"We often hear financial planners, financial advisers and mutual fund companies use words like 'savings' and 'investment'."
But did you know that saving and investing are two completely different concepts?
Salary or Income:
Most of us earn an income every month. It can be in the form of either salary or business income. After that, we also have our expenses like food, clothing, rent, electricity and telephone bills.
Storage:
Once we have paid for expenses from our income, we usually call the remaining amount savings. Of course, the more we save, the better.
Cost:
And we should always aim to reduce our costs. However, we can not always avoid certain expenses such as rent or loan instalments. If your goal is to create wealth, savings alone are not enough. We need to do something to increase our savings and further it.
Investment:
This is where investments come in. They are financial plans that help us increase our money over time.
Inflation:
We need to invest because the cost of living is increasing every year. That is what is called inflation. In other words, the value of money is declining.
Depreciation money:
You currently earn Rs. Suppose you are saving 10,000. If you leave this 10,000 rupees as it is, after a few years we will be able to buy very, very small quantities of goods with it. This is because over time, money loses its value. Also, the price of goods and services is rising. That's why your money needs to grow.
Why Investing Is Important:
Should grow faster than the pace of inflation. Only then will you be able to buy at least the same items you bought in the past. This is where investments help us.