From our childhood we are taught to save money out of pocket to buy the things we wanted most. This mindset brings the age of maturity, and we try to save money on what we want most. But here we are making a drastic mistake in life that makes the difference successful or reduced in terms of financial reinforcement.
To understand investment; we must first define the investment.
What is an investment?
According to Investopedia, an investment is an asset or item that is bought in the hope that it will generate income or value it in the future. In economic terms, the 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 profit price.
What are the top 5 benefits?
1) Financial independence
Financial independence means that you have enough wealth to live on without working. Financially independent people have enough assets that generate income without any physical work, because their money works 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.
· Choose profitable investment options.
· Solve your financial goals.
· Try to stay away from loans and debts.
2) Precautions against inflation
Inflation is a steady increase in the overall level of prices of goods and services in an economy over a period of time. It can be seen as the value of money ages over time.
In the economy, inflation reflects a decrease in the purchasing power per unit of money – loss of real value in the exchange environment and the unit of account within the economy
Asset value continues to rise due to inflation. As a result, investments are not only safe, but also increased over time. Therefore, it acts as a defense against inflation
3) Achieve financial goals
When we invest, we set aside our money for long-term purposes such as retirement, an international vacation trip, a luxury car home or a child’s education.
Investments guarantee us to achieve all our long-term and short-term goals in a specific time.
4) Increase wealth
Investing is not a way to get rich quick. It takes time, patience and awareness. It requires analytical research of the available opportunities and makes a well-oriented choice of where to place your investment so as to provide a huge return. If things are done on the spot, the results are almost guaranteed.
5) Provide a source of income
Some funds specifically aim to provide investors with a monthly income, while others, like many real estate funds, also pay dividends monthly.
Most of the monthly income funds try to offer 11 monthly payments with a similar amount and the 12th, which varies. The exact level of income will depend on the results of the fund.
What are the ways to invest?
Suitable investment options are listed as follows:
· Individual stock.
· Mutual funds.
· Corporate debt.
· Government bonds.
· Goods (gold, silver, etc.)
· Liquidity funds.
· Fixed deposits.