Now a grown-up, you probably hold a steady job and love financial stability. Yet, you may still find yourself listening to los compadres when it comes to managing your money. We’re talking about those bills you keep under the mattress because someone once told you that money is safer there than in a bank. ¡Pero que mentira!
Let’s be honest here. You probably find investing confusing, and that's not without good reason! It is a topic that nobody explains to Latinos, but we want to change that. So, here’s what we think you should know about investing.
Investing helps you keep up with that thing called inflation.
Did you know that for every dollar sitting still in your savings account today, you are losing about two percent of its value, each year? You can blame this on annual inflation. Investing your savings instead of abandoning them in a savings account* can help you keep up with inflation rates. Even better, you’ll have the opportunity to grow it as long as you keep it invested over time.
* Putting money in a savings account would only earn (on average at major banks) about 0.01% per year, which is not enough to keep up with a 2% annual average inflation.
Investing can help you reach important goals a little faster.
This is not about that jar in the kitchen for ahorros. We’re talking about the important goals you want to achieve in the next 2 or more years, like a dream vacation, or something more in the long run like a kid’s college education or your retirement. The rule of thumb is: if you're planning for a goal that is at least one year out, than invest that money. Why? Because investing is all about growing money.
Investing can help you save on taxes. Really.
You already know that investing is a smart habit, but did you know that it can also help you reduce your taxable income? IRA accounts - which let you invest towards things like your retirement or sometimes even the down payment of your first home - are tax-deductible.
There are two great things about contributing to an IRA. First, you can use direct deposit to fund this account. Second, you can make contributions all the way until the tax filing
deadline, which is typically April 15. An annual contribution limit does apply, but while your money is invested in an IRA, you pay no tax on earnings.
So, can you get into the habit of investing? Yes, and you should as soon as possible. Learn more about how you can start with just five bucks a week at Finhabits.com.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by Finhabits to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Finhabits, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.