Importance of Investing since Young
After the discussion about emergency fund and the instrument that is most suitable to keep emergency fund, which is money market Mutual Fund in the previous articles, this time we will be discussing about the importance of investing. Curious? Let’s read through! 😊
Saving vs Investing
It is important for us to understand the difference between saving and investing. Although both terms have similarity that is to set aside some amount of fund, however saving and investing have different meanings. Based on Indonesian dictionary (Kamus Besar Bahasa Indonesia), the word save is defined as ‘setting aside money (in piggy bank, bank and others)’, while the word invest is defined as ‘putting money or capital in a certain company or project with the purposes to earn capital gain’. In addition, saving is normally done for short term period while investing is for longer period. In terms of risk and return, saving has lower risk and return if compared to investing with chance of higher risk and higher return.
In simple, savings is an activity of setting aside money to fulfil short term financial needs (daily needs) while investing is one of the ways to reach financial goals or dreams by earning capital gains or returns from the amount of fund you currently have.
When Should You Start Investing?
There are different stages of life: university, work and marriage, building your carrier or entrepreneur, raising child, being established and pension at the end. So, in which stage of life should you start investing? The answer is you could start investing in all stages of life, however it is advisable that it is better if you could start at the soonest – the sooner the better.
‘I have not started working, so I have no income. But I want to start investing. Is it possible?’ Do you, Moduers who are still in university and not working yet, have this question? The answer to this question is definitely YES YOU CAN. 😊 You could start investing by setting aside your allowance that perhaps is used for buying your daily coffee as investing in Mutual Fund can be started from as low as Rp 10 thousand only! Extremely affordable.
Benefits from Investing
Start implementing the investing habit since young is important. However, you need to have self-discipline to be able to do this. Why investing since young is important?
Investing gives you variety of advantages, such as it could help you in:
- Preparing fund to reach your financial goals, such as purchasing a house, continuing your education or fulfilling your dreams of travelling around the world.
- Reaching financial freedom. As discussed in the previous article about financial freedom, investing could give you passive income so that it will help you fulfill your daily needs and lifestyle in the future without the need for you to work.
- Pension fund preparation in the future. As mentioned above in regard to life stages, pension is the last stage of life. In the pension stage, you will stop working and will not have fixed income anymore. By start investing as early as possible, you will be able to get your pension fund ready early as well.
So, what are you waiting for? In whichever stage of life you are in, let’s start investing!