21%), and ‘for a specific goal (like a house or holiday)’ (19%).
Grow your wealth
One of the main reasons to invest is to grow your wealth. Again, the broader definition of ‘wealth’ is personal to you, but it can include things like the money in your savings account, your investments, your house (if you own one), and so on.
Investing can help grow your wealth through compound returns. With compound returns, the idea is that by leaving your money invested—or reinvesting any money your investment pays you over time—you could start to earn returns on both your initial investment and also on any returns made along the way. These returns add up over time, meaning that you could meet your goals faster than you might otherwise.
Options to live the life you choose
While making money from investing in shares is one way to grow your wealth, people don’t grow their wealth just for the sake of it; they do it to help create the kind of future they want.
For some, this could look like achieving specific goals—like buying a house, or having enough money for retirement.
For others, it could look like having more choices and greater flexibility in life. Growing your wealth and building a sturdy financial foundation can make it easier (and less risky!) to make life decisions.
For example, if you’re getting regular income from your shares, you could potentially afford to spend less time working, and more time on your hobbies or with your friends and family. You could have more flexibility over where you choose to live, greater ability to support causes you care about, the option to start a business … the list goes on!
Backing a future you believe in
When you buy shares in a company, you become the owner of a tiny slice of the company. By investing in the company for the long term, you’re not only showing that you expect and want the company to be worth more in the future—you’re also supporting a business that you believe should exist in 10 years, 20 years, or more.
So as well as growing wealth for yourself as an individual, you can use investments today to support companies you believe in and want to see exist in the world.
Creating the future you want
No matter which way you cut it, investing is about building a future that works for you. This might be personal, and could include things like retirement, owning a home, or supplementing your income. It might be for your family. It might be for charities, or to support specific companies. Either way, the more wealth you have, the more choices and control you have in the future. How you use that power is up to you.
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.