Saving money is important. We all save money as much as we can but you should not be just saving money and keeping in the bank. You’re actually losing interest or reruns by not investing your monthly savings.
Most people in their 20s or 30s plan to invest, but some people plant to invest after specific age or they wait for “perfect time“. That perfect time will never come and waiting for a specific age is not a good decision too.
Look, waiting for perfect will just make you loose potential returns that you could make. The perfect time you’re waiting for is not in the future, it’s today. Yes, today is the perfect time to invest.
You might be having many thoughts like “how can I start Investing?” or “why should I invest money?” Well, I’ll give you 5 reasons to invest your savings.
1. Wealth Creation :Once you start investing, it will allow you to grow your money with interest and returns. You can choose where you want to invest, you can invest in Bonds for stable returns, or you can invest in mutual funds or directly in stocks. Once you invest, it allows you earn returns on your already earned money. Investing directly in stocks requires a lot of research, but you may choose mutual funds to begin with. There are many types of mutual funds. You can choose any mutual fund, which suits your risk profile.
2. Reach Your Finance Goals:We all plan for a better future and plan our financial goals. We make goals to achieve in a certain time, but you know what? If you invest, you can reach your financial goals earlier than you would have planned.
3. Beat The Inflation:If you don’t know, you keep losing your money’s value if you just keep your money in the current bank account. Inflation rate fluctuates between 6% to 1% but, the average inflation rate in ~3% in India. So if you keep your money in a bank account, you will keep losing value of your money. Let’s say you have 1000rs in your current account as of today. During this year, the inflation rate is 3%. After a year, you will still have 1000rs in the bank but, the value of 1000rs will be 970rs as everything got 3% costlier. Your purchasing capability will decrease by 3%. So if you invest your money, you are probably going to earn at least 7-10% returns in bonds or 10-15% in mutual funds. That will not just maintain your purchasing capabilities but, will increase it in the longer period.
4. Tax-Saving :
Well, few investment vehicles give double returns, it definitely will allow you to earn interest but also reduce your taxable income. You can invest in ELSS funds to save tax. They money you save with ELSS is also can be used to invest more and get more returns out of it.
5: Higher Returns:These days, the savings account is giving 3.5 percent returns and 5.1 percent in fixed deposit if you invest more than a year. But if you invest in mutual funds or directly in stocks, you can get higher returns. Take a look at Sensex historic graph.
From 1979 to 2019, sensex gave compounded annual growth rate (CAGR) of 16%. Yess! 16% returns which compounded every year.
You know what that means? If you had just invested 1000rs in 1979 forgot for 20 years, the total amount you would get 19,460rs. That’s 19x times of invested amount. Take look at this pic chart.
This much you could get if you had invested in 1979 in Sensex index. This probably convinced you to start investing.
Note: this is historic returns, there’s no guarantee of same returns in future.