PERSONAL FINANCE - INVE$TING!!!

We Indians traditionally have savings mindset and since childhood we are taught how essential saving some amount is. Saving oriented economy is traditional Indian way, however though saving is the crucial thing it only is the first step of wealth generation. It's often said that the wealth cannot be generated through savings, and one needs investments to create generational wealth. Nobody has become rich by savings as inflation erodes the value of savings with time.

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There’s a difference between saving and investing: Saving means putting away money for later use in a secure place, such as a bank account. Investing means taking some risk and buying assets that will ideally increase in value and provide you with more money than you put in, over the long term. And while saving offers a guaranteed return (that is, interest on your balance), investing includes the potential to lose money.

Investing aims at increasing this rate of return so that your goal is achieved early i.e. you achieve your FIRE number early. Investing, broadly, is putting money to work for a period of time in some sort of project or undertaking to generate positive returns (i.e., profits that exceed the amount of the initial investment). It is the act of allocating resources, usually capital (i.e., money), with the expectation of generating an income, profit, or gains. Main factor driving the investing is the expectation of a positive return in the form of income or price appreciation.

Once you know what investing is, it’s important to establish what you want to achieve from it. Consider the investment time horizon — how long you can wait to enjoy the potential benefits of your investment —and your target rate of return — the size to which you ideally want your capital to grow.

WHY TO INVEST ???




  • To reduce the impact of inflation — Investments should be increasing in value at a greater rate than inflation. The buying power of cash held in bank accounts is eroded over time by the rate of inflation, which tends to be higher than savings account interest rates. Inflation should not reduce your purchase power. 
  • Financial planning and retirement — Investing can help you plan for the future, financially speaking. Research suggests that long-term investment plans have the potential to achieve their targets because they can ride out short-term market volatility. 
  • Create a passive income — Some types of investments pay out regular returns, such as stock dividends. Individuals can choose to reinvest that cashflow or use it to supplement their current lifestyle.
Investing offers you a chance to achieve financial freedom. More of it we have covered under

As usual, kindly make sure you consult your financial advisor before taking any decision about finances as FINANCE MATTERS and it matters for everyone😇.

-- SACHIN GOSWAMI

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