Why do people invest?

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RG2015
RG2015 Posts: 5,907 Forumite
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in Savings & investments
Following on from my earlier post on why people save, I am now asking why do people invest?

I have some spare cash and I have this in a series of bank accounts. Until recently I was ahead of inflation but now I am not even keeping up with inflation. Therefore, I am asking myself should I invest some of my cash to make up the shortfall. Alternatively, should my incentive to invest be making a profit?

As I am retired and mortgage free with an adequate pension, my goals are quite different to many others on MSE. In truth, I am not specifically looking for advice but perhaps inspiration.

To this end, I am looking to see what motivates people to invest.
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  • pip895
    pip895 Posts: 1,178 Forumite
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    To make enough money to live off in retirement.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    RG2015 wrote: »
    Until recently I was ahead of inflation but now I am not even keeping up with inflation.

    To this end, I am looking to see what motivates people to invest.

    Therein lies your answer. After many years, the compound effects of inflation erodes the value of cash deposits.
  • Prism
    Prism Posts: 3,803 Forumite
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    To save enough money for my retirement, to help with my kids early adult years (car, first house, uni costs etc), and mainly because I have spare money and investing seems the best way of making the most of it.
  • RG2015
    RG2015 Posts: 5,907 Forumite
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    edited 26 November 2017 at 2:09PM
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    pip895 wrote: »
    To make enough money to live off in retirement.
    Yes, absolutely and I was so fortunate to sign up to an excellent company pension scheme in 1980.
    Thrugelmir wrote: »
    Therein lies your answer. After many years, the compound effects of inflation erodes the value of cash deposits.
    Very true, but many investors would be disappointed to only match inflation.
  • darkidoe
    darkidoe Posts: 1,125 Forumite
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    I think the average sentiment that I got off some friends and family is if they can at least have the security of getting back their original amount they saved/invested after a few years, they are happy and any extra is a bonus. However, most people don't recognize that that is perhaps below average perfomance and inflation may be eroding value of their savings/investment. It is much more informative to compare with the performance of indexes and also to account for inflation but I admit, that can be too technical for the average person.

    Save 12K in 2020 # 38 £0/£20,000
  • Stubod
    Stubod Posts: 2,169 Forumite
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    edited 26 November 2017 at 2:46PM
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    My preference would be to not invest..(very risk averse, but accept that inflation is also a risk).

    In theory with what we have saved and pensions to come we just have "enough" to last, (even assuming inflation is double interest rates).

    In the past I always uses to go for the highest savings rates I could find and for most years these normally bettered inflation. However over the last few years we have transferred our cash ISA'a (which were down to silly rates), into SS ISA's with "cautious / low risk" attitude. Mainly just because savings rates are so low at the mo.

    If interest rates go back up (unlikely I know), and assuming they are still better than inflation I would probably return to savings....but that's just me...
    .."It's everybody's fault but mine...."
  • adindas
    adindas Posts: 6,814 Forumite
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    RG2015 wrote: »
    Following on from my earlier post on why people save, I am now asking why do people invest?

    I have some spare cash and I have this in a series of bank accounts. Until recently I was ahead of inflation but now I am not even keeping up with inflation. Therefore, I am asking myself should I invest some of my cash to make up the shortfall. Alternatively, should my incentive to invest be making a profit?

    As I am retired and mortgage free with an adequate pension, my goals are quite different to many others on MSE. In truth, I am not specifically looking for advice but perhaps inspiration.

    To this end, I am looking to see what motivates people to invest.

    Because if it is done correctly, it has been statistically proven for many years that the return from long term investment is better then saving.
  • BLB53
    BLB53 Posts: 1,583 Forumite
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    Easy...you get a much better return from investments compared to cash so long as you have a decent strategy and have the temperament to stick with it when the markets head south.

    Investing in equities is like being the part owner of lots of different companies and we all know who gets the lions share of company profits...and its not the workers.
  • steampowered
    steampowered Posts: 6,176 Forumite
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    Keeping your money in cash is not simple a matter of being lower risk.

    It is a different kind of risk. You are accepting greater inflation risk (i.e. inflation eroding the value of your savings) and shortfall risk (i.e. your pot being insufficient to fund your retirement) than if you invested.

    Investments are more volatile (i.e. they bounce up and down), yes, but if you are investing for the long term that should not be a concern.
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
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    BLB53 wrote: »
    Investing in equities is like being the part owner of lots of different companies and we all know who gets the lions share of company profits...and its not the workers.
    That could be because the workers get paid before any profit arises. Profit is what is left after all expenses, including wages have been paid. Sometimes there is no profit to pay the owners anything.
    Eco Miser
    Saving money for well over half a century
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