What is investing?

Let’s first look at what the definition of investing is.

“In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.” Investopedia

You can also invest in your education, your career, your health, your relationships, etc. In monetary terms investing is simply putting your money to work for you.   Most of us were taught that to earn money or an income we had to work for it. We trade hours of our time for a financial reward. The challenge with this is that we can only work so many hours in a day and we of course want some time left to spend time with our families and friends and have some fun. Making your money work for you maximises your earning potential whether or not you receive a pay rise, decide to work overtime or look for a higher-paying job.

Most people cannot duplicate themselves to increase their working time unless they start a business which has other people working for them. If that is not for you then the way to get ahead financially is to put aside an amount of money from you income to invest so that over time it grows into something larger. This larger pot of money can provide you an income in the future that you don’t have to trade hours for money for.

A really great example of this is KiwiSaver. A percentage of your income each paycheck, plus a contribution from your employer and from the government goes into an investment that over times grows in value. If you start contributing to KiwiSaver when you are young by the time you get to 65, which is the current age you can get access to it, you will have a good sum of money which will provide you an income. If you are closer to retirement age or you believe KiwiSaver will not provide enough income for you, then you need to consider putting more aside to invest

There are many different ways you can go about making an investment. This includes putting money into term deposits, bonds, shares, property or starting your own business. It doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit.

Lisa Dudson is a bestselling author and Registered Financial Advisor with over 15 years industry experience. Lisa offers financial advice through www.acumen.co.nz and co-owns the New Zealand's leading property investment agency www.ifindproperty.co.nz