It’s estimated that the average American has anywhere from $6,000 to $21,000 in retirement savings.
The median household income is somewhere around $60,000. The full retirement age is 65 years old, and life expectancy for the average American is around 80 years.
In order to maintain one’s standard of living in that equation, they would need $900,000 in retirement savings to support them through old age. That sum isn’t difficult to achieve through different types of investing, but many people shy away from investments.
We’ll look at the pros and cons of investing today, giving you some perspective on how it’s done and what to expect. Let’s get started.
The Advantages of Investing
The clear advantage of investing is that you can get your money to work for you rather than having to work for your money. The power of compound interest does wonders over a long period of time, turning small principal investments into millions of dollars under the right circumstances.
If you have a savvy investment manager, you can get a very high rate of return on your investments. Take a look at https://www.mortonbrownfw.com/financial-risk-management/ to explore some professional options.
Retirement Security
Aside from gathering significant wealth with a small amount of effort, investing gives you the opportunity to retire comfortably.
Working into old age is difficult, especially considering that older people are at higher risk for injury and illness. That contributes to high medical bills, difficulty getting back to work, and general discomfort.
Alternatively, a healthy retirement account lets individuals stop working and enjoy their golden years in peace. If someone is fortunate enough to make wise investments, they can even retire before the full retirement age of 65.
There’s no minimum age of retirement if an individual has enough money to sustain themselves.
The Risks of Investing
The downside to investing is that there could be significant financial risk involved. Investment risk is unavoidable, but you can avoid serious risk if you choose to.
By that, we mean that there are “safe” stocks and investment options that hold a very marginal amount of risk. The odds of those investments failing you are extremely small, although the rewards are smaller.
Low-risk investments yield small, yet steady returns. Over a period of decades, though, those are the investments that can lead you to retirement.
On the other side of things, high-risk investments pose a serious reward if they come through. You can double, triple, or quadruple your money in a small amount of time.
If you put all of your eggs in one basket, though, you’re likely to find that you lose a significant portion of your money.
Want to Learn More About The Pros and Cons of Investing?
We hope our look at the pros and cons of investing was useful to you. There’s more to learn about how investing works, though. We’re here to help with more resources.
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