Financial Planning Fridays #70: Why We Invest
This episode explains why Presilium invests rather than only saves: investing builds a future bigger than saving alone could reach. Using a long-term example, it shows how compounding over decades dramatically reduces what you must set aside to reach a major goal like $1 million.
This episode explains why Presilium invests rather than only saves: investing builds a future bigger than saving alone could reach. Using a long-term example, it shows how compounding over decades dramatically reduces what you must set aside to reach a major goal like $1 million.
Key takeaways
- Investing aims to build a future larger than saving alone can reach.
- Compounding over decades sharply lowers what you must set aside to hit a goal.
- Reaching $1 million has required far less by investing than by saving in cash.
- Long-term investing harnesses growth that cash savings cannot match.
Happy New Year, we are looking forward to an amazing 2024 with you! To start the year, I wanted to discuss why we invest rather than just save. We invest to build a future that is bigger and brighter for us and our families than we could have ever reached by saving alone. Please let me show you what I mean. In order to reach a $1 Million total by investing over the past 40 years you would have needed to buy $165 of a diversified stock portfolio each month. To reach $1,000,000 by purely saving, you would have needed to save $2,083 each month instead. But here is the other big difference between these 2 options. In order to save $1 Million, you just needed to place $2,083 each month under your mattress (or your local bank) like clockwork every month for 40 years. You didn’t necessarily have to worry about how the economy, world, and market will impact your savings strategy. To reach $1 Million by investing instead, you needed to invest a fraction of your savings amount – $165 to be exact- every month like clockwork and buy stocks. You could have saved 92% less every month by investing and still reached the same $1 Million. However… Terrible news reports on television and in the newspaper- buy your $165 worth of stock Wars, high inflation, recessions, buy stock Market going down or predicted to go down- buy stock For us to reach our biggest goals, we need to tune out a lot of noise and negativity. We must continue to remain optimistic that the world will continue to make progress and the market one day in the future will resume its march higher. In modern society, the noise is louder then ever, and this has become especially important! Like any journey, it is critical to have a trusted guide. At Presilium we are here for you to provide an amazing experience as we work towards reaching your goals together. Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.
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