How Investing Keeps the Economy Going
Jobs have become more and more difficult to attain in the past few years. The world has become more vigilant on its money and its uses. The working force has dwindled and some futures have become uncertain due to the economic recessions many countries are facing. Today, money has become more important than ever. It has become the fuel for the machine of our modern world.
Economics today is a circular process. Money is what sets this process in motion. There are two parts in this circular movement, the consumer and the producer. The producer gives the consumer money in the form of wages and other means. Consumers can then choose to invest the money or save it. Saving the money keeps it out of the flow and keeps it static, ready to use. Saving the money reduces the risk of losing it. However, by taking it out of the flow, less money is present in the circulation. Money is used to create goods or provide services. Now, if money was spent or invested, it is able to move back into the flow. By moving back into the flow, producers acquire more capital for their ventures, which in turn enhances the quality of life of the consumer.
It is the common working individual that makes the world keep going. There is more power in a worker than one might think. It is how the common man uses his wages that decide how the world keeps on going. Upon receiving his wages, individuals are inclined to put into savings this amount. Savings can be defined as money set aside, therefore reducing consumption and investing. Saving is amicable because it allows the common individual access to funds when it is needed. Having a large amount saved up can give a sense of accomplishment. The other option available is to use the wages for investment options.
Investing is defined as using capital, in this case the salary, to commit to an endeavor with the goal of acquiring more capital. As compared with savings, investments have a certain degree of risk to them. Investments can come in the form of stocks, bonds, or mutual funds. The risk in investing deals with the uncertainty of the financial world. Businesses can belly up, denying investors any sort of return from their invested capital. Successes, however, can outweigh the failures. A smart investment can give high, continuous returns.
To invest, one most begin with a strong foundation in the form of savings. Savings is what keeps the investor through the times when returns from endeavors aren’t doing well. Once a comfortable amount has been set aside, money should be then used for investment purposes. Investing in its purest form is a gamble that can pay off or leave a person in debt.
When we compare the two options, it can be noted how different they are from one another. Saving is a low risk/low return situation, as compared to investing which is higher risk/higher return. Savings keep the money static, but liquid and easily accessible. Investments, on the other hand, keep money in the form of bonds or shares that can’t be accessed right away. Now a question is set before us: is investing better than saving?
Investment can be considered as superior to saving because money begins to work for the person instead of the person working for the money. By investing, a person can earn more from the capital initially spent. Investments give more options to an individual as compared to saving. Saving money can only give, on average, a 1% return. Depending on the investment, returns can reach to higher than double. Investors have to be well read and well researched when deciding on which venture could give them the highest returns.
Another form of investing is starting a business. This form of investment can give much more fulfillment to a person as compared to saving. With starting a business, a person controls all aspects of it. They are their own boss and do things their way. This is considered better than saving because one feels their money working for them. As the business expands, more capital is attained and more can go directly to the owner of the business.
A point stressed earlier is perhaps the most important of the article. Investing keeps the world going. Money cannot just be printed in infinite qualities. Too much money in the market could lead to money losing its purchasing power. With the limited amount of money circulating, it is imperative that money is kept in the circular flow of economics. Invested money is used by producers and firms to bring services to people.
With the money gained from investing, they are able to bring about new products and innovations. As compared to savings, when money is left static, it works for nothings. It can be likened to sleeping. When something is sleeping, it can’t be productive. It is safe but not yielding results. Investing is money made active. If saved money is sleeping, invested money is running. When money is running, it can go to far places and reach new opportunities. One just has to keep a close eye not to let that money run too far.
In recent years investing in the capital market became simple and accessible to us the common people with the introduction of discount and online brokers. Almost any brokerage has advantages and disadvantages and the difference between them is mainly in the eyes of the investor. What this means is that each investor has its own characteristics and preferences when it comes to investing. Because of this reason it is advisable that you’ll check which brokerage matches in the best way to your investing approach. Here are several reviews of leading brokerages to assist you to choose the one that fits you best:
- Betterment review at http://bestratesin.com/betterment/638/
- eTrade review at http://bestratesin.com/etrade/669/
- TradeKing review at http://bestratesin.com/tradeking/519/
- OptionsXpress review at http://bestratesin.com/optionsxpress/774/
- Scottrade review at http://bestratesin.com/scottrade/584/
- tradeMonster review at http://bestratesin.com/trademonster/888/
- OptionsHouse review at http://bestratesin.com/optionshouse/1154/