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Making your money grow. Investing. Introduction. When you have money, you can choose whether to save it, spend it, share it ‒ or invest it. Saving money involves putting it aside to use later. Investing money involves spending money in order to make more money. Investing.
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Making your money grow Investing
Introduction When you have money, you can choose whether to save it, spend it, share it ‒ or invest it. Saving money involves putting it aside to use later. Investing money involves spending money in order to make more money.
Investing Life is expensive and sometimes you need a lot of money to do the things you want. For example, it costs a lot of money to: • Pay for an education • Buy a home • Look after a family • Prepare for when you stop working.
Some of the things you spend your money on only last for a short time. But other things, like paying for an education, can help you throughout your life. In this way, paying for an education is a type of investment; it costs a lot at the time, but it can help you to earn more money later on.
Investing Investing is important because your savings may not buy as much in 50 years as they can buy today. Inflation makes the cost of things go up over time. For example, in the 1970s, 2 litres of milk cost about 13 cents. Today, you’ll probably pay at least $4 for the same amount. You can’t stop the cost of things going up, but by making investments you can make sure that your savings keep growing.
Investing There are lots of different ways to invest money. Some common examples are: • Opening a savings account. When you have a savings account, you earn interest from the bank. • Buying bonds. When you buy bonds, you are lending money to the government or to a company. They pay you interest for the loan. • Buying a house. The value of a house usually goes up over time, so when you sell it, you can make lots of money. • Buying shares in a company. When you buy shares, you own a small part of a business or enterprise. If the business or enterprise makes money, you get some of it.
Joining KiwiSaver is another type of investment. When you join KiwiSaver, part of your pay goes into a special fund. People who know a lot about investing invest your money for you. Lots of New Zealanders are using KiwiSaver to save for when they retire.
Investing Investments often involve some risk. A risk is the chance of something bad happening. When it comes to investing, risk is the chance that you lose money instead of making money.
Investing Low-risk investments tend to pay lower returns. (A “return” is the amount of money you make on an investment.) Investments that make a lot of money often come with high levels of risk.
One way to reduce risk is to have lots of small investments rather than just one large investment. That way it doesn’t matter if some of your investments lose money. Hopefully your other investments will make up for it.
Investing Investing money is an important way to prepare for your future. There are lots of experts who can give you the advice you need, and you’re never too young to start. It’s time to get growing!
