What investing is and why it matters

If you’ve never invested before, it’s completely natural to feel a little unsure about where to start. Many people assume investing is only for the wealthy, or for financial experts, but the truth is that investing is possible for everyone, no matter your background or experience.

In fact, investing is one of the most effective ways to grow your money, plan for the future, and build financial security over time.

That said, a lot of people hesitate to take the first step—sometimes because they worry about making mistakes, or they don’t know where to begin, or maybe they feel nervous about the risks. But here’s something important to always keep in mind: choosing not to invest has its own risks too, especially when it comes to inflation and missed opportunities for growth.

The good news? Investing doesn’t have to be complicated. With the right knowledge, anyone can get started. So, what exactly is investing, why does it matter, and how can you begin?

Let’s break it down.

What is investing?

At its core, investing simply means putting your money into assets—such as stocks, bonds, or investment funds—with the expectation that they will grow in value over time. Instead of keeping all your money in a low-interest savings account, investing allows it to work for you by generating potential returns.

It’s important to understand the difference between saving and investing. A savings account offers security, but interest rates are often so low that they don’t keep up with inflation. This means that while your bank balance might stay the same, its purchasing power actually decreases over time.

Investing, on the other hand, carries some risk but also offers greater potential for growth. Historically, investments have provided significantly higher returns over the medium to long term compared to savings accounts. That’s why investing is especially valuable for long-term goals like retirement, buying a home, or funding education.

Why is investing important?

Investing plays a key role in helping people achieve financial stability and growth. Whether your goal is to retire comfortably, build wealth, or simply keep up with rising costs, investing allows your money to potentially grow and work more efficiently over time.

To see why this matters, let’s look at a simple example:

Imagine you have SGD 10,000 sitting in a savings account earning 0.5% interest per year. After ten years, that money would grow to just SGD 10,500—not a huge difference. And if inflation averages 3% per year, the actual purchasing power of that money shrinks, meaning it will buy less over time.

Now, compare that to investing the same SGD 10,000 in a diversified stock market index fund with an average annual return of 12%. After ten years, that investment could grow to approximately SGD 30,782. That’s a significant difference—just by choosing to invest instead of leaving the money in savings.

If we extend that timeline to 20 years, the contrast becomes even more striking. Savings might grow to about SGD 12,200, but investments could potentially surpass SGD 64,000. That’s a SGD 52,000 difference, simply by making the choice to invest.

The reason investing can create such a big difference over time comes down to compound growth—where your returns generate additional returns. The earlier you start, the more time your money has to grow.