Investment - Why you should invest money as early as possible ?
Importance of Investing Money
The first thing that comes to
your mind by hearing the word Investments is profit in wealth. To invest is to
engage your money in the expectation of some profit in the future. So here is the article on investment for beginners.
What is
Investment?
Investment means an asset an asset
in terms of time, money, power, effort, etc. in hopes of great results in
future. Here we are talking about financial investment. Investments of money.
Investment helps in growing your money for your future use. It assures a
definite cash flow of income in your future without doing any work. Investment
refers to any methodology used for generating future income. Basically an
investment is done with an idea of future assurance of money. In finance, the
benefit we get by doing investment is called returns. The returns may depend on
what and how you invest your money. The returns may consist of gain or loss.
Generally investors expect higher returns from riskier investments. Some
risk-taking investments includes stock-marketing and real-estate. Many investors
follow High-risk, High returns methodology whereas common man usually follow
Low risk, Low return policy. With every investment there is risk associated
with it. This is a fact! Many people who have a definite source of income, say
salary do not invest their money. Instead, they save it for their future. But
this terminology is not very correct. If you want to secure your future then
saving will not help much. You have to invest your money, “The one who doesn’t
take risk acquire nothing.” Saving will not increase your money but investment
will.
Why does
investment matters?
Investment does matters for
all of us in order to secure our future. Investment can give you financial
freedom. Let’s take an example of two persons. Person1 [P1] and Person2 [P2]
invested $20,000 with no additional investment and earned a 10% return every
year. This means that after one year they would have $22,000 ($20,000 × 10% =
$2,000 and $2,000 + $20,000 = $22,000). The only difference is P1 began
investing at age of 20 and P2 began at age of 30. By the age of 70, P1 has more
than double what P2 has. But 10% result returns every year is not practical, the
sooner you start investing, the better it is.
How to
Invest?
There are various options
where you can invest. But you have to choose the right one. Many frauds takes
place in the name of investments. Some major investments options are
share-marketing, real-estate, mutual funds, etc. you can also invest your money
through banking. Banks provides variety of services to invest your money.
Generally, common people invest in various banking schemes. The banking
investments is low risk, low returns options. Investments in Gold is also prominent option for common man. Many great investors buys assets
that they believed to be undervalued. They analyze the stock and financial
reports. They check the background of the company when they buy the stock of
that. They check whether that company is or was involved in a scam or not.
Investments can be stocks, bonds, mutual funds, interest-bearing accounts,
land, derivatives, real-estate, etc. Warren Buffet and Benjamin Graham are
notable examples of value investors.
Economic
Growth due to Investments
Investments also encourages
economic growth. More than 50% of economic growth is due to investments in
various sectors. Investments encourages International trading. If you invest in
a company and it leads to increase in production which directly affects the
Gross Domestic Product (GDP) and allows the economy to grow through increased
production.
You must invest your money
rather than spending it. By investing, it will grow. The returns you will get
by investing it, will build your wealth for future.
Thoughts of some Great investors
Comments
Post a Comment