What are the benefits of investing money

What are the benefits of investing money

Let’s understand the benefits of investing money

Let me start with a small story

There were two persons Mr.X and Mr.Y. Both had an ambition to lead a happy and prosperous life. They started working in the same company and their take-home pay per month was 1,00,000. They both started working at the age 25 and they would get retire at the age of 58.

Mr.X

• Mr. X didn’t have any financial knowledge and he thought he is getting attractive salary to lead a happy life
• He did not invest in any of the financial assets
• According to him, financial wealth is all about having luxurious goods such as iPhone, costly bikes and cars. So, he spent all his money in buying those goods. As the years went, all these physical goods lost their value (Depreciation)
• Till his retirement, he had money in his hand and he was leading life with that money. After retirement, he didn’t have any clue on how he would lead his remaining life.

Mr. Y

• Mr. Y on the other had some knowledge on personal finance and money management which he gained through by reading books on investing
• He started to invest 180000 per year till his retirement
• He diversified his savings in different financial instruments like bonds, Mutual Funds, PPF, stocks. His average returns was 10% per year

• With the investment of 61,20,000, he could earn 4.8 crores approximately

Conclusion

• Start investing early and wisely
• Do a thorough research before investing in any financial assets
• Gain financial knowledge by reading blogs, posts and books. Financial knowledge is very important
• Savings are also important in case of an emergency. Do save. Savings is for short term needs and investment meets long term needs
• Do not buy things which you cannot afford.
• Make the hard earned money work for you

“It is best to start investing earlier in small increments rather than to invest big at later times”

Happy investing!

Thanks for Reading