While it is undisputable that money cannot grow on trees, it can however burgeon if you save and invest wisely. The process of ‘investing’ involves buying an asset and letting it appreciate over time. This means you can eventually sell the asset for much more than what you paid for it, thereby landing you a profit. Think of your capital as a seed. By sowing it, instead of consuming or devouring it right away, you’ve picked ‘long-term gain’ over ‘instant gratification’. Your investment grows as does your sapling, when watered regularly. Finally, analogous to a full-grown tree, it’ll provide you with fruits, flowers, fresh air, and much more incentives.
The most perennial method of attaining financial security is by saving and investing over a long period. Most students and youngsters believe that saving and investing isn’t something they need to consider immediately. This, however isn’t the case. Here’s an example to help better elucidate the benefits of investing. If a 20-year-old invests 10,000 rupees in a monthly brokerage account that grows at an average rate of 10%, that money will be worth around 80 lakh rupees when they’re 65 and ready to retire. Every single day is valuable and every single day contributes a drop to what will become a vast ocean of profit. This proves that each day a person waits is an opportunity missed. Moreover, young adults have the luxury to take small and calculated risks without the fear of affecting their livelihoods and families.
Staying invested for longer periods of time, without liquidating your capital, will most likely result in higher returns. Investment products can be financial - like mutual funds and fixed deposits, or nonfinancial - like gold and real estate. Fixed deposits return definite interest rates over fixed durations, while stocks get you a share in companies, proportional to your investment. To avoid putting all your eggs in one basket, you must diversify your assets. If you lose money on one product due to market fluctuations, the gains from your other shares should make up for it.
Mistakes are part of the investment process. Learning and improving from the mistakes will help you succeed as an investor. However, it’s also important to pay attention to some warning signs that might help prevent you from falling prey to investment fraud. Some fraudulent scams that everybody should be wary of are:
1. Promises of a guaranteed high return offered exclusively to you
2. Scam artists that offer the opportunity for you to make a large amount of money in a short period
3. Opportunities that require a very quick commitment on your behalf
It’s important to do a thorough background check and make informed decisions about your investments to avoid risks and shady deals.
Every successful investor starts with the basics! The following are some helpful and informative resources that can guide you on how to begin investing:
· Invesopedia is a website that helps young adults build a sound financial portfolio
· Personal Finance by Khan Academy guides students in making the right monetary decisions
· ‘The Little Book of Common Sense Investing’ provides a framework for building a low-risk portfolio and teaches you how to make smart investment decisions.
In a nutshell, investment is a sound way of growing your funds over time, and one of the best financial manoeuvres you'll make. It's important to start early, so read up and start investing today!