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Sunday, March 16, 2008

What is investing?

  • What is investing?

Investing lets your money earn some more money, thus getting it to work harder for you. In effect, your savings do not sit idle, but help you profit from them. Why should you invest?There are two main reasons why you should invest:To stay ahead of inflationAs the cost of living keeps increasing and day-to-day expenses keeps rising, investing lets you keep pace with thesechanging market conditions.To achieve financial goals As the saying goes…A journey of a thousand miles, begins with a single step. Investing small amounts of money over a period of time brings you closer to your financial goals.

  • When should you invest?

With investing, time makes money. Thus, the earlier you start investing the better, since you can reach your financial goals faster. So, regardless of your financial position, investing ensures that you accrue wealth over time.

  • Where do I start if I have no savings?

The first step to investing begins with saving. You can stay invested, even by saving small portions of money on a monthly basis. Thus, the first successful investment decision, is the decision to start saving, however difficult it may seem at first. After all, where there is a will, you will always find a way!For eg: If your monthly salary is Rs 20,000 per month and your monthly expenditure is Rs16,000 per month, park the difference of Rs 4,000 into an investment avenue of your choice immediately.

  • How can I invest if my savings are meagre?

The amount invested does not restrain earnings, as long as you keep investing regularly.

  • What's the next step after my first investment?

Investing is a lifelong activity; you need to keep investing regularly. To know about investment opportunities, keep reading up about financial markets and companies.

  • How Do I Get to My Allocation Goal?

Financial goals can be separated into two types:Short-term goals - Are immediate goals,ones you would want to achieve now or within a year.For ex- Buying a computer,a bike,a mobile, music system, DVD player etc.Generally,it takes less money to reach these short-term goals.Long-term goals - Take you a longer time to reach and need adequate planning, as they involve larger sums of money.For ex. Buying a luxury car,buying a house,and even starting a business.Often, it is the first step towards investment that seems to be the hardest.However, with adequate planning and a clear focus on the objectives, you could attain your goals with ease.You should always plan for your goals taking into consideration your risk-return appetite and accordingly apportion your funds into various channels.

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