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Question:


Is investing a must for long-term financial success?
-NYCRita


Answer:


Unless you’re independently wealthy or have a rich, very old relative who’s fond of you, then yes, investing is almost certainly required to reach your financial goals. With short-term interest rates close to zero and expected to stay there at least for several years, and with long-term rates not much higher, parking your money in assets with little or no risk of loss probably won’t get you where you want to go.

But you may not need to invest as much as you think or take on all that much risk in an attempt to earn outsized returns. One idea that is gaining favor is that we can have more later in life and be happier all through our lives by living smaller and more frugally. A family of four eating out one time fewer each month can probably save $1,000 a year or more. Cut out one or two premium-TV channels and a fancy outfit or two and you might save another $1,000. Over the years it adds up.


So you do have options if you want to invest less, but what’s wrong with investing? The stock and bond markets have been making people nervous, but they’ve done quite well in the last few years, and over the very long term a well diversified portfolio of stocks and bonds almost always produces returns that not only are positive but easily beat the rate of inflation.
-Conrad de Aenlle



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