Why investing is good for you?
In today’s world just earning money is not enough and investments play a very important role in how you’re planning to shape your future. While an individual may be working hard to earn money but that might not be adequate to lead a comfortable lifestyle or fulfill dreams in future if there is no growth of the money earned. Thus, to achieve your dreams and make your money work for you, you invest.
What is the difference between saving and investing?
We have always heard the proverb “a penny saved is a penny earned”. These words ideally define saving money. Saving allows you to cut down on expenses that are irrelevant and put that money to use for a later purpose. Typically, people tend to save money to pay hefty educational expenses of their children or for a planned vacation or new automobiles etc. While saving money can undoubtedly allow you to achieve your goal but one thing that is not paid too much heed is that “In saving, an individual saves to spend it later and this money doesn’t really grow your wealth”.
On the other hand, investing allows you save money only to grow to a larger sum. Money saved in a bank account is considered as opportunity loss and is not an investment as the interest earned on these deposits are very low and is barely sufficient to meet rising inflation. Thus, investments are should be smart enough with an aim to generate healthy while minimizing the risk.
Why invest?
Grow money – Investing provides you with an option to grow your wealth. Investing instruments such as equities, bonds, mutual funds provide returns that could contribute to wealth creation over time.
Secure retirement – While today an individual must be working hard enough, tomorrow the age shall not be in his favor for a similar level of hard work as today. Keeping in mind this reality, it is always advisable to save for retirement in order to ensure that all expenses are taken care of when the inflow from work could go minimal. We believe putting some amount monthly towards retirement savings in a portfolio of investments such as stocks, bonds, mutual funds, etc.
Achieve goals – Investing help you achieve financial and personal goals such as buying home, car, starting business, marriage etc. If money is generating higher returns you tend to achieve goals faster. Investing can always help you accumulate wealth required to start a business.
What to look for while investing
There are multiple investment instruments available to invest which typically makes an individual overwhelmed with the kind of options. However, someone who is new to investing would not really know where to invest their money and could lead to wrong decisions which could translate into financial losses. We, at ORO, believes that picking the investment instrument is very critical for a successful investment. Let us discuss the factors that play a pivotal role in determining where to invest:
Age – Ideally sooner you start better you earn. Typically, young investors have lesser responsibilities and also have a longer time horizon. Thus, if an individual who has a long working life ahead of him/her should ideally invest with a long-term view with increasing investment amount as it adds to income over the years. One of the best suited instruments for such investors would be equity funds where returns are higher than traditional instruments such as fixed deposits, recurring deposits etc.
Goal – Every individual has a goal of their own which could a be a personal goal or financial goal. These goals could be either short-term or long-term. Fthe or short-term goal, while it is advisable to opt for comparatively safer options, one can look at aggressive products for long-term goals. Given the returns are not always guaranteed, it is also advisable to opt for guaranteed returns scheme for goals that are non-negotiable such as children’s education or down payment for a house.
Profile – Factors such as income, dependents, risk appetite etc. are very critical in determining investment solutions suited for an individual. A young investor with no responsibility can always take higher risk compared to someone who is a senior citizen. Probably this is why we have the saying “one size doesn’t fit all”.
How should I plan my investments?
Step 1 – Figure out the right investment that suits profile and requirement.
Step 2 – Choose investment with proper due diligence; Never fall for quick-buck schemes that promise high returns in a short time and avoid complex instruments you do not understand
Step 3 – Review portfolio periodically and consider tax implication adequately
To conclude on a lighter note, one of the most compelling reasons an individual should invest is the prospect of not having to work as there are only two ways to make money – work yourself or have assets to work for you. For any queries feel free to write to us at connect@orowealth.com and we shall be glad to assist.
Until then, Happy Investing.
Until then, Happy Investing.
Created by Orowealth.com
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