Top Reasons For Investing In Today's Market

Best Growth Stock – Of the many compelling reasons to invest, perhaps the most important is that we will need more money to fund our retirement because we are living longer. Today’s investments form the basis for future purchasing power. Poor investments can lead to negative returns and reduce future purchasing power.

You are faced with two portions regarding your money. You can spend it or save and invest it. According the Bureau of Economic Analysis, the personal savings of Americans are low compared with people in other developed nations. A low savings rate indicates that Americans are not accumulating enough saving to fund emergencies and sustain their standard of living during retirement.

Other than winning the lottery, you can accumulate a large retirement fund in the future without having a large amount of money at your disposal. It is easier than you think. All you need is time, money to deposit at regular intervals, and a rate of return on your investment.

You can make the following overriding conclusions:

The longer the time horizon, the greater are the effects of compounding, which reduces the initial single-sum deposit or the amounts of the series of deposits.

The higher the rate of return, the greater are the effects of compounding, which reduces the initial single-sum deposit of the amounts of the series of deposits.

The longer the time horizon and the greater the rate turn, the lower is the initial single-sum deposit or are the series of deposits.

The key to successful financial planning is to set aside more for saving and to invest it wisely using a long time horizon. The rate of return on investments should excess amount related to the intrinsic risk of the investment. Savings accounts and low-rate-of-return money-market accounts do not contribute significantly to large future accumulations of interest. The higher rates of return come from stocks, bonds, mutual funds and other investment-class assets such as real state. However, these investments are not without risk, so you should understand the types of risks associated with each of these investments before you invest.

History provides a good example of the risk of loss from investing in investment classes without an understanding of their characteristics. The record appreciation of stock market prices from 1998 to 2000 enticed many investors who had never previously invested in stocks to jump into the market. This enthusiasm of investors to invest in Internet stocks, initial public offerings (IPOs), and other risky stocks, which defied gravity in their meteoric ascent to dangerously high valuation, became apparent. The incredibly high returns earned by these stocks in relatively short periods of time prompted many investors to disregard the risk of investing in these expensive stocks.

The rapid and steep declines in the stock market that we saw at the begining of the 2000 emphasize the volatility of stock prices, which drove many investors back to the safety of their low-yielding bank accounts perform perpetuates this myopic view of investing in the stock market (jumping in when valuations are high and selling when valuations are low). Understanding the characteristics of the different types of investments can help you to determine which investments are right for your needs.