Why should you invest?

We live in uncertain times where jobs disappear, constant re-skilling is the order to day. Saving is no longer enough. 

Once upon a time you will realize that things cost more over time and doing nothing with the money when you have it. So, it is important to make investment to let your money grow rather than diminish.

Nature of investment: 

when you talk about investment, there is come stock market. Stock market is that platform where you rise your money.

Most of the people think stock market is a casino, even some people think it is the path to instant wealth creation but have to understand the true nature of the stock market.

Warren Buffett said " investment requires knowledge of two things - business valuation and how to think about market".

Why should you invest?

(i) Inflation:

Whenever talk about money, there is always talk of inflation. " Inflation is the rate at which cost of goods and services rises. 

That's means inflation goes up and purchasing power decreases. So, investment can help you beat inflation and Create wealth.

(ii) Compounding effects: 

It's rather simple to make money work for you. Let's understand the benefits of compounding.

Let's say, you have Rs 1 lakh to invest. You decide to invest this in a 5 year bank fixed deposit which offers you 8.5% interest P.A. with compounding interest. So, you have two options,

(a) Fixed deposit where the interest is paid out every 6 months.

(b) Where the interest is reinvented.

Now, see what happens with each option.

Option a

Amount Rs 1 lakh, interest rate 8.5% P.A.

and interest received for 5 years Rs 42,500

Option b

Amount and interest is to be same and interest received for 5 years 50,366

This is effect of compounding. "Compounding is the 8th wonder in our world."

(iii) Dividend: 

Investment as a result something investors receive dividend. That would increase their money. So, investors benefited for investment. When a company earned good profit, then company distributed a part of profit per share.

             

Let, Mr. A has 100 shares and company distributed dividend Rs 6.5 per share. Now Mr. A will receive 100*Rs 6.50=Rs 650

(iv) Wealth maximization: 

By investing shareholders maximize their capital. Lot of people maximize their money from stock market, Such as the great investor Warren Buffett.

(v) Reach goals: 

By investing  one can reach their goals with mix of right investment. Such as better home, a better car etc. 

But investment is long term game. So, start investing " Build Today a World for Tomorrow.