Published in  
Career & finance
   on  
September 12, 2020
 edited by  
Janet Escobar

Why you Need to Start Investing your Money

Inflation is the overall increase of consumer goods prices and fall in the purchasing value of money. This means that every year that your money sits around in a savings account it’s actually losing purchasing power because the cost of living is increasing. By investing, you are maintaining your money’s value against inflation.

I’m here to talk to you about money. Yes, the thing that seems to make our world go round yet we find most difficult to discuss, moneeeeeeey. (insert Cardi B voice “Making money moves”)
Growing up, everything I knew about money and finance came from the people around me. I am from one of the poorest boroughs in London, Newham. Here we are taught to view the financial world like a mega black box that only white middle-class men have the power to understand. Only once I started working in the financial world myself, I realized how ignorant I had been and how I barely knew the basics at all (disclaimer: still don’t know everything, the art of learning is a journey people).

Parents rely on teachers to teach their children the most important lessons, and teachers rely on the curriculum to guide them on what they should teach. In the midst of this, we are not taught crucial lessons such as how borrowing from a bank really works, or how interest rates affect our everyday life. To anyone who disagrees that finance should not be taught in school, I ask you this one question, how is learning how to cut wood in design and technology more important than learning how to grow your money?

The good news is, the coded language that is finance can be self-taught, and everyone can understand if they want to.

No items found.

We are currently living in very turbulent and volatile times. This has also been mirrored in the stock market. Which explicitly means that the day to day movements of stocks is much larger than on a typical day. However, volatility isn’t necessarily a bad thing; some people rely on these stormy times to make their most gains. But, it is crucial to understand that it does impact ordinary people like you and me. For instance, many employers offer a pension plan, which partly invests in stocks. These movements will determine what value your pension holds, so whether you follow the financial markets or not, it discreetly impacts you.


What exactly is the stock market?

The stock market, in simple terms, is where investors connect to buy and sell investments, most commonly securities such as stocks. Stocks are shares of ownership in a public company, i.e., Apple.

The value of the share relates to the company’s worth behind it, and the value can always increase or decrease. For example, Apple releasing a new iPhone will impact Apple’s growth, which, as a result, will impact the value of its shares. An increase in the value of the share is great for investors, a share that may be worth £38 could now be worth £50. So when the investor sells her shares she will have a return of £12. But of course, the value of a company can also decrease and the investor could make a loss.


What are indices on the stock market?

The value of the UK’s top 100 companies is summarized into what’s known as the FTSEn100 share index. The FTSE100 shows how well or poorly these companies are performing, thereby reflecting how the economy of the UK is performing at that present time. Other countries also have their own indices, for example, the S&P500 is a US index, and the DAX belongs to Germany. Together these make up the global financial market place.

Why is investing important?

Inflation and compound interest. Inflation is the overall increase of consumer goods prices and fall in the purchasing value of money. This means that every year that your money sits around in a savings account it’s actually losing purchasing power because the cost of living is increasing. By investing, you are maintaining your money’s value against inflation.

Compound interest is the addition of interest to the initial sum of a loan or deposit, or in other words interest earned on the interest. So when you invest your money into the stock market, for instance, you will earn interest on your deposit. This interest will be reinvested and additional interest will be earned. This is why if you ever take out a loan, you will definitely have to pay back a lot more money than you initially borrowed. For examples and further information visit https://www.thebalance.com/compound-interest-4061154  

The earlier you invest your money the faster compound interest can start working, and the more money you will have made. These finance conversations are endless because there is a mountain of information to learn, more will follow if people find them helpful.

Article written by Elona Bucaj and edited by Janet Escobar.

  • Our Latest
  • Instagram Posts
3,7M followers
@THEFEMALEHUSTLERS

The Female Hustlers

The Female Hustlers

100