Why should people invest? Give reasons for each age group: college students, college graduates, couples with young children, and people in their 50s.

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The primary reason why all people should invest is to increase the value of the money that they earn. If you do not invest, inflation will erode your savings. Another reason for investing that applies to all age groups is to prepare for retirement. In addition, investing provides financial security...

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The primary reason why all people should invest is to increase the value of the money that they earn. If you do not invest, inflation will erode your savings. Another reason for investing that applies to all age groups is to prepare for retirement. In addition, investing provides financial security for your family.

Of all the age groups, college students face the most obstacles to investing. Because the cost of college has risen dramatically in recent years, the best strategy for college students is to avoid incurring too much debt. The average college graduate has about $30,000 of debt. Scholarships can reduce the burden of debt. College graduates need to start investing as soon as they start working. They should participate in employer-sponsored 401 (k)s. One important reason for investing at this age is to take advantage of the power of compound interest.

In addition to planning for retirement, couples with young children often invest to pay for their children's college education. By age 40, the average American has a net worth of only $35,000. By this age, they may have developed sources of passive income—such as that provided by rental property.

People in their fifties invest almost exclusively for retirement. By 50, the average American has a net worth of about $85,000. It is important not to take Social Security too soon because doing so reduces your overall benefits.

Investing is complex, so hiring a fiduciary is often a good idea. A fiduciary is legally required to judiciously invest your money and to avoid conflicts of interest.

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Investing in your future should begin with your very first paycheck. Investing is not just a way to make sure that you have the money saved for those milestones that come later in life; if you invest wisely, it is also a way of making your money grow and work for you.

College students should invest money to pay for further education if required—for example, if they are planning to go on to law school or medical school. They should also be thinking of the next phase of their life, understanding that jobs are hard to find and that they may go through a period of unemployment before they find a job after graduation.

College graduates go out into the workplace and get their first jobs, and this is when they should be starting to invest more. If a set amount is put aside every month right from the first paycheck, then this isn't something they have to adjust to later. College graduates should be investing with goals in mind, like having children and getting into the property market, if they are interested in those things.

Couples with young children should be investing with their children's futures in mind. There are educational expenses that lie ahead, as well as the resources needed for any extra-curricular activities that the children become interested in. As a family grows, it is also increasingly important to think about having money saved in case something goes wrong.

People in their 50s need to realize that they are only a decade away from retirement and that now is the time to add to their savings for retirement.

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Investment is a way to ensure you have an adequate income in the future. Even if investment means, as a child, putting away a quarter a week in a piggy bank, it is an important habit that will pay off in the future if you have unanticipated needs. While investment benefits everyone, it offers slightly different benefits at different ages:

  • College students: Imagine that you simply put $25 a month into a savings account at 5 percent interest. By the time you retire, at 65, that would become over $50,000 dollars due to the nature of compound interest. Other good reasons to invest include building up a down payment for your first house and being ready to pay off college loans.
  • Couples with young children: The first major investment couples with children should make is a tax-protected college savings account for their children. Next, the earlier people start saving for retirement, the better off they will be when they retire and the earlier they will be able to retire. Finally, investments protect them against emergencies such as medical expenses or being laid off from their jobs. 
  • People in their 50s are in their peak earning years, making it an ideal time to build up investments. At this point, they also may have low living expenses, probably having put their children through college and paid off their mortgages, making them able to afford a higher rate of savings. Finally, they are in the last one or two decades of creating the portfolio that will fund their retirement.
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