If you are planning on enhancing your corpus, it is vital that you put your surplus funds to good use by investing them. The question that hence arises is “what is an investment?”. An Investment is injecting your spare funds into financial instruments that would eventually yield profitable returns and lead to the creation of wealth.
The income generated from such investments can be used to fulfil financial obligations such as repaying borrowed funds, saving up for retirement, paying for educational expenses, purchasing commodities and others.
Regardless of how old you may be, it is imperative to understand what is an investment and why there is a need to invest. Knowledge of investments is a prerequisite to advancing into investing. A financial crisis may disrupt the smooth functioning of your finances which is why it is important to safeguard yourself against any such mishaps through investments.
Here are some of the reasons why you should invest:
Investing in financial assets that yield high returns can lead to the creation of wealth. With your wealth growing, you will be able to invest further and build your corpus over time.
Investing at a younger age can help you grow your funds exponentially, and act as a source of security and stability during your retirement.
A number of investment options offer tax benefits that can help you save up on tax payments and increase your profit earnings.
Wealth generated through investments can help you fulfil your financial goals such as repayment of borrowings, financing educational expenses, saving up to buy physical assets, etc.
Once the answer to what is an investment has been thoroughly comprehended, it is wise to pay attention to certain fundamentals. Investing requires a great deal of careful planning. A smart investment plan is the one that encompasses all necessary factors and helps combat financial inconsistencies.
Here are a few key factors that you need to consider while investing:
Based on your appetite for risks you can opt for investment options that cater to your financial requirements. If you have a higher risk appetite you can choose to allocate your funds in market-related investments that have higher returns but are accompanied by risks due to their close association with variations in market conditions.
Your financial goals help you get a clear idea of what investment options would work best for you. If you are looking for options that help you fulfil your long-term goals, you can invest in financial instruments such as PPFs, and others that can accommodate your funds for a longer duration and provide you returns at the closure of your term.
Your income is a vital part of your livelihood. If you wish to receive a stable source of income to help you meet your daily expenses, you can opt for fixed income investments such as fixed deposits etc and tailor them to suit your financial needs.
One of the major reasons why you should invest is to grow your capital. Investing in assets that are linked to the market can help you receive high returns and expand your funds. Slightly riskier investments such as stocks and mutual funds offer greater dividends while compared to other investments. Diversifying your funds across various investment options can foster financial growth.
Investments such as fixed deposits, government bonds, PPF and others are considered a safe option for the long term.
As a beginner you must first understand what is an investment .You need to carefully plan out your investments based on the goals you wish to achieve. Depending on the immediacy of your goals, you can opt for investment options that serve your needs.
Some of the most secure investments of 2022 are fixed deposits, public provident funds, unit linked insurance plans, senior citizens savings scheme, national pension scheme and others.
Through a detailed analysis of your financial requirements and the market conditions you can chart out a good investment plan that will help you grow your savings.
All investments are made with the intent to make money. Investments such as stocks, securities, bonds and others, although risk-prone, are likely to gain higher profits. On the other hand, FDs, PPFs and others are safer and yield assured returns.
Savings help you put aside your excess funds for use in the future. They do not generally yield high returns. Therefore, if you are looking to grow your funds, you must consider investing since it leads to the creation of wealth.
It is essential to invest for a number of reasons such as the fulfilment of financial goals, deduction of taxes, creation of wealth, post retirement security and so on.
Investments can be made to fulfil a variety of goals such as the repayment of debts, purchase of commodities, paying for educational expenses, fulfilling personal commitments such as buying a house, starting a new business etc.
In this day and age, almost all types of investment options are available online. Thus making trading and investing further convenient and readily available at your fingertips.