Why Should we Invest? Learn Investment basics in a simple way

Why Should we Invest? Learn Investment basics in a simple way

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Investment Basics

Learning Investment Basics is not a Rocket Science. Simple common sense and patience can help you to understand investment basics.

Reason of Investments : We make investment for specific reasons such as for purchasing a valuable thing, for buying property, for securing our future and for our future generations. The technical reasons for making investment are money attracts money, the value of money enhances over a period of time and you can secure your future with higher finances.

Some people get into financial insecurity due to fewer investments. By making investments, one can gain financial security. Making your money work in a favorable manner is known as investing. The two main reasons why we invest are as follows:

Money attracts money

Everyone has a feeling that money is spent either for paying utility bills, EMIs and credit cards or for doing shopping. But actually, money can also help in earning money. Suppose you lend Rs. 1000 to someone. After a year, you get your Rs.1000 back along with certain amount of interest. Thus, your money has helped you in earning that interest amount. Similarly, if you have purchased shares in a company, you are paid dividend on regular basis. Here, your money in shares has helped you in earning dividend, a form of income. In this way, money is utilized for earning more money.

The value of money increases over a period of time

Here, you purchase certain thing such as real estate property with an intuitive mind that its value will enhance over a period of time. After few years, you sell it for a much higher price. Thus, you have got your money back along with the portion of extra amount. This is known as profit.

Main player in investment – Compound interest

One of the factors in investment is the compound interest. With compound interest, you earn interest on money lent, dividend on shares purchased and profit on something sold. Thus, it is compound interest helping you to earn money on money spent. Over a period of certain years, even small amount of savings results in higher finances. This definitely helps you in accomplishment of your financial objectives in the future.

The fear factor in investment – Risk

It is said that investment comes with a promise, and also with a risk. You may invest in variety of investment options such as shares, bonds, mutual funds, real estate property and so on. But all these investment options carry certain amount of risk. You must be well-versed with the working of the investment option and the risks involved in it before investing.

But if you want to earn higher returns in future, then you must have risk facing ability. If you are not willing to take any risks, then you can invest only in fixed and recurring deposits of the bank. You must also take into consideration short-term as well as long-term financial goals.

Conclusively, investment is essential for every individual, however the size of income he may have. Like a social media portfolio, you must also build your investment portfolio. You must carefully analyze your requirements, investment options available in the market, funds at your disposal and the rate of returns expected in future.

Lets say “Today is the my first day of the rest of my life-begin planning for it!”

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2 COMMENTS

  1. A good piece of information by Ankita yet again! Its really very important to invest your hard earned money, in the schemes that suit you the most. This not only helps you grow your money but also helps you enhance your investment portfolio. There are a number of options available in the investment market and you can choose the best one, according to your requirements.

  2. Investment is a very crucial step in saving your money and getting it back, after a certain period, with higher amount. This article describes all the possible reasons for investment and also the various parameters which everyone should keep in mind while investing their money.It also reveals that the investor can choose the plan as per their requirement. As always,an informative piece of work!!

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