You must be wondering whether you should save your hard earned money or take the risk and start Investing your money. We hope the below stated reasons will help you answer that question…
Let me borrow some lines from: Financial Tips for 2019 for Indian Millennial
Did you know that if you save Rs. 1 Lakh every year for the next 30 years with no interest, you would have a corpus of Rs. 30 Lakh after those 30 years?
However if you invest that same Rs. 1 Lakh a year in an investment vehicle that fetches you a return of 10% per annum, you would be sitting on a corpus of a whopping Rs. 6.97 crores!
Do you see the difference?
It’s called the magic of compounding! Your interest earns interest and its interest earns interest and so on!
As we just calculated, the result is exponential growth.
To make your money grow, you need to make it work for you (most important principle of personal finance) And the easiest way to do so is by investing it!
Let me begin my article now.
But before proceeding, let me ask you a question: have you watched the Saif Ali Khan starrer movie Baazaar?
For those who haven’t, Baazaar is an Indian film boasting of a storyline intricately composed with ingredients like money, power and stock market. It is basically set on the backdrop of stock markets and investing.
Those who have watched it know the power of investing your money!
Okay, Bollywood buffs, let’s move on to the actual article now!
As you might have guessed until now, I’ll be concentrating on why you should invest in this article.
In case you’re somebody who’s anxious about investing or does not believe in investing, consider this article to be tailor-made for you.
Hopefully, this article will enable you to alter your perspective and start investing.
- 1 Why don’t you invest?
- 2 1. I don’t trust the Stock Markets
- 3 2. I don’t have the slightest clue on how to invest
- 4 3. I’d rather keep cash
- 5 4. I don’t have enough money to invest
- 6 5. I’d preferably spend my cash and enjoy
- 7 Three Golden Tips for Beginners
- 8 Research
- 9 Diversify
- 10 Stable Returns
- 11 Basic Concepts of Investing in Stocks
- 12 1.Identify the trendline
- 13 2.Support and Resistance Levels
- 14 3. Historic Trading Volumes
- 15 Reasons to start Investing your Money now : Conclusion
Why don’t you invest?
Well, to make you understand that investing your money is important, I’ll analyze why most people don’t invest.
The Gen X (i.e. the millennial generation) is mostly the people who refrain from investing for some odd reasons.
So we’ll take a look at five possible reasons for not investing and address them:
1. I don’t trust the Stock Markets
Well, this is an understandable reason. Especially for those who have watched ‘The Wolf of Wall Street’! (jk!)
But jokes apart, not investing is a big, big mistake.
Let me tell you one thing: if you are choosing to not invest in the stock market, you are missing out on a huge money-making opportunity.
The economy is a huge money-making machine. You must learn to take advantage of it.
2. I don’t have the slightest clue on how to invest
Consider a situation: a person, X wants to invest his savings in stocks and other securities but has no idea whatsoever about the jargon of Indian stock markets.
If you are avoiding investing just because you do not know much about investing, then you must consider learning the jargon about Indian stock markets.
Keep in mind, investing is no rocket science. If others can do it, so can you (I should have considered becoming a motivational speaker, right?)
Just remember this: it takes time. It takes time for your money to multiply.
Start thinking about investing as a marathon rather than a 100m sprint and you’ll start seeing results.
3. I’d rather keep cash
This is a horrible, horrible thought.
Inflation is a ghost that will come and eat away all your savings without you even realizing it.
The money that you save should not only beat the inflation until you retire, but should also stay augmented over the entire retirement period.
Not many know this, but inflation is a risk that reduces your purchasing power over time. The value of rupee after 20 years will be less than .25 of what it is today!
Say, Rs.60,000 is your living expense today. After 20 years, considering an inflation rate of 6%, you would need at least Rs.1,92,428 to match the same living standard!
In addition to inflation rate, you also need to consider medical and healthcare expenses. As we age, we become more vulnerable to health issues and our healthcare costs rack up.
As a side note, it’s always a great idea to invest in a life insurance plan. We’ve covered the LIC Jeevan Anand Plan in depth.
4. I don’t have enough money to invest
Don’t make the mistake of believing that you need a large sum of money before you can even consider investing.
It’s not true.
