Money Smart Athlete Blog

Why a Money Smart Athlete should consider investing

Your first priority in order to take control of your financial life is to set up a financial freedom plan which as we have explained in a previous blog article should be based on your values, dreams and goals. The majority of goals you set in your plan will need at least some amount of money to be achieved and you can earn this money by working for it or by making your money work for you.

Savings are an important part of your plan and you should have your emergency money saved in the safest possible way with low risk such as bank accounts. But when you put your money in a bank account instead of investing it, your money is only resting, it doesn’t work for you and there is no possibility to have more money in the future than what you save

By investing your money, you are getting your money to generate more money and over the long term, you benefit from higher potential returns than you get from a savings account. With a proper investment strategy, which you can set up with the help of your financial advisors, you can use your money to build up your assets and use them toward the major financial goals you have set, such as buying your dream home, buying your dream car, starting your own business, or paying for your children’s education.

Investing nowadays is not simple and requires investors to be constantly educated and informed on the variety and complexity of investment vehicles available. If you choose for example to invest your savings on the financial markets, you have the opportunity to benefit when companies perform well or if you choose to buy and sell real estate you can benefit from them increasing in value. The investment opportunities are almost endless.

Before you start investing it is critical to understand the relationship between risk and return. There are different types of investments, each associated with a level of risk and return. Risk is the chance that the return from an investment will be different than the one expected.  Low risk is associated with low potential returns while high risk is associated with high potential returns. Investing, is making a trade-off, by giving up security, believing that your money will grow faster in the long run. You can choose the level of risk you feel comfortable taking in exchange for a chance at higher returns.

Except for the most important reason to invest, which as we stated is to make your money work for you by generating more money, you can gain even more by investing:

  • You can protect your money against the possibility of negative interest rates which can decrease instead of increase the balance of your precious saving accounts.
  • Investing helps you keep pace with inflation, by growing your money fast enough to at least keep up with rising prices caused by inflation.
  • If you decide to invest money in a new or current business you support the creation of new jobs and new products. Except from enjoying the process of creating and establishing a new business you can get a strong return on your investment.
  • Investing can help you reduce your taxable income. There are investments such as retirement funds which are exempt from taxation. Also if you generate a loss from an investment, you may be able to apply that loss against any gains from other investments, which lowers the amount of your taxable income.

Whatever goals you have set in your financial freedom plan, educating your children or retiring on a yacht in the Greek Islands, investing is the key to getting you where you want to be. You can contact us at [email protected] for more help on how you can make your money work for you.

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