WHY SHOULD ONE INVEST ?



The simple answer for this is  it is needed in order to build wealth and to satisfy all the immediate, medium and long term needs without compromising on the basic comfortable lifestyle. 

Savings is not sufficient to ensure the financial safety, because, idle money kept in the bank account is of no use because it does not earn any additional income which is an opportunity loss and it does not beat inflation. Therefore it is important that we invest money and make money of it and keeping it idle does not help anyone in future.

Also, it ensures present and future financial security, as investment creates wealth and also beats the inflation with the power of compounding. Investment meets all the goals like building a house, world tour, education for the children, marriage, emergency fund and if not anything just comfortable lifestyle.

It is important to be disciplined and instill that value in ourselves of setting aside a particular amount on a regular intervals be it monthly, annually whatever the case may be and stick to it no matter what the case is. Some investments also qualify in reducing tax liability.


WHERE TO INVEST ?

There are several ways of investments and one could choose any/ combination suitable to their life. It is important to choose a method where they can regularly follow it, where they can properly analyze everything with proper application of knowledge and not just for the heck of it. Anything done without proper knowledge is bound to fail.

Following are some of the most popular investment categories:

1. Fixed income instruments

This categories offers fixed returns in the form if interest be it quarterly, semi annually. annually or fixed intervals. They are considered to be low risk investments, as they are backed by the creditworthiness of the issuing company or government. These can be chosen if one wants stable source of income without any risk. In some cases, investors receive tax benefits from investing in fixed income securities.
  • Bonds issued by Government of India
  • Bonds issued by government agencies like HUDCO, NHAI etc.,
  • Corporate bonds
  • Fixed deposits with banks
  • Public provident fund ( PPF )
  • Debt Mutual Funds
  • National savings certificates
  • National pension scheme
It is important we know about these above categories begore choosing them, it is important to be aware of economic indicators and historic trends and make a correct decision whether it is suitable for them or not


2. Equity



This means purchasing shares of a particular company which are traded on BSE or NSE with the expectation that they will raise in value in the form of capital gains or dividends or both. If sold, investor will receive the monetary difference. Unlike fixed income instruments, these do not guarantee capital but the returns are high compared to them.

Investment in well reputed companies have yielded good returns to investors and it requires certain skill and knowledge without which a person will not be successful


3. Real Estate

It basically means purchasing a property with an intention to generate income rather than use it as residential property for self. It provides opportunity to build wealth, increases income and diversify investment portfolio. They create capital gains for investors due to increase in property value as well as provide rental income. Real investment includes both commercial and non commercial property.

There is no proper measuring reference for real estate returns and also it involves quite hard procedures, be it legal verification of documents , policies and also it requires huge investment.


4. Commodity - Bullion




Investment in gold and silver are one of the popular forms of investments opted. There are different ways of investing in them, in the form of jewelry or exchange traded funds. 


When looked at all the above categories of investment, Equity gives more returns compared to others but it also got more risk too. So here comes the question why should we invest in stock market?


WHY SHOULD YOU CONSIDER INVESTMENT IN THE STOCK MARKET?

1. If we let investments stay for long time and let the interests compound, one will get good returns and get one of the best benefits of investing in the stocks and that is compounding benefit. 

2. One of the main intention for investment is to fight against the inflation and that can be easily done through investment in stock market.

3. Fixed returns may be momentarily satisfying but keeping future and inflation in point of view, stock market investment gives enough returns if done intelligently and with knowledge which is not so easily possible with any other form of investment

4. It is powerful long term investment

5. It is convenient to open to start investing on new age platforms and without any difficulty one can do at their comforts of home if proper skill is present.



To summarize:

1. Principle of investment is higher the risk , higher the return and if lower the risk lower the return.

2. If a investor wanted good returns and is ready to take risk then equity investment is good option.

3. If investor wants to protect his/her capital and is okay with fixed returns which may be comparatively less than the equity investment then one can opt for fixed securities. Also, risk is less in this.

4.  Investment in real estate requires huge capital outlay and there is no proper measure of returns in this case. Also, procedures are very complex.

5. Investment in gold and silver are safer, but returns are not that attractive.