Most of the people are confused between saving and investment. Saving is usually for a small duration and is for short-term goals. Investment is for long-term goals and is usually for more than five years with the future plan like education, home, retirement, etc.
In savings, there is hardly any risk as you are insured by the government if something goes with the banks. While in investments you may lose some or all your money you invest. Better use surplus money that is with you.
You earn interest on your savings which are very limited, sometimes not even beating inflation. Investments, on the other hand, have the potential to give you returns which even you may not imagine, as your investments may go up in value (appreciation) over a period of time. This indirectly improves your net worth and change lifestyle.
Investing is growing money over period of time
Always remember greater the risk of your investment, higher potential return or loss of money. But by taking the calculated risk you tilt the balance in your favor. You have to maintain the fine balance and our tips are there to help you out.
The main idea behind investing is to grow your money over a period of time. You can invest in stocks, bonds, real estate, etc.
Creating corpus for the future
As you all know, India is one of the fastest growing economies of the world and every year there are thousands people who enter the workforce. As the population increases, this situation is bound to worsen. This will dramatically increase the cost of living, decreasing income sources, job competition, and you will need extra funds to cope up with the situation.
It is observed that today’s youth spend all their earnings without thinking of the future cost of living, family expenses, and medical expenses that they will have to bear. Even if they instill the habit of saving it will not be sufficient. They have to invest thereby making their money work. Most of these youth are holding a private job which is no guarantee for how many years or months they will be on rolls. There are corporate honchos who were relieved of their duty suddenly when the economy took a downturn.
A way out for costly future lifestyle
Investing in stocks is a way out from this situation. It is a myth that you should have a huge amount to invest in shares. You can start with a small amount too. Investing in stocks is virtually liquid, that is to say in the hour of need you can sell the required number of shares to tide over the tight financial situation.
Compounding your money
When you see the graph of stock indices in a long-term (in decades) it is gradually increasing. Naturally, there are up and down cycles in every business and stock market is no exception.
Investing regularly and at an early stage means there are fewer burdens on saving/investment each month for the required corpus for the ‘costly’ future. Many youths are unaware of the power of compounding which is a simple concept of finance. Compounding of your investments in stocks will create an unimaginable return over a long period of time. Growth in stock is on two fronts, price change and reinvesting dividends that make compounding curve more exponential.
To know which will be the best stocks that will give you better returns with a reduced the risk factors contact us or fill the form for a free trial to make a beginning.
Happy investing . . . . . . .