Why is investment spending important - wdk

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What about you? Where do you enjoy spending your money? However, I am still contributing to my k at work, an contributing to my Employee Stock Purchase Plan to buy company stock at a discount and am paying my mortgage each month. Your email address will not be published. Notify me of follow-up comments by email. Notify me of new posts by email.

This site uses Akismet to reduce spam. Learn how your comment data is processed. Personal Finances are certainly top of mind for many of us. Any investment is better than none, but you need to choose carefully. Generally, the higher a return offered by an investment, the greater the risk of losing your money.

In order to protect your wealth, you want to hold a mix of high- and low-risk investments. You want to allocate a certain amount to cash, ETFs, bonds, and common stocks of varying degrees of risks. Your investments will be diversified in purpose, with some focused on capital growth and others on generating income.

You might even make some investments just for fun, like investing in Bitcoin. I remember talking with one of my girlfriends brothers a bit about investing. I tried to explain to him that short term the money could go down but over a long term horizon like 10 years you are very likely to have more money.

I love this, this is like one of those opener questions that a professor would ask at start of an Investments class. Investing is important because it forces you to get out of thinking about just the short term. Personally, I am a big fan of small businesses too, though at the moment, I just sold both of my small businesses, so I need to find something new! Any advice where I should open a basic mutual fund account?

I just graduated university in Toronto and trying to organize my finances. Their Streetwise funds are a great way to get started investing. The fees are relatively low compared to most funds and the portfolios are well diversified. When I signed up, I really like the quiz-thing they make you take to determine what kind of investor you are. Your email address will not be published. Post Comment. This site uses Akismet to reduce spam. Learn how your comment data is processed. Why Is Investing Important?

Surprisingly, high health care costs are one of the biggest causes of overwhelming debt. The fifth determinant is consumer expectations. If people are confident, they are more likely to spend now. The Consumer Confidence Index measures how confident people are about the future. It includes their expectations of inflation.

If consumers expect inflation to be high, they will buy more now to avoid future price increases. Consumer spending is the single most important driving force of the U. Keynesian economic theory says that the government should stimulate spending to end a recession.

On the other hand, supply-side economists believe the government should cut business taxes to create jobs. But companies won't boost production without demand no matter how low taxes are. If you doubt this, think about what would happen if everyone stopped spending.

Businesses would eventually go bankrupt and lay off workers. The government would then have no one to tax. The economy would have to rely on exports, assuming other countries kept up their consumer spending.

Borrowing would keep the government and factories open. These additional components of the gross domestic product aren't as critical as consumer spending. Even a small downturn in consumer spending damages the economy. As it drops off, economic growth slows. Prices drop, creating deflation. If slow consumer spending continues, the economy contracts. But too much of a good thing can also be damaging. When consumer demand exceeds manufacturers' ability to provide the goods and services, prices increase.

If this goes on, it creates inflation. If consumers expect ever-increasing prices, they will spend more now. That further increases demand, forcing businesses to raise prices. It becomes a self-fulfilling prophecy that 's hard to stop. That's why the primary mandate of the nation's central bank, the Federal Reserve, is to ward off inflation.

Consumer spending is measured in many different ways. It is similar to the PCE but has a little more detail about types of households.

That's because the BLS analyzes data from the U. The BLS releases the most current report in September each year. Retail sales is another component of consumer spending. You can check how healthy it is with the most recent retail sales statistics. Consumer spending drives a significantly large part of U. This makes it one of the biggest determinants of economic health. Watching the trend on consumer spending can serve as an invaluable tool for managing your investments.

National Transfer Accounts.