How Investments Can Change Your Life

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Kita Mo
Kita Mo
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Investing undoubtedly has the ability to make a positive impact in a person’s life. However, many people are unwilling to do so because of the uncertainty involved in this type of financial activity. Nevertheless, despite this risky endeavor, the benefits of investing outweigh its disadvantages, especially since some investments prove to be instrumental for people with certain financial goals.

Self Improvement during your Formative Years

When people think of the word “investing,” they often relate it to words like “broker,” “stocks” or “bonds.” However, they also often overlook the fact that the pursuit towards education and self development is also an investment in itself. Every second and cent that goes into books, tuition fees, and other educational resources is one of the best ways to lead meaningful, productive, and financially stable lives. 

According to Paula Pant, the founder of the finance blog Afford Anything, “When you invest in yourself, you improve the odds of increasing your income and that could have outsized effects that are far bigger than what you could reasonably expect from investing in the stock market or real estate.” With this perspective, it is clearer now that people who take the time to learn valuable life skills, pick up new interests, and constantly develop their existing knowledge base can achieve career success in the future. In fact, constant self improvement can even bring a lot of benefits, some of which include improving one’s earning power and ability to withstand economic inflations and recessions.

Aside from increasing one’s future income through self investment, learning to invest at an early age is also a life skill that can help people instill valuable lessons while pursuing financial freedom later in life. Today, many experienced investors encourage others to invest during their 20’s primarily because compounding interest allows a young investor to acquire larger incomes in the future. Moreover, although the investment skill certainly ensures financial benefits, learning to invest at a young age also allows early investors to develop saving, budgeting, and proper financial planning skills that they can carry throughout their life.

Financial Freedom during your Working Years

In some cases, the one thing that constantly motivates people to keep diversifying their financial portfolio is the eventual financial stability that comes from sound investments. Although some investments do not necessarily assure sufficient returns, investing in the right assets surely allow investors to enjoy more liquidity throughout their careers. Furthermore, other forms of investment also allow investors to generate passive income as they continue to build their careers or businesses, allowing them to achieve their financial goals. Investing in high-income assets and equities like stocks and property can also help combat increasing inflation rates.

Nowadays, people can begin their investing journey in many ways. The very act of  keeping money in a savings account already counts as an investment because account holders receive a small interest from the bank. Indeed, the existence of such investments just goes to show that even conservative investors can benefit from these sorts of activities by investing in bank products, mutual funds, and other relatively “safer” investments. Although these types of investments may not generate large sums, they certainly improve a person’s individual standing. Similarly, aggressive investors who wish to see higher returns can also put money in riskier investments like bonds, stocks or real estate. In this way, investors who wish to potentially earn more over a short period of time have the ability to do so. Truly, anyone interested in growing their money can do so by investing in various types of investments, proving that investing has the ability to bring people closer to financial freedom goals.

Financial Stability during Emergencies and Retirement

Finally, one of the greatest benefits that investments can bring to people is financial security during difficult times. By putting money into insurance and retirement plans, investors are not only financially prepared during emergency situations, but are also fortunate to receive the returns to their investments when they are no longer strong enough to generate more income. 

Purchasing insurance plans are certainly a good way to assure a financially stable future, especially when the investor encounters predicaments or retirement. High-income individuals can choose to invest in permanent life insurance. While they are expensive to maintain, permanent insurance plans allow policyholders to grow the plan’s cash-value components without paying taxes all while providing the investor with insurance benefits. On the other hand, an average person can also purchase term insurances, which are significantly more affordable than permanent insurance and provide high returns should it ever be needed. When a person puts money into a term insurance plan, the policyholder’s beneficiaries receive financial assistance should something unfortunate happen to him within a certain time period. Despite the fact that term insurance policyholders may not see returns to their money after the term lapses, the fees incurred is surely a small price to pay for peace of mind.

While insurance plans certainly provide investors and their families with appropriate monetary padding during untimely emergencies, it is still important to incorporate this investment into a larger retirement plan. Luckily, there is a large variety of investments that can be made to help build an effective retirement plan. According to FWD, one of the best ways to create a retirement fund in the Philippines is to invest in a pension plan which can be done through banks, insurance companies, or the Philippine’s Social Security System (SSS). Through such programs, workers can add monthly contributions to the pension plan while they are still earning income. However, after their retirement, they get the money back through a lump sum amount of their contributions or monthly allowances. 

Another way investors can improve their retirement plans is by opening a Personal Equity and Retirement Account (PERA) through various banks and insurance companies authorized by the Bangko Sentral ng Pilipinas (BSP). Similarly, workers also have the choice to invest in the SSS’s Personal Equity and Savings Option (PESO) in order to receive benefits similar to that of PERA. Through these retirement accounts, investors can put in a maximum of 100,000 pesos into the account annually. Eventually, when they turn 55, they can withdraw tax-free returns from the account. 

Aside from investing in pension plans and retirement accounts, the returns on properties, stocks, bonds, or mutual funds that investors choose to put money into are also able to alleviate any monetary strain that they can experience during difficult times or during their retirement years. This is especially true for those who decided to invest in these assets and equities early in their careers. 

Clearly, wise investments have the capacity to mitigate monetary burdens experienced by the modern man, allowing them to maximize their income and pursue other passions. Furthermore, the act of investing itself is an essential life skill that does not only bring financial freedom but also instills values that can change the way a person views money. For these reasons, starting an investing journey is certainly a choice that can change a person’s life for the better. 

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