Why Investing Is Not an Option—It’s a Necessity

Ignoring Your Money Costs More Than You Think

If you believe that investing is just for the wealthy or financially savvy, think again. Many people believe that investing is a choice—something you can do when you learn how to do it properly — or a luxury that only the rich can afford. In reality, by choosing not to invest your savings, you are making the decision to lose money over time. Whether you’re aware of it or not, the value of your cash and your purchasing power is constantly eroding over time. Furthermore, the opportunity cost of choosing not to invest – even by dollar cost averaging into a simple S&P 500 index – is massive. The bottom line is that, if you are not making your hard-earned money work hard for you, you’re falling behind.

The Hidden Thief: Inflation

Inflation is the gradual increase in the cost of goods and services over time. Think of it this way: if you had $100 a decade ago, it could buy you more than it can today. A cup of coffee that cost $2 now might cost $4 in ten years. That means that if your money is just sitting in a savings account earning little to no interest, its purchasing power is shrinking every year.

A real-world example of inflation’s impact is the cost of housing. In the 1970s, the median home price in the U.S. was around $25,000. Fast forward to today, and that same home could easily cost over $400,000. That’s an average annual growth rate of around 5.3%. If this trend continues, a median-priced home could cost over $6.7 million in 55 years. While wages have increased over time, they haven’t always kept pace with inflation, meaning that saving money alone wouldn’t have been enough to afford a home— a fact that younger generations are discovering today when saving for their first home.

Investing in assets that grow with inflation, is a necessity to combat the ever-rising cost of living. Investing is one of the few ways to outpace inflation and ensures that your wealth grows, rather than diminishes; and is the only idiot-proof way to secure an admirable retirement down the road.

Why Saving Alone Isn’t Enough

Many people assume that simply saving their money in a high yield savings account is enough to secure their future. While having an emergency fund is crucial, traditional savings accounts offer interest rates that barely keep up with inflation. For example, if inflation is 3% per year and your savings account earns 1% interest, you're actually losing 2% of your purchasing power annually. Investing, on the other hand, provides opportunities to grow your money through assets like mutual funds, stock indices, or real estate, which historically offer returns that outpace inflation over time.

To put this into perspective, imagine you have $10,000 in a high-yield savings account earning 1% interest per year. After 10 years, your account balance grows to $11,046. However, during that same period, inflation at 3% per year means that something that cost $10,000 today would cost $13,439 in a decade. In real terms, despite your savings increasing, your purchasing power has decreased—you can now afford less than when you started.

Investing, on the other hand, provides opportunities to grow your money through assets like stocks, real estate, or bonds, which historically offer much higher returns over time. If instead of leaving your money in a savings account, you had invested that $10,000 in an index fund earning an average 8% annual return, your balance after 10 years would be around $21,589—a significant increase that outpaces inflation and grows your wealth over time.

Investing Gives You Financial Freedom

Think of investing as planting a tree. The earlier you plant it, the stronger and bigger it grows. If you start investing now, you’re setting yourself up for financial independence—whether that means retiring comfortably, traveling the world, or simply having the freedom to choose how you spend your time. By choosing not to invest, you might find yourself working harder for longer just to maintain the same standard of living.

But investing isn’t just about an admirable retirement—it’s about creating lasting wealth. If you consistently invest throughout your life and retire at 65, you could comfortably live off 5% of the income your investments generate while still allowing your money to grow. For example, if you’ve built a $2 million portfolio, withdrawing 5% per year would provide $100,000 in annual income, all while the rest of your money continues compounding. This strategy ensures that you don’t outlive your wealth and allows you to leave a financial legacy for your loved ones.

The Cost of Waiting

Many people delay investing because they think they don’t have enough money or that they’ll start when they “know more.” But time is one of the most powerful factors in investing. The earlier you start, the more you benefit from compound growth.

Consider two people: Sarah and Jake. Sarah starts investing $5,000 per year at age 25 with an average return of 8% annually. She invests for 15 years, then stops adding money but lets her investments grow. By the time she turns 65, her portfolio has grown to over $1 million.

Jake, on the other hand, waits until he feels “ready.” He starts investing $5,000 per year at age 35, earning the same 8% return. He keeps investing until he’s 65—a full 30 years. Yet despite investing twice as long as Sarah, his portfolio only grows to around $800,000. That’s the power of starting early—even if you invest for a shorter period, time allows your money to grow exponentially.

Beyond the lost opportunity of compounding, there’s also the opportunity cost of not investing. Imagine two people: one invests $10,000 at an average annual return of 8%, while the other leaves it in a savings account earning 1%. After 30 years, the investor will have over $100,000, while the saver will have barely over $13,000. That’s a massive gap, all because one took action while the other let fear or indecision hold them back. Every year you delay, you’re essentially leaving money on the table—money that could be working for you instead of sitting idle.

You Don’t Have to Be an Expert to Start

One of the biggest myths about investing is that it’s only for those who understand complex financial markets. The truth is, anyone can start investing, and you don’t need to pick individual stocks or time the market to be successful. Simple, diversified investments like index funds allow you to grow your money without the need for significant effort or the possession of complex financial knowledge. Thanks to technology, investing is more accessible than ever, with platforms offering easy ways to get started with just a few clicks. When in doubt, dollar cost average into a US or global index fund, but please for the love of god, don’t sit back and do nothing.

 

The Bottom Line

Investing is not a luxury or an option—it’s a necessity if you want to keep up with the cost of living and build wealth over time. By avoiding it, you’re unknowingly choosing to let inflation eat away at your savings and paying a high opportunity cost for fear and ignorance. The good news? You don’t need to be rich or a financial expert to start. Dollar cost average into a low cost global or US ETF. Find a financial advisor with the heart of a teach to help you understand that your income and investing it are your most important tools. The most important thing is to take action, today! Your future self will thank you.