The Rationale and Relevance of Investing your Money

The Importance of Investing Your Money for a Lifetime of Success

Esbelda Santana

State University

SCOM 1000: Human Communication

Professor

June 28, 2024

The topic I chose is "The Importance of Investing Your Money for a Lifetime of Success”. It will engage and educate the audience by highlighting investment strategies. It will show how investing not only secures financial stability but also empowers individuals to achieve their goals, such as retirement, education, and wealth generation. By showing real-life success stories, this speech will show the impact of investment on personal and economic growth, motivating to consider how they can use these skills and knowledge mints that they gain on their day-to-day life.

Introduction

Attention Getter: imagine yourself near the beach or traveling the world these are all the things you can do in your life when you don’t have to worry about your financial future, where your money works for you, and where you can accomplish your dreams without financial stress.

Motivation: unfortunately, many people have financial struggles that they're having to deal with later in life because they miss out on opportunities to grow their wealth. Understanding the importance of investing can change that.

Thesis: How you may say by Investing your money wisely is important for achieving long-term financial success and stability.

Preview: In this speech, I will be discussing the benefits of investing, different investment strategies, and real-life examples of successful investments.

Body

I. Investing yields fundamental benefits for you and your family.

A. It secures your financial stability, which ensures you have sufficient money to cover your costs and save for future use.

1. Accumulating wealth. By allocating part of your income to investments, you open avenues to benefit from compound interest, which leads to exponential growth in your investment, making you financially secure in the long-run (Lafayette Federal Credit Union, 2024).

2. Beating Inflation. Inflation reduces money’s purchasing power over time (Lafayette Federal Credit Union, 2024). Investment provides a means to preserve your money’s value by shielding it from the effects of inflation (Lafayette Federal Credit Union, 2024). Instead of holding on to cash that loses value to inflation, you could invest in assets whose returns outpace the inflation rate, ensuring they to continue to earn interest and build your wealth over time.

B. Investment empowers you to achieve your financial and personal goals.

1. When you invest in assets such as government bonds, your investment earns interest annually, which is paid back to you in addition to the principal amount at the expiry of the bond. This allows you to make plans for and finance your personal and financial goals with certainty.

Transition: Now that we understand how investment benefits you at the individual level, we can move on to see the various strategies that you could use to invest your income.

II. As an investor, you have two main strategies of investing your money.

A.You could let your money earn money.

1. You could lend out your money to the government by purchasing treasury, and, in return, the government pays you for using your money (US Securities and Exchange Commission, n.d). In this case, your money earns interest and when you finally get it back, you get not only the principal amount, but the accumulated interest as well.

2. You could also buy dividend-paying stocks in a company, in which case you would be entitled to regular dividends as a shareholder (US Securities and Exchange Commission, n.d.). In this case, your invested money earns an income for itself, and dividends from the company’s earnings become a regular source of indirect income for you.

B. You could also put your money in an asset that appreciates over time and dispose it off later at a higher price.

1. For instance, you could buy land in a promising area and as more people or businesses move into the area, the land continues to gain value. Five or ten years later if you need you money back, you could sell the land at the prevailing market value, in which case you would receive way more for the land than you paid for it (US Securities and Exchange Commission, n.d).

Transition: There are different cases of individuals who have grown to be billionaires and built unimaginable fortunes from simple investment decisions.

III. Real-Life Success Stories

A. The case of Stewert Horejsi. Stewart Horejsi ranks 991 in the 2024 Forbes List of Global Billionaires, with an estimated net worth of $3.4 billion (Forbes, 2024). Upon his graduation in 1962, Stewart returned to his Salinas hometown in Kansas to manage his family’s welding-supply businesses. In search of knowledge on how to manage his dwindling finances better, he bought and read the book ‘Money Masters’ by John Trail. Inspired by what he had read, he decided to act by using part of his company’s income to buy 40 shares of Berkshire Hathaway stock at a cost of $265 per share (Forbes, 2024). Several months later, he invested more, increasing his shareholding to 300 stocks. He continued to invest in more stocks at Berkshire yearly, hitting 5,800 stocks at his peak. This investment decision transformed his life. Today, the Berkshire stock (BRK.A) is ranked as a class A stock worth $353,000 (Forbes, 2024). He became a billionaire just by investing in a single stock and holding on to it crucially with a long-term view.

B. Warren Buffet (net worth of $123billion), one of the world’s richest people in 2024 also made his wealth from investing in stocks. Warren purchased his first stock when he was 11 – three shares of Cities Service selling at $38 a share (Fiorillo & Button, 2024). By the time he was completing high school, he had established a business worth $1,200 from his savings and interests earned from stocks held in various companies. His company thrived mostly through investing in stocks in other companies. For instance, he first invested in Coca Cola in 1988 and several years later, he owned 7 percent of the company through shares worth over $1billion (Fiorillo & Button, 2024). It is estimated that the bulk of Warren’s net worth today comes from his shareholdings and asset portfolio, with estimates showing that he makes approximately $37 million daily (Fiorillo & Button, 2024).