what is investment

 what is investment?

the money you earn is partly spent and the rest saved for  meeting future expenses . instead of keeping the savings idle you may like to use savings in order to get return on it in the future . this called investment .

why should one  invest ?

one needs to invest to :

.  Earn Return on your ideal resources.

.  Generate a specified sum of money for a specific goal in life.

.  Make a provision for an uncertain future.

One of the important reason why one needs to invest wisely is to meet the cost of inflation. Inflation is the rate at which the cost of living increases . the cost of living is simply what it costs to buy the goods and services you need to live . Inflation causes money to loss value because it will not buy the same amount of good or a services in the future as it does now or did in the past. for example, if there was a 6% inflation rate for the next 20 years , a Rs. 100 purchase today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor in any long-term investment strategy. remember to look at an investment's 'real' rate return, which is the return after inflation. the aim of investment should be to provide a return about the inflation rate to insure that the investment does not decreases and the value. for example, of the annual information rate is 6%, then the investment to earn more than 6% to ensure it increases in value. If The after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in the value; that is, they won't buy as much today as they did last year.

What care should one take while ininvestors 

The sumar one starts investing then better. by investing early allow your investments more time to grow, whereby the concept of compounding (as we shall see later) increases your income, by accumulating the principal and the interest or dividend earned on it, year after year. the three golden rules for all investors are:

. Invest early

. Invest regularly

. Invest for long term and not short term

More about investment and related investment topics in our next post you can tell wait for next post.

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