After the horrendous stock market plummet of 2008, many wonder ‘why invest at all?’ Some can see putting cash aside to save for a rainy day, for example a layoff, but many question the reason for savings beyond that.

For starters, it should be emphasized a lot that ‘saving for a rainy day’ is incredibly important. No one knows if the labor market will go back to normal again. We’re already at 9% unemployment and that doesn’t even take into account underemployment (people who want to work full time but can only find part-time work). Also, with the socialist path America is now going, we are likely to have sustained higher unemployment figures- 4-5% unemployment may just be a thing of the past. Look at France’s figures. That’s the type of economy we are attempting to mirror.

So I hope I scared you a little bit on the necessity of saving for savings sake. Not just relying on your credit cards, since you have to pay that back eventaully + interest and you never know if the credit card company will suspend your line of credit (they are doing that for people with impeccable records as we speak). Save for savings sake.

There are two other reasons to save: delayed gratification and to make money. What do I mean by delayed gratification? Quite frankly, if you have leftover money that you don’t really want to spend, you may want to spend it later. Of course, you may have inflation to contend with (not right now, but it is possible), so you will do your best to keep the purchasing power of that money for later. Delayed gratification is similar to ‘saving for a rainy day’ with the exception that this is your excess funds beyond that that you will allow yourself to spend on discretionary purchases.

The final reason to invest is to make even more money. This used to make sense prior to 2008 when investments actually went up in value. It could still happen. There are money making opportunities out there. My guess is just as good as anyone’s. If you think the stock market is undervalued or commodities are undervalued or there is value in corporate bonds, you can increase your nest egg by those means. Just don’t get too aggressive or you’ll get burned like everyone else did lately.