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Investing

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Pradeep Behera
Pradeep Behera

Investing and saving are important concepts for money management. Saving preserves money for future expenses while investing allows money to grow. It is best to balance saving and investing, as going to one extreme or the other can impact financial stability. It is suggested to invest surplus funds after keeping some in savings for emergencies. Proper money management through a balance of saving and investing can increase wealth over time.

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Investing and saving are two important concepts of money management. Saving is the act of preserving money to meet future expenses and to be protected from uncertainties. Investing is the act of committing your money somewhere where it is allowed to grow. A greater balance in these two will increase your wealth at the same time will save you from unfortunate financial requirement. Going one side towards either saving or investing may affect your financial stability. Going for saving without investing, won't cause your financial weakness but your fund won't grow, you will not get full value of your effort. Someone else, may be bank will enjoy the return from your money. On the other side if you invest all your money without savings, then you will face difficulty during urgent need of cash due to certain situation. It is suggested to invest your surplus amount after keeping some reserve to meet your emergency requirement.
Here is a quote, Workers earn it, Spenders burn it, Bankers lend it, Women spend it, Counterfeiters fake it, Taxes take it, Successors receive it, Thrifty save it, Hoarders crave it, Robbers seize it, Rich increase it, Gamblers lose it, Stock brokers multiply it........ What is it ??? Its Money !!! Being crispy, you should invest to multiply your money to cater future needs.
Money controls every relationship in life, every interpersonal interaction: friendship and courtship, partnerships, investments, living together, marriage, divorce, death and etc! Everyone needs money to increase his personal freedom, sense of security and ability to afford the things he wants in life. Till death or even after death money is required. Some people need more money to maintain luxurious life and some to just maintain their life. For the first category people they must have to go for investing as it is one of the best ways to earn more money. For the second category, it is unfortunate to hear that, pension scheme have been stopped in most private and public sector companies. It is essential to go for investing in order to have financial stability after retirement. Everybody wants to save money. Saving = Income - Expense, In order to save you have to either increase income or reduce expense. Second option has a limit, you can't reduce expense after a certain limit depending on your style of living. But first one has no limit.
You can have very high income from different source based on your Zeal to excel and consistent effort to achieve success. You can enjoy life while saving for uncertainty. Investment in share market is a high return investment. Once Bill Gates said, " If you born poor, it is not your mistake But if die poor it is your mistake". Why to do the mistake ? You can be sure that if you don't put your money to work someone else will and take the profit for him
Do you have few hundreds of rupees or few dollars? Yes!! Then you can invest it. Anybody having few hundreds of rupees or few dollars as surplus amount can invest. You can invest it in stock market, mutual fund, bonds or gold etc. depending on your personality and investment objective. Age limitations are depending on your country rules. That you can clarify with your broker. In India there no age limitation for investment There are various fields to invest. Depending on your personality, interest, risk taking capability, amount of investment, objective of investment etc. you can choose where to invest. Two major factors decide investment strategy i.e. 1. Amount of return and 2 Amount or risk to loose We suggest that, you understand minute details before investing in Stock market and Mutual funds, other investments like Real estate or gold etc. can be decided with little compromise
There are many types of investment depending on gain and risk. Always remember gain is directly proportional to risk. Whenever there is expectation of high gain, there is a chance to lose. Higher the gain higher the risk. There is no source of gain without risk except you father's bank account. Stock, bond, Mutual fund, Currency trading, Commodity trading, are common category of investment in share market. Except these here are many other sources for investing. For example, you can open your own business, investment in real estate, investment in gold etc. Each category requires different skill and time and has different gain percentage. Depending on your interest, personality and skill you may select any one or more. We will discuss about investment in Stocks, Mutual Fund and Bonds since these takes major part in share market.