All you need is some amount of free money every month to put into investment vehicles that can fetch you a return of 10%+ over the long term. You’re young right now, and you can take risks.
Take them. Because you’ve got the biggest asset that older people would kill for.
Starting an SIP is a good way to start exposing yourself to equity. Invest small but invest consistently. Make your money work for you! It’s one of the most important among the 4 Principles of Personal Finance in India.
It doesn’t matter how less you invest, what matters is you invest.
5. I’d preferably spend my cash and enjoy
I know, I know #yolo and stuff. I know ‘You Only Live Once’, but it is precisely because yolo that you must grow your money.
The problem with the young generation is that as soon as they develop a higher level of income, they start to spend cash without worrying and investing.
But this is the biggest money mistake one can make.
It may entice you to spend your hard-earned money on something exorbitant like the latest iPhone, an expensive smart watch, new speakers, bigger car and this list can go on and on and on.
But my advice is, don’t.
The reason behind this is simple: these ‘extra luxuries’ tie up a whole lot of money which could very have been invested.
If you start investing today, you can easily plan a luxurious retirement.
Three Golden Tips for Beginners
Okay, given that we have analyzed all the reasons why you don’t invest your money until now and dismissed them as well, I am convinced that I have convinced you to start investing.
However before you dive straight into investing, here are a few basic tips for beginners to keep in mind when they actually start investing:
Do complete research before finalizing an organization in which you want to invest. You must look into an organization’s history and future plans both. Also, you ought to comprehend the organization’s long-term plans, expansion plans, owners etc.
Diversify your portfolio. Try to invest in a variety of securities in order to lower your overall risk exposure. This goes well with saying, “Don’t put all your eggs in one basket”.
If you have a portfolio which consists of a wide range of securities, it will work as a shield against huge losses for you.
Initially, look for stable returns rather than investing aggressively. I know, we all want to multiply our money quickly but patience is the key to smart and fruitful investing.
Basic Concepts of Investing in Stocks
Before learning the advanced concepts, it is essential you first understand the logic behind some of the everyday terms in the Indian stock market.
Deciding which security to invest your money in, when to buy it and when to sell it can prove to be very difficult, especially for beginners.
But if one has the knowledge of technical and statistical analysis, the whole investing procedure will seem like a breeze.
1.Identify the trendline
Trendlines are those lines which are used to depict the rise or fall in stock prices on a graph. They signify what is known as the price pattern.
Identifying a pattern or trendline is the first task you must learn.
2.Support and Resistance Levels
Support level implies the bottom boundary whereas resistance level implies the top boundary.
These two levels simply suggest that a stock’s price is not likely to fall below its support level and likewise, it’s not likely to rise beyond its resistance level.
When the price of a security reaches its support level (i.e. predicted bottom-most level), it is believed that the market is currently bearish in nature. Hence, it is considered an ideal time to buy that security.
Similarly, when the price of a security reaches its resistance level (i.e. predicted top-most level), it is believed that the market is currently bullish in nature. Hence, it is considered an ideal time to sell that security.
3. Historic Trading Volumes
Volume means the number of transactions in a particular security which, taken place at a particular point of time, irrespective of buying or selling transactions.
At the base of the X-Axis (i.e. the horizontal axis) of the graph, you can see some little, vertical lines. These depict the volume of that particular security at a particular point of time.
The volume usually increases dramatically when there is significant news (positive or negative) about the organization.
At a point when the volume is expanding, it can likewise move the price of the stock rapidly.
With high volumes persisting in the market, you can be witness greater ease in buying and selling stocks. This is because if a lot of people are trading that day, you will find a buyer/seller quite quickly.
So start investing today and multiply your money magically! To know more, read Technical Chart Analysis Of Indian Stocks
Reasons to start Investing your Money now : Conclusion
Don’t think and start investing now!!
To make your money grow, you need to make it work for you and the easiest way to do so is by investing it in vehicles that give you an inflation-beating return on your investment.
The longer you wait before you start investing, the longer it’ll take you to see impressive returns. This is due to the magic of compounding that works wonders in long term investments.
It depends on your risk appetite. Stocks, equity etc are riskier investments as compared to bank FDs, bonds and government schemes.