“The best time to plant a tree was 20 years ago. The second-best time is now.”
A Chinese proverb
We have been hearing a lot about savings & investment from our elders, how they saved a lot and spent very little, how did they value money etc. We have read a lot of books which focus on money management, investments & savings. But if you are reading this piece, you wish to know more. There are some unanswered questions, or a conflict between the need to spend and save.
WHY? Well, keep reading. In the next few paragraphs I’ll explain why you should make investment in the simplest possible manner, in different asset classes.
1. YOUR SALARY ONLY COVERS INFLATION
Inflation is defined as general increase in prices, and cost of living. A hundred-rupee note does not buy the same amount of goods as it used to sometime ago. Purchasing power of money always declines.
How would you grow to prosper?
2. STANDARD OF LIVING ALWAYS GOES UP
Your lifestyle is better than the one your parents led, and your kids will have a lot more than you (God bless them). You want to provide everything for your family. You don’t want to reduce consumption. It is painful and exhausting if you have to lower your lifestyle from current levels.
3. WEALTH IS THE KEY TO PEACE, HAPPINESS AND FREEDOM
Agreed, money is not the only thing but only when one has more than enough to fulfil one’s needs. Do you remember Salman Khan saying this in an interview with Farah Khan,
“I don’t care much about money. It is fine when I have it today. God knows what will happen when I don’t have it.”
Adequate money ensures that we can use OUR TIME as per OUR CONVENIENCE. You may want to work on your hobby, spend time with family or whatever you enjoy.
Always know why are you saving and investing. It keeps you on the right track.
4. INVESTMENT BOOSTS OUR INCOME
It helps us to reach our goal in less amount of time. Your money kept in bank account vs your money invested as per your requirement will make sure that you achieve it efficiently and, in less time, as it provides an extra return.
5. LIABILITIES HAVE A DUE DATE
Time and tide wait for no one. Whether you are ready for it or not, your kids will get married at a certain age, you will retire at sixty.
EMERGENCY will not call before appearing at your doorstep. Contingency plans are non-negotiable.
We live in a VUCA world – most interesting and UNCERTAIN times. Skills are getting outdated fast. Automation is taking away jobs and livelihoods by a huge chunk. So, a passive income as a safety net is more important than it has ever been.
6. WHY SHOULD ONE SAVE – FOR INVESTMENT OR JUST SAVING?
One needs to save to overcome inflation, multiply money, create wealth & peace, maintain a standard of living, have a provision for unforeseen expenses.
Just saving is not enough.
Money needs to be invested well to yield returns.
Money also needs to be available at the time it is needed.
The author of this article is Yash Seth. See his profile on the following link to interact further.