Why there is need to understand about investments?

 

How can you multiply your money and why it is important to understand that how you should channel your savings?

Many of you heard about investments when it comes to raising your wealth, but you stop to go ahead because of lack of information and other aspects related to the investments as future uncertainty and other related risks make you reluctant to put money in any vehicle. And yes, everyone should think before investment because it is your hard-earned money. Most of the people cannot understand the estimation and calculation of its return, so they easily believe whatever their bank or other financial advisors advised that’s why most often people get misguide and defrauded. And as you can see advising, consulting, borrowings all becomes a business and these are running their business with your money so it is important for you to take an initiative and start educating yourself about various investment vehicles and its related aspects as there are various risks involved that necessitates you to understand the principles and concepts so that you can take the decisions of your yourself according to your risk-bearing capacity and repayment potential.

What are the things you should consider before an investment?

How can you evaluate if your investment vehicle is suitable for your goal?

Life is all about doing something to reap benefits in the future, so all of us are in the investment game.

Investment is neither a product nor a procedure, it is a personal plan, a plan in which you have to decide what are your goals and how you can go from one level of comfort to another level. In your young age, you are able to earn but these earnings you should invest  wisely so that when you reach old age you can fall back on investments, as in this age your capacity to earn diminishes, that’s why you need to have a clear picture of your financials before an investment plan

Things you should consider before planning to invest

•  Inflation-Return relationship: The money you save for the long term is going to be affected by inflation. Inflation which is the rising price of things makes your money worthless and less over time. The interest you earn usually cannot cope with inflation. So, you need to put money where it grows to retain its value or even increase in value.

• Simple and Compound Interest
• Time value of money: It can mean the difference between a life of having what you need for your entire life or living the dream now, while relegating yourself to financial troubles tomorrow.
•  Risk and return
• Role of diversification in risk reduction: The management of your portfolio totally depends on your risk-bearing capacity  the more the variety of products in the portfolio will reduce the risk on each product

How can you know more about investments?

• It happens through education, practical experience, and life lessons
• Increase your knowledge about real estate planning, social security, how a credit card works, and credit scores, saving for the future, insurance, retirement, and taxes.
• Read newspapers and magazines about money matters
• Visit banks and turn your savings into investment, do it by yourself will give you an idea of how banking work
• Educate yourself through videos, to build the foundations of the investment market.
• Read more and more about the categories of investment products and their key aspects so that you can avoid any mishappening and prevent yourself from frauds and scams.
•  Understand the calculation of return on investment, credit score, interest, time value of money and inflation rate etc so that you can make an analysis of your portfolio accordingly you can do future planning.

Moreover, In my next blog, I will share some of the important points and calculations regarding investments and how investment product works.

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