Types of investment are the available investment source. Types of investing refer to the various styles or strategies of investing. All road leads to same destination. Like this, investment strategies are the road to be followed to reach your target. You may follow any road to your interest and personality but aim and importantly the destination. Some people are conservative in their investment strategy and some are aggressive. It is seen that both of them get success. There is no defined investment strategy, no theorem or no law like physics and chemistry; you can follow your own. Once you learn basic thing and start investing, automatically your investment strategy will be defined based on you risk factor and personality. But certain proved mistakes should be avoided and certain proved success tips may be taken care so that you save some of your time and money
It is clear that the more time you keep money you will get more interest. Starting early will give you more amounts at the end. For example, Say John and Mihir both are of same age now at 50 years. John invested Rs 10,000 when he was 20 years old @ 10% interest but Mihir invested the same Rs 10,000 at age of 30 Years. If interest is compounded annually, at age of 50 John will have Rs191, 000.00in his account where Mihir are will have Rs 74,000.00 (appx.) In his account. See the difference. This clearly says you should start early. But, that doesn't mean that you invest money without knowing anything, in hurry. Stop procrastination. Start now
You would have heard the word "Inflation". It is general increase in price of average products over time. The opposite is deflation. It is measured annually in percentage. For example, if inflation is 5% in 2009 then, cement/bag pricing Rs 200 in 2009 will have a price of Rs 210 in 2010. It indicates that inflation decreases purchasing power of money, i.e. the Rs 200 can buy the cement bag in 2009 but the same Rs 200 can't buy the same Cement in 2010. Inflation is calculated based on a group of product. If inflation is 5% that doesn't mean that the entire product will increase by 5%. There are some products which price would have come down also. Lets understand the effect of inflation and interest rate on investment. Almost everyone thinks inflation is evil, but it isn't necessarily so. Inflation affects different people in different ways. It also depends on whether inflation is anticipated or unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated inflation), then we can compensate and the cost isn't high. For example, banks can vary their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up.
Problems arise when there is unanticipated inflation: Creditors lose and debtors gain if the lender does not anticipate inflation correctly. For those who borrow, this is similar to getting an interest-free loan. If the inflation rate is greater than that of other countries, domestic products become less competitive. People living off a fixed-income, such as retirees, see a decline in their purchasing power and, consequently, their standard of living. People like to complain about prices going up, but they often ignore the fact that wages should be rising as well. The question shouldn't be whether inflation is rising, but whether it's rising at a quicker pace than your wages or your return on investment. Finally, inflation is a sign that an economy is growing. The lack of inflation may be an indication that the economy is weakening. It is important for investors to understand effect of inflation and interest rate on investment
Can you afford to lose all your money invested in market? If yes then you can go forward, on the other hand you rethink about your financial position. First of all make yourself stable, make your family protected from market declines and unfortunates. A 70 year old widow will be more conservative than a 30 yr executive who has a full time income except investment. Hence age and financial position drives your investment strategy. Invest the money which you can afford to lose. From the beginning, if you don't have experience or some degree in this stock market, then it is recommended that you make it as part time work. After you get confidence in investment you can take it as full time. Again, be debt free before investing. Don't invest money taken from loan. Because if you lose money invested then you may come to the road. Be careful! Always remember borrower is servant of lender. Avoid borrowing
Always remember, you can put your best effort on something that you are interested in. If you are interested in computer programming, you can do wonders in that. If you are interested to be writer and by family pressure or due to some reason you want to become an investor in share market, then probably you have to re-think. Some people if got news paper directly will go to business page and some may not know that there is a business page. Second kind people may have to re- think before investing in share market. Do you enjoy thrill or fast racing or you enjoy the slow blowing of air at low speed? Can you sleep at night if there is a chance that all your invested money you may lose tomorrow? Investment, especially in stock is controlled by thrill, gambling and challenge. If your personality suits it you can play the game creatively
What is 8th wonder of world ? In Albert Einstein's word, "The eighth wonder of the world is compound interest!. Compounding is the process of generating earning from reinvestment or earning. To work, it requires two things: the Re-investment of earnings and Time. Lets take an example, You invested Rs 10,000 in 1990 @ 10% interest. In 1991 you will have value of Rs 11000(10000+10% of 10000). If you are not withdrawing the interest of Rs 1000 then it will be reinvested. So in 1991 you will have value of Rs 12100. Say you kept it for 40 years hence in 2030 you will have Rs 45, 2593. See how compounding creates magic. In stock market if you go for reinvestment of your earning you may huge amount with the power of compounding.
