You will be investing your savings. Savings is the difference between Income and Expenditure
You must save for a rainy day as the ants are carrying grains and saving it for a rainy day.
Savings have no form and must be protected from Inflation. When the purchasing power of money varies with time, the phenomenon is called 'inflation'. This is manifested in a general rise in prices of goods and services. In olden days people used to buy 40kg of rice for Re1 and today a kilo of rice costs Rs20! The passage of time has eroded the value of money. Economists call it a decline in the purchasing power of money.
You must invest to protect your savings from inflation but that need not necessarily place your financial future at jeopardy. There are low risk investments that exist in the market place. You can structure your investments based on your appetite for risk. Risk can be minimized by choosing to invest in low risk investments the risk associated with each investment changes with time, and must be monitored carefully.
'It is not how much you save but where you invest it that counts'
First let us answer the following questions to have clear understanding on investments:
• Why should I invest?
• How much do I want to invest?
• Where do I invest?
• If I don’t invest here, what are my opportunity losses?
• What should be your investment objectives?
• What care should I take while investing?
• For how long do I want to invest?
• Is this the best investment for me?
• Does this investment match my investment objective?
• How much risk can I take?
• Am I ready to absorb losses, if it so happens?
• Will I be in a position to get money whenever I want?
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