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Investing: How Investment Is a Lot Different From Saving Money?

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A business man with masters in mechanical engineering having vision in business sectors such as real estate, Automobile, food & technology.

Save or Invest?

Save or Invest?

Investment! The meaning of this word, if understood and applied in life, it might bring tremendous returns. Like we invest our time in acquiring knowledge, learning things, relationships, enjoying our favorite sports, and every second of our time we invest consciously or subconsciously to make life better, likewise, hard-earned money should also get invested for a better future. Mr. Benjamin Franklin correctly said “Time is money” because time cannot get saved, instead should get utilized, spent, and invested in a wiser way. Out of the 100% of the money earned or possessed, they must get divided into saving, spending, and investment, with making conscious choices on the invested part. Unintentional though, we all put our money in instruments which are future liabilities or returns that are very less in the long run. Let your investment make assets and not liabilities when you grow old. Whereas saving can fulfill emergency needs and short goals, only investments will help in accomplishing long-term goals.

Investment Scores Higher.

Investment Scores Higher.

Understand Money & Inflation.

When was the first time you earned life’s first paycheck? Let’s say at 20, for those 20 years you enjoyed your parents’ every support, but parents could afford only when they saved and invested their hard-earned time and money at the right time and right place. Inflation pushes the prices of products and services higher every year, so the money earned 10 years ago would be utmost less compared to today’s earnings. Likewise, today’s earnings would get counted as 1/4 after 10 years, with an increase in goods prices with time. To cover up the inflation rate, rising prices of daily essential goods, and maintain a regular lifestyle, one needs to save and invest more.

To Meet Emergency Needs- Save.

Emergency funds - another name for saving money. To meet emergency requirements like hospital expenses, home appliances, sudden repair/buying, or other sudden needs arising from nowhere such funds come in handy. Keeping aside a fixed lump sum of money and over & above money saved shall get invested in instruments offering good returns in the long run.

Life Goals!

Life Goals!

Understand Life & Future Goals.

At 60, if possible, many choose to retire from work and spend the rest of life relaxing. Till that age, one would try to fulfill all requirements of children and self-needs. But for the future retirement life, one’s investment made during work-life comes in handy. Saving doesn’t build asset, investment does! Robert Kiyosaki has explained well in his books how investment builds assets and makes poor dad rich.

30 Days Challenge.

When a thought of buying anything comes to your mind, for example, a fancy shirt for $100, wait for 30 days. If the thought persists after 30 days, buy it and if you have forgotten the thought itself or find it least interesting, Congratulations, you have $100 in savings. Remember, money not spend is the money saved.

To Meet Short & Long-Term Goals- Invest.

Very short-term goals get achieved with saved funds, but down the line, 3/5/10/15/20 year goals get achieved through the right investment instrument and staying invested for longer time.

Let money grow like a tree!

Let money grow like a tree!

Let Money Work for You While You Sleep.

Money invested works for you in making more money while you sleep. They build assets slowly with time and the growth potential of investment instruments like gold, property, government bonds, stocks, and various other options. Like a tree grows with time, your investment portfolio shall grow, which shall make returns heavier.

Practice 3 Golden Rules:

  • Golden Rule #1 - Never spend more than what you earn.
  • Golden Rule #2 - Have a money plan for the future life.
  • Golden Rule #1 - Make your hard-earned money grow.
Make Investment a Habit!

Make Investment a Habit!

Follow 70/30 Investment Rule:

Make a thumb rule for the money earned on a regular basis in the early phase of life. Segregate income into 3 parts like spent, save, and invest. In the 70/30 rule, keeping aside 70% of earnings for daily expenses, 20% for savings for emergency and meeting short-term goals, and 10% for investment. Likewise, practicing the 50/30/20 investment rule will get the job done if comfortable. The intent should be to spend less and save & invest more.

Make Investment a habit!

To form a habit, one needs to be disciplined and persevere through all odds. An investment habit today would be like what you reap after 30 years will be what you sow today, much additional than you sow, and later than you sow. The sows & reap principle is the most powerful nature’s law, correctly applicable to investment & returns. All other principles add & subtract, this principle, if applied in the approved manner, multiplies the gains. Investment multiplies money and saving is just keeping money, Period!

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

© 2021 Hiren V

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