Every one is talking about shares, mutual funds, real estates etc and about its gain and loss. Why people are taking risk without keeping their money in locker or in savings account.
When I asked this question to my friends, many of the answers I got are "Want to be rich hence investing", "Want to save tax hence investing", etc.
I don't want to be rich and let me lead a simple life. Do I still need to invest? I don't have any income tax. Do I still need to invest?
Yes. You need to invest to beat the inflation.
What is inflation?
Inflation is a rise in the general level of prices of goods and services over time.
For example, last year 1 pen costs around 10 rs. This year the same pen would costs around 10.5 rs. So the price is increased by 5%. If you have your money in locker for an year, the worth money was diminished by 5% (or inflation rate).
This is the case with any goods. Even if you keep in savings account, the interest rate will be very less when compared with the inflation rate. To make sure the worth of money remains same or more, we need to invest.
how to beat inflation?
There are many ways of investments available. We need to make sure that our money is growing more than inflation rate. Let us see the best modes of investment
Best modes of investment
- Fixed deposit in bank - Simplest way of investment and no or less risk.
- Share market - Investment in shares/mutual funds (More risk and more return)
- Real estate - Investment in housing/land market (A long term bet)
- Gold - Investing in gold (medium risk)
