Western Capital Trading :: Shares

Why Invest?
Saving versus investing

We all know that putting money aside for those unexpected events that life throws our way is a good idea - when it does happen you'll need to get your hands on some ready cash. But where and how you save for the future depends on your overall aims.

Taking a longer-term view

Money you've put aside for short-term needs has to be accessible and safe – you want to be sure it's still there when you need it. But the price you pay for that accessibility and certainty can be a lower return. Cash savings will earn interest, but at the same time the buying power of your money can be eroded by inflation.

Investing your money on the other hand means a longer-term commitment in exchange for potentially greater returns. True those returns aren't guaranteed, and you'll be taking a higher degree of risk that you'll get back what you originally invested, but by investing in the stock market you can see the capital value of your money grow AND get income by way of dividends. Reinvest that income and you could see your money grow faster still.

Not all stock market investments carry the same degree of risk. Typically, the riskier it is, the greater the potential reward. So you can manage your risk by selecting lower-risk investments. And you can spread your risk by investing in a range of different investment types, or by investing alongside others, pooling your money to be managed by professional fund mangers. You can read more about the different types of investments available, and their different characteristics in the Choosing investments section.

A good place to start is with the guides in the Research & Education section: they'll help aid your development from novice to seasoned investor.

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