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If you can afford to save 1k a week, do you need to invest?
Is there ever a point where investing is a pointless risk? I'm saving a little under 1100 a week right now and am drawing a pension for my daily expenses. So should I invest the extra or is it even necessary and too risky?
4 Answers
- John WLv 710 years agoFavorite Answer
Ask yourself if it would be worthwhile to invest $1,934,575.82 because that's how much a $1,100 per week cashflow is worth given today's risk free rate of 3%. Granted your cash flow isn't perpetual so the actual value is certainly less than that and interest rates will likely rise but the point is that a regular cash flow is worth a lot of money.
It's certainly worth investing but you do want to be risk averse. Nature has evolved us to be risk takers because evolution doesn't care if we individually fail so long as some of the population succeeds to continue the species therefore we've evolved to take risks that almost assures our individual failure while maximizing the chances that someone in the population will succeed. If you do not take the time and trouble to analyze investment prospects, you will naturally gravitate towards excessive risk. When you look for something to invest in, look for no load, low fees and a good healthy conservative asset allocation, a fund that is 50% invested in stocks and 50% in bonds and cash equivalents will actually have a mathematically much higher probability of growth than an aggressive 100% invested in stocks fund which mathematically almost assures an eventual loss.
- 10 years ago
It depends on when you'll need the money, and how much you'll need.
Sitting in your cookie jar, or even a bank account, that money is getting less valuable over time because the interest you're getting is nowhere near inflation.
Investing can take on a big range of opportunities. You could try and preserve your wealth in something like a GIC, or go for some modest growth in something like a bank or a bond portfolio.
It's probably worth your time to talk to an professional advisor about this.
- ?Lv 610 years ago
You have to put that 1100 somewhere. Even if it's just in a demand savings account, you've made an "investing" decision there. "Investing" doesn't necessarily mean "the stock market."