Investing refers to allocating funds for assets with the expectation of a better and more secure future. Investments are made to generate returns, which compounds your money over time and eventually leads to a higher sum of money.
Investing is super necessary to reach your financial goals and is the main way to enjoy and reap a better future. By investing, you are also facilitating savings and gathering a corpus during rainy times. Alongside, making daily investments compels you to keep aside money regularly, thus letting you inculcate a sense of financial safety and security in the long term.
Also, making investments is of utmost significance for tackling inflation, which refers to a surge in the prices of goods and services, decreases the value of your money, and brings down your purchasing power. Hence, when inflation rises, you tend to purchase fewer things with the exact amount of money.
Thus, inflation is a phenomenon that cannot be controlled, so if you wish to stay ahead of inflation, you must have more and save more. Also, money does not grow by itself, and if it has to grow, it becomes important to earn returns; for that, you need to invest. It is very vital to generate inflation-beating profits. Otherwise, you might be unable to buy and afford stuff and other services in the future from the savings you are making at present.
Investments can be classified into active and passive. Active investing needs you to dynamically modify various assets share in your portfolio basket, as per the market and other economic growth and development prospects, and you are required to have sufficient time and know-how of investment resources to get involved in active investments. One of the main examples relating to active investing is equity investments.
On the other side, passive investments do not need you to be hands-on regarding your investments as you need to put in your money and remain invested for a specific duration of time; this is also known as a buy-and-hold strategy of investment and is recommended for those who do not have enough time to spare for handling their assets.
Investors must select anyone from an active or passive mode of investing after evaluating your needs and preferences along with the risk-bearing capacity.
Mentioned below are a few of the main ways of investment in India:
- Direct Equity
- Fixed Deposits
- Mutual Funds
- Recurring Deposits
- Employee Provident Fund
- Public Provident Fund
- National Pension Scheme
As a wide range of investment options are available in the marketplace, an investor may feel stuck while opting for one. If you are a beginner in investing, you may feel unsure where to put your hard-earned money. Making one wrong investment decision can invite unnecessary financial adversities, which you would want to stay away from.
Thus, it is advised that you consider the following parameters and then move on to making an investment choice:
- Age
- Goal
- Profile
Conclusion:
You can truly unleash the power of compounding by starting early, and it is rightly said that the sooner you begin your investment journey, the better. When it is about making investments, time is money, and the earlier you commence and the longer you are invested, the greater your investment returns will be.
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