Many are under the false assumption that if you save for the future then you can’t have fun in the present. A common question is “why should I bother investing?” or some variation. Some reasons are: 1) Tax advantages 2) Compounding growth 3) For your future self 4) You can have it both ways.

TRANSCRIPT:

Hi again, Greg Vojtanek here of Fade In Financial. By the way, for other free educational materials, visit fadeinfinancial.com. So today I'm going to answer that question "Why should I invest?” I get that for a few reasons, the main one being “hey I should just enjoy myself now, right? Why put it away for something I may not be around for?”

There are a thousand reasons why I think you should invest. I'm going to focus on just four of them today. When I say “invest” I don't necessarily mean real estate or other types of alternative investments. I'm really going to focus today on retirement accounts. You've heard of Solo 401(k)s, 401(k) plans, maybe a SEP IRA, traditional IRA, Roth IRA, maybe a 457, 403(b). Those are the types of accounts I'm referring to.

The first one: tax advantages. Yes, the government, in a way, rewards us for saving our money for the future and investing it. Now the tax advantages could come a couple different ways. One being you get a tax deduction when you contribute to these accounts, like a 401(k) for example. If you have your own S Corp. or LLC you could open up, perhaps, a SEP IRA or solo 401(k). Like in a traditional IRA, when you contribute to these, you get a tax deduction. If you have a business, you could also get a further business deduction when you contribute into those as well.

Another tax advantage is that it's a growing tax-deferred. So if you're getting dividends and capital gains and it's growing that account, it is tax-deferred. You're not getting taxed on it until you withdraw that money. If you have a Roth IRA, you're already taxed on it. Then when you take that money out, again it's growing tax-free, you take it out also tax-free. You will not get taxed on it if it's a Roth and you take it out. Now there are exceptions to that rule, so make sure you seek a professional before making any of these decisions.

Now the next one is compounding. For those who don't know about compounding here's a quick example. If you had $10,000 to invest and you made 10% on that money that's $1000. Now that equals $11,000. Then if that $11,000 makes 10%, that's more than when it was $10,000. Then you add that to the pile. Then you add the next year to the pile. Compounding, compounding, compounding. That's how that works. Then if you combine that with an account that's tax-free or tax-deferred, even better because you're not being taxed on it until later.

The third reason: it's not for you right now. It's for future you. If you've ever thought "I really wish I would have started investing X amount of years ago. If only I had put money away when I was whatever age.” Well, guess what? That time is now. Look ahead 20 years from now. You don't want to say "I really wish I would have started investing 20 years ago.” Start today.

Also, you don't want to have to think about the income later in life, because you started thinking about it now. It can be a huge burden lifted off your shoulders later in life.

And the last reason: you can have it all. You can still have a great life now. You can go on vacations. You can give to charities or family members. You can buy a home. And you can invest. With the proper planning, you can still have it all.

I hope that was helpful. Again, please go to fadeinfinancial.com for more free information. Thank you very much for watching.