How does investing help in wealth building?

Investing contributes significantly to wealth building primarily by growing money through returns such as interest and dividends. When you invest in assets such as stocks, bonds, or mutual funds, your money has the potential to generate returns over time. These returns can come in various forms, including capital gains (the increase in the asset's value), interest payments from bonds, or dividends paid by corporations to their shareholders.

The power of compounding also plays a critical role in this process. As returns are reinvested, they can generate additional returns, leading to exponential growth of wealth over the long term. This growth effect highlights the importance of starting to invest early, as even small amounts can accumulate significantly over time.

Although controlling expenses, avoiding debt, and saving for emergencies are essential financial practices that contribute to overall financial health, they do not directly lead to the growth of wealth in the same way that investing does. Controlling expenses helps manage cash flow, avoiding debt prevents financial strain, and saving for emergencies ensures financial stability. However, investing is the definitive strategy that allows individuals to leverage their money for greater growth and potential wealth accumulation in the long run.