It is common to see certain individuals earn a good salary and consistently save money while also curbing unnecessary spending. Despite doing all of these things, many find themselves grappling with financial insecurity during the later stages of their lives. A critical factor that deeply correlates with this issue is the individual’s approach towards wealth investing, or an utter lack of it, which creates an imbalance for them.
To understand the impact of a lack of investment, we will discuss some of the reasons one must invest and how certain platforms like moneymoksh.com can help guide you towards making more informed financial decisions.
What happens if you don’t invest?
Picture this: Your monthly salary stands at 50,000, and your regular expenditures like rent, groceries, traveling, and medical expenses cost 30,000. That results in a total of 20,000 in surplus, giving you the opportunity to set aside additional savings. Ideally this sounds like a win, but in reality if you save this surplus all while doing nothing with it, you’re not spending the money to earn passive income which could help protect you against inflation, meaning you arnt building wealth.
Let’s consider several reasonable scenarios:
- You will receive a raise of 10 percent of your monthly salary every year.
- Your expenses will also subject to an increase of 8 percent every year.
- You’re currently 30 years of age and have a retirement age goal of 50.
- You plan to retire at 50 and wish to save while enabling 20,000 ever month, but assume this money will not be subject to investment.
Carrying out this plan, after 20 years, you would have accumulated almost ₹1.7 crores. That would sound fine until you realize that with the surging cost of living, it would not last even a decade post-retirement. You would run out of funds after 8 years — with no salary, business income, or financial pep.
To conclude, not investing leaves you susceptible. You toil for your money for many years, however, when it matters the most, post retirement, the money would not work for you.
The Power of Compounding: Why Investing Works
Imagine instead, that you invested your monthly surplus of ₹20,000 each year in an instrument that has an average annual return of 12% for twenty years. Then you would not just have ₹1.7 crores, but instead would have over ₹4.26 crores. That’s a 2.4x difference – simply because you chose to invest, rather than allow savings to sit idle.
That’s the power of compounding, earning interest on interest, and is precisely why moneymoksh.com and other similar platforms encourage early and consistent investment strategies.
Why You Should Invest In The Stock Market?
Let us condense the pivotal points on why investing should be done without fail:
- In Fighting Inflation
Step by step, inflation curtails the power of your money. A loaf of bread costing 25 rupees now, will set you back by 50 in a decade’s time. If you wish to hold on to your savings, it is necessary to invest in inflation-beating avenues equities.
- In Creating Wealth
By itself, savings are not going to help you bypassage to boomtime — it will be investing. Accumulating wealth is necessary, no matter if you want to buy a house pay for your child’s education, or you just want to retire with no emotional burdens.
- In Improving Standard of Living
Investing affods you the opportunity to upgrade other aspects in life such as hobbies, vacations, better cars, and even a swankier house.
Where Should You Invest?
Age, goals, and risk appetite are the key determinants in investment selection.The following are major asset classes you can consider:
🏦 Fixed Income Instruments
These are investments of lesser risk to greater expected returns. Bank Fixed Deposits (FDs), Bonds from Bata or Bajaj, and even Tata’s government Bongs are prime examples.
Depending on the issuer’s credibility and the term duration, returns typically range from 5% – 9% annually. These options are favorable to conservative investors who prioritize capital safety.
📈 Equities
Equity investments come with a higher risk but equities also have higher returns. Indian equities, for example, are estimated to have delivered more than 12-15% CAGR over an extended period and some well-managed companies have even provided returns exceeding 20% CAGR.
Equity investments are ideal for longterm goals as they are fundamental in countering inflation. If you are looking to invest in the stock market and you don’t know how to get started, moneymoksh.com has articles and professionals to guide you.
🏠 Real Estate
Real estate consists of purchasing residential or commercial properties. The two major sources of return are:
Rental Income (typically 2–3%)
Capital Appreciation (depending on market demand)
But real estate is capital intensive, demands complex legal procedures and lacks liquidity. It is more appropriate for seasoned investors with lots of capital.
💎Precious Metals (Gold & Silver)
Gold and silver are classified as precious metals and are traditional stores of value. Historically they have yields at 5-8% CAGR. You can invest through:
💍Physical jewelry
Exchange-Traded Funds (ETFs)
Sovereign Gold Bonds (SGBs)
As a means of diversification, investing in precious metals can be reasons for diversifying your portfolio, though they should not be your most significant investment venture.
How Various Investment Avenues Yield Results Over A Given Time Period
Assuming you make an investment with your disposable income for a period of two decades:
In fixed income securities at 9% return → You would gather ₹3.3 crores.
In equities at 15% return → Your capital would increase to ₹5.4 crores.
In bullion at 8% return → You would achieve approximately ₹3.09 crores.
As is evident, equities would provide the highest return on investment over the long duration of time. At the same time, there is a very important fact, and that is diversification — that is, not concentrating all your investments in one area.
An Effective Strategy to Investing Smart: Asset Allocation
As per your risk appetite, these are some scenarios of the ideal asset allocation:
–A young professional with a longer investment horizon may look to allocate:
60% equities
20% gold
20% fixed income
–A retired individual might prefer:
80% fixed income
10% equities
10% gold
Overall, asset allocation works towards risk control while optimizing returns. You can learn more on diversification strategies on moneymoksh.com, where experts meet financial needs.
- Caveats before making speculative investments
- Investments of higher potential returns are likely to involve greater risk.
- Volatility exists in potential equities.
- Fixed income investments are less risky, but may not exceed inflation.
- Decouple your portfolio.
- Do not settle on a single investment vehicle.
- Your focus should be long-term.
- Capitalizing on opportunities is best through presence, not precision.
- Refrain from investing in unregulated areas.
Investments sans clear protocol and security, like cryptocurrencies, fall under unregulated territory.
Final Thoughts
Having flexible assets is no longer a luxury but a requirement. Want to travel the globe, retire early, or afford quality education for your children? All your goals start with setting aside money and investing it smartly.
You’re not required to figure everything out all alone. MoneyMoksh.com provides trusted partnerships for long-term wealth, featuring easy-to-understand guides, expert advice, and actionable insights to empower you towards prudent financial decisions.
The second-best time to plant a tree is now, and there is no time as good as now to start investing. So take action immediately.
to learn more go to www.moneymoksh.com