Real investor doesn't simply purchase stock like purchasing Cake. Real investor understands value of his money. He analyzes the stock, gain expectation and risk involvement and then only decides to buy or sell. True investment can be done with dedication and involvement. You have to spend enormous time in front of computer and with the news paper to become a real investor. "Invest time before investing money"

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Investing

  • 1. Investing and saving are two important concepts of money management. Saving is the act of preserving money to meet future expenses and to be protected from uncertainties. Investing is the act of committing your money somewhere where it is allowed to grow. A greater balance in these two will increase your wealth at the same time will save you from unfortunate financial requirement. Going one side towards either saving or investing may affect your financial stability. Going for saving without investing, won't cause your financial weakness but your fund won't grow, you will not get full value of your effort. Someone else, may be bank will enjoy the return from your money. On the other side if you invest all your money without savings, then you will face difficulty during urgent need of cash due to certain situation. It is suggested to invest your surplus amount after keeping some reserve to meet your emergency requirement.
  • 2. Here is a quote, Workers earn it, Spenders burn it, Bankers lend it, Women spend it, Counterfeiters fake it, Taxes take it, Successors receive it, Thrifty save it, Hoarders crave it, Robbers seize it, Rich increase it, Gamblers lose it, Stock brokers multiply it........ What is it ??? Its Money !!! Being crispy, you should invest to multiply your money to cater future needs.
  • 3. Money controls every relationship in life, every interpersonal interaction: friendship and courtship, partnerships, investments, living together, marriage, divorce, death and etc! Everyone needs money to increase his personal freedom, sense of security and ability to afford the things he wants in life. Till death or even after death money is required. Some people need more money to maintain luxurious life and some to just maintain their life. For the first category people they must have to go for investing as it is one of the best ways to earn more money. For the second category, it is unfortunate to hear that, pension scheme have been stopped in most private and public sector companies. It is essential to go for investing in order to have financial stability after retirement. Everybody wants to save money. Saving = Income - Expense, In order to save you have to either increase income or reduce expense. Second option has a limit, you can't reduce expense after a certain limit depending on your style of living. But first one has no limit.
  • 4. You can have very high income from different source based on your Zeal to excel and consistent effort to achieve success. You can enjoy life while saving for uncertainty. Investment in share market is a high return investment. Once Bill Gates said, " If you born poor, it is not your mistake But if die poor it is your mistake". Why to do the mistake ? You can be sure that if you don't put your money to work someone else will and take the profit for him
  • 5. Do you have few hundreds of rupees or few dollars? Yes!! Then you can invest it. Anybody having few hundreds of rupees or few dollars as surplus amount can invest. You can invest it in stock market, mutual fund, bonds or gold etc. depending on your personality and investment objective. Age limitations are depending on your country rules. That you can clarify with your broker. In India there no age limitation for investment There are various fields to invest. Depending on your personality, interest, risk taking capability, amount of investment, objective of investment etc. you can choose where to invest. Two major factors decide investment strategy i.e. 1. Amount of return and 2 Amount or risk to loose We suggest that, you understand minute details before investing in Stock market and Mutual funds, other investments like Real estate or gold etc. can be decided with little compromise
  • 6. There are many types of investment depending on gain and risk. Always remember gain is directly proportional to risk. Whenever there is expectation of high gain, there is a chance to lose. Higher the gain higher the risk. There is no source of gain without risk except you father's bank account. Stock, bond, Mutual fund, Currency trading, Commodity trading, are common category of investment in share market. Except these here are many other sources for investing. For example, you can open your own business, investment in real estate, investment in gold etc. Each category requires different skill and time and has different gain percentage. Depending on your interest, personality and skill you may select any one or more. We will discuss about investment in Stocks, Mutual Fund and Bonds since these takes major part in share market.
