It is a well-known fact that investments and risks go hand in hand. Regardless of its nature, every possible investment carries an element of risk. Yes, there are times when this risk can prevent people from making an investment. You may not want to expose yourself to the risk associated with a specific investment, so you decide to steer clear of it. However, have you ever thought that not investing can actually have greater risks than investing? It may not make sense to you right away, but the fact is that there are a number of pitfalls of not investing. Shay Benhamou has shed some light on the common ones that you can find below:
Not able to achieve life goals
The primary reason why people even contemplate investing is because they have some financial goals in life that they wish to achieve. Whether they are short, medium or long-term goals, people want to invest and build wealth for accomplishing them. But, Shay Benhamou states that not investing means that you will fail to achieve the said goals. Regardless of what it may be, you have to have a sum of money for doing something and prudent investments is how you go about making this money. Hence, you have to invest if you want to realize your life goals and achieve them easily.
Letting inflation erode the value of money
The biggest threat to wealth creation is none other than inflation because its effect on money is de-compounding. This simply means that it can erode the value of money over time. So, how do you ensure that doesn’t happen? According to Shay Benhamou, investing in inflation-beating instruments like equities is the best way to go about it. Inflation will end up depleting your savings because the purchasing power of money falls, but investing in mutual funds or stocks, can help you in countering it.
Preventing your money from growing
You could keep your money safe with you and not invest in anywhere, but Shay Benhamou says that doing so will prevent your money from growing. Investing your money in a solid vehicle means that it will be able to generate returns and your savings will grow over time. This can come in handy in emergency situations because you will have more money than what you did before investing. It is a great way of enhancing your riches, which ultimately results in you achieving your financial goals.
Not enjoying tax benefits
An important fact that investors should know is that putting their money somewhere can also make them eligible for tax benefits. Shay Benhamou says that while you may be required to pay taxes on the additional income you make through your investments, it can also make you eligible for a number of exemptions. This can actually help you in reducing your liability in the long term, which can bring down your expenses.
Additional source of income
Who doesn’t want a good lifestyle? Of course, everyone wants to live a good life, but managing all your expenses is easier said than done. You will need a lot of money to make this happen and not everyone gets paid so much. Saving money and investing it can provide you with an additional source of income. Shay Benhamou says that not only will you be able to use your returns for emergencies, but can also be used for upgrading your lifestyle. The returns do depend on the type of investment you make, but the profits can certainly be helpful. They can also be used for securing your future and can be extremely helpful in unforeseen situations.
If you are on the fence about investing your hard-earned money somewhere because of the risk of losing it, then Shay Benhamou recommends that you assess the inherent risks of not investing to understand why this may not be a good decision.