Why is investing important for everyone?

What is investing?Because there are very limited ways to always have the money for your all kind of needs: 
Earning - The money that you earn from your business as profits or that you earn as salary or that you earn in as a commission. 
Saving - The surplus money that you save for future expenses or needs. The money you saved could either be sitting idle or you can put it to work for you. (Yes, just like you worked for it to have it in your pockets).
When you put it to work, it is called investing. But the question remains, why you should be investing? I meet so many young people who just started their first job and they really wonder what the big deal with investing is let alone how to do it. After I explained them they now know that simply paying off debt and budgeting is not enough: investing is essential to good money management which also includes saving taxes. 

Why invest?: One of the most persuasive reasons for anyone to invest is the prospect of not having to work your entire life! Yes, as we know it, financial freedom. Bottom line, there are only two ways to make money: by earning and/or by having your money work for you. Still not convinced, we will look at investing from the perspective of mathematics in the manner you will understand. 

Power of Compounding - In 1626, Peter Minuit of Netherlands bought the island of Manhattan from the Lenape people for a basket of clothes, beads and other stuff that would have been worth just $24 then. Now, you might think that the native Americans were robbed. Actually, if they were able to invest that $24 in an 8% bond, that account would be worth $26 trillion in 2012 - enough to buy entire America. That is the magic of compounding. Your money keeps multiplying the longer you save. If compound interest is the only thing you remember from your high school math, you will survive. 

Power of investing in a stock - If you had spent Rs 55,000 to buy a Royal Enfield motorcycle in 2001, you would now have an old, rugged bike. But if you had invested the same Rs 55,000 in shares (3140 * Rs 17.50 per share) of Eicher Motors, the company that makes Enfield (Bullet) bikes, your investment will be worth Rs 9.75 crore now as the share price of Eicher Motors is now trading at 31200 on Nov 08, 2017. You would have attained financial freedom by now.

The first example was of investing in a debt security or fixed-return investment instrument like FD, PPF, Govt. Bonds, Corporate Bonds and second example is of investing in equity-like stocks of companies.

How should you invest? - As a thumb rule of the investment, if you are between 18-50 years old, you must invest (100 - Your Age) in Equity and rest in Debt. So, if you are 33 years old, You must invest 67% in equity and 33% in debt securities. After the age of 50, you should ideally never have more than 20% equity investments in your portfolio. There is a saying which is much simpler than this mathematical calculation: Own stocks when you are young and own bonds when you are old.

My bank account gives 6% return, isn't it investing? - Technically, anywhere you invest, if it returns more than 0% on your investment, it will be called investing. However, there is a devil out there which will keep eating your money, generally known as inflation. In a developing country like India, inflation remains above 4% and sometimes even crosses 10%. So, if you had Rs.100/- in your saving bank account, a year earlier, it would be now Rs.106/- in your bank account but would be worth Rs.101.5/- only due to inflation.

As evident from the line chart, inflation was above 12% in 2012, so a mere 6% return was nothing. Effectively, your money was not invested as your Rs.100/- worth Rs.94/- after a year. Assuming an annual inflation of 6% (over long-term), in 40 years you need $11 for every $1 you have now, to have a comparable lifestyle.
What else needs to be taken care of while investing? Risk. Yes, Risk is the sole consideration which encapsulates all other factors associated with your return. You need to evaluate your risk profile based on the required returns. Look at the below table and see how risk per unit increases with returns. A longer investment horizon is always needed while investing in stock market, unlike debt securities where fixed returns are assured which also bear less risk.

Your return on any investment is always proportional to the risk you take. There is no such thing as a low-risk, high-return investment. If someone says that, run as fast as you can from them.

Where should you invest? Whether you invest in stocks, bonds, mutual funds, options and futures, precious metals, real estate, your own small business, or any combination thereof, the objective is the same: to make investments that will generate more cash for you in the future. As they say, "Money isn't everything, but happiness alone can't keep out the rain.". Personally, I would recommend starting small and instead of directly investing in equity markets, start purchasing mutual funds as they spread your money in 5-7 different types of investments (bank deposits, tech stocks, broad market index, bonds, etc.).
Whether your goal is to send your kids to college or to retire on a yacht in the Mediterranean, investing is essential to getting you where you want to be.