  • 7. Types of investment are the available investment source. Types of investing refer to the various styles or strategies of investing. All road leads to same destination. Like this, investment strategies are the road to be followed to reach your target. You may follow any road to your interest and personality but aim and importantly the destination. Some people are conservative in their investment strategy and some are aggressive. It is seen that both of them get success. There is no defined investment strategy, no theorem or no law like physics and chemistry; you can follow your own. Once you learn basic thing and start investing, automatically your investment strategy will be defined based on you risk factor and personality. But certain proved mistakes should be avoided and certain proved success tips may be taken care so that you save some of your time and money
  • 8. It is clear that the more time you keep money you will get more interest. Starting early will give you more amounts at the end. For example, Say John and Mihir both are of same age now at 50 years. John invested Rs 10,000 when he was 20 years old @ 10% interest but Mihir invested the same Rs 10,000 at age of 30 Years. If interest is compounded annually, at age of 50 John will have Rs191, 000.00in his account where Mihir are will have Rs 74,000.00 (appx.) In his account. See the difference. This clearly says you should start early. But, that doesn't mean that you invest money without knowing anything, in hurry. Stop procrastination. Start now
  • 9. You would have heard the word "Inflation". It is general increase in price of average products over time. The opposite is deflation. It is measured annually in percentage. For example, if inflation is 5% in 2009 then, cement/bag pricing Rs 200 in 2009 will have a price of Rs 210 in 2010. It indicates that inflation decreases purchasing power of money, i.e. the Rs 200 can buy the cement bag in 2009 but the same Rs 200 can't buy the same Cement in 2010. Inflation is calculated based on a group of product. If inflation is 5% that doesn't mean that the entire product will increase by 5%. There are some products which price would have come down also. Lets understand the effect of inflation and interest rate on investment. Almost everyone thinks inflation is evil, but it isn't necessarily so. Inflation affects different people in different ways. It also depends on whether inflation is anticipated or unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated inflation), then we can compensate and the cost isn't high. For example, banks can vary their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up.
  • 10. Problems arise when there is unanticipated inflation: Creditors lose and debtors gain if the lender does not anticipate inflation correctly. For those who borrow, this is similar to getting an interest-free loan. If the inflation rate is greater than that of other countries, domestic products become less competitive. People living off a fixed-income, such as retirees, see a decline in their purchasing power and, consequently, their standard of living. People like to complain about prices going up, but they often ignore the fact that wages should be rising as well. The question shouldn't be whether inflation is rising, but whether it's rising at a quicker pace than your wages or your return on investment. Finally, inflation is a sign that an economy is growing. The lack of inflation may be an indication that the economy is weakening. It is important for investors to understand effect of inflation and interest rate on investment
  • 11. Can you afford to lose all your money invested in market? If yes then you can go forward, on the other hand you rethink about your financial position. First of all make yourself stable, make your family protected from market declines and unfortunates. A 70 year old widow will be more conservative than a 30 yr executive who has a full time income except investment. Hence age and financial position drives your investment strategy. Invest the money which you can afford to lose. From the beginning, if you don't have experience or some degree in this stock market, then it is recommended that you make it as part time work. After you get confidence in investment you can take it as full time. Again, be debt free before investing. Don't invest money taken from loan. Because if you lose money invested then you may come to the road. Be careful! Always remember borrower is servant of lender. Avoid borrowing
  • 12. Always remember, you can put your best effort on something that you are interested in. If you are interested in computer programming, you can do wonders in that. If you are interested to be writer and by family pressure or due to some reason you want to become an investor in share market, then probably you have to re-think. Some people if got news paper directly will go to business page and some may not know that there is a business page. Second kind people may have to re- think before investing in share market. Do you enjoy thrill or fast racing or you enjoy the slow blowing of air at low speed? Can you sleep at night if there is a chance that all your invested money you may lose tomorrow? Investment, especially in stock is controlled by thrill, gambling and challenge. If your personality suits it you can play the game creatively
  • 13. What is 8th wonder of world ? In Albert Einstein's word, "The eighth wonder of the world is compound interest!. Compounding is the process of generating earning from reinvestment or earning. To work, it requires two things: the Re-investment of earnings and Time. Lets take an example, You invested Rs 10,000 in 1990 @ 10% interest. In 1991 you will have value of Rs 11000(10000+10% of 10000). If you are not withdrawing the interest of Rs 1000 then it will be reinvested. So in 1991 you will have value of Rs 12100. Say you kept it for 40 years hence in 2030 you will have Rs 45, 2593. See how compounding creates magic. In stock market if you go for reinvestment of your earning you may huge amount with the power of compounding.
  • 14. Real investor doesn't simply purchase stock like purchasing Cake. Real investor understands value of his money. He analyzes the stock, gain expectation and risk involvement and then only decides to buy or sell. True investment can be done with dedication and involvement. You have to spend enormous time in front of computer and with the news paper to become a real investor. "Invest time before investing money"