From our childhood days, we are taught to save money from our pocket to buy the belongings we wanted the most. This casing of mind carries to the age of maturity and we try to save money for the thing we want the most. But here we commit a drastic mistake of life that makes a difference of becoming successful or reduced in terms of financial amplification.
To understand the investments; we must define the investment first.
What is Investment?
According to Investopedia, An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.
What are its top 5 benefits?
1) Financial Independence
Financial independence means you have enough wealth to live off of without working. Financially independent people have enough assets that generate income without any physical work as their money is doing work for them.
How to achieve Financial Independence?
Here are the best tips to become financially independent:
· Try to increase your income.
· Plan your savings every year.
· Select profitable investment options.
· Decide your financial goals.
· Try to stay away from loans and debts.
2) Safeguard against the Inflation
Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. It can be considered as the ageing of the value of money over a time.
In Economics, Inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy
The value of assets keeps on increasing due to inflation. As a result, the investments are not only safe but also increased by the time. Hence, It acts as an uphold against the Inflation
3) Achieve Financial Goals
When we invest, we put our money aside for long-term goals such as retirement, International holiday trip, Luxury home with a car or a child’s education.
The Investments ensure us to achieve all our long term and short term goals at a precise time.
4) Increase Wealth
Investing isn’t a mode to get rich quickly. It takes time, patience, and awareness. It requires analytical studies of opportunities available and makes well-versed choices of where to place your investment so it provides huge returns. If the things are performed in a spot in order the results are almost guaranteed.
5) Provide a source of Income
Some funds specifically set out to provide investors with a monthly income while others such as many property funds pay out dividends monthly, as well.
Most of the monthly income funds attempt to offer 11 monthly payments of a similar amount and a 12th that varies. The exact level of income will depend on the fund’s performance.
What are the ways of Investments?
Suitable Investment Options are stated as follows:
· Real Estate.
· Individual Stock.
· Mutual Funds.
· Corporate Debt.
· Government Bonds.
· Commodities (Gold, Silver etc).
· Liquid Funds.
· Fixed Deposits.