The money we earn is partly used for our day to day needs and the rest is saved for meeting future expenses. Instead of keeping our savings idle, it’s better we use this money in order to get return on it in the future. This is called Investment.
One has to invest to earn return on your idle money. One of the important reasons why one needs to invest wisely is to meet the cost of Inflation
Inflation is the rate at which the cost of living increases. Inflation causes money to lose value because it will loose the power to buy the same amount of goods or services in the future. For example, if the annual inflation rate is 7%, then our investment will need to earn us more than 7% to ensure it’s purchasing power increases.
If the after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in value; that is, they won’t buy as much today as they did last year.
What are various options available for investment?
- Physical assets like real estate, gold/jewellery, commodities etc.
- Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc.
Let’s discuss about following in detail:
- Investment Basics
- Stock Trading
- Brokers
- Bonds
- Derivatives
- ETFs
- Real estate investment
- Portfolio