The main reason to invest money is to make more money through investments than would have been made keeping the money in a traditional savings account. Invest money for retirement or college funds with advice from a financial planner in this free video on investments.
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Hi there, I'm Cathy Pareto, the founder of Cathy Pareto & Associates, certified financial planner here in Miami, Florida. In this clip we're going to be talking about reasons to invest money. Now money is a limited or scarce resource probably for most of us, right? There's limited funds coming in and there's X amount of expenses going out. You can do three things with your money. You can spend it, you can save it and you can invest it. Why would you want to invest it? Well let's for starters identify that if you just put it in a savings account, you're probably not going to get a very high rate of return because usually when something is risk free or safe, you don't really get compensated a lot. Whereas if you invest it, if you're taking on some amount of risk, you're going to be compensated for that risk over the long haul. And if you're thinking about investing your money, it's typically for goals, whether it's college funding for your children or retirement planning for yourself, which is probably the number one reason to invest. Retirement requires a lot of capital and unless you have that capital growing for you at a higher expected rate of return, you're going to have to save more money if you want to be able to survive in retirement. So one of the main reasons to save or invest rather, is to reach those goals and try to attain higher rates of return, otherwise you're going to have to step up your level of savings because you're not going to earn as much in a risk free savings account. So that's just a couple of reasons why you might want to invest and this has been Cathy Pareto in Miami, Florida.