Investment : Why ?
We often
all listen and read about investment. Many experts share their view and advice on
investment through various media like TV, news letter, blog etc. A lthough a
lot of information is available on internet and many other media but common
investor still has no clear idea about investment. The investor awareness is
very low about investment. I am trying to go from very basic like what is
investment? What is asset class? What risk associated with each asset classes
etc.?
Why need investment ?
We all
have some future goals or responsibilities like children education, their
marriage, retirement planning, abroad trip, purchasing big home and many more.
To achieve those goals we need money at various stages in life. The value of
money badly affected from inflation. By passing the time the purchasing power
of money decreases. If we do not our money invest in anywhere and keep in our
locker or keep idle in bank account, we cannot fulfill our future goal due to
the non availability of appropriate money for the particular goal. Inflation
eats our saving during the long period. There are difference between saving and
investment. We Indians are great saver but poor investor. To fulfill our future
goals successfully we need investment successfully.
“Investment
is an act of deploying your money in an asset class with an expectation of
return after paying taxes higher than inflation to preserve purchasing power of
money.”
Assets are
broadly classified in two categories:
- Physical Assets
- Financial Assets
Physical Assets: A physical asset is an asset which has value and can be touched, felt and
used. A piece of land, home, gold coins etc are the example of physical assets.
These assets carry storage cost and maintenance cost. A owner of these assets
feel very safe and confident.
Financial Assets: These assts cannot be touched or felt and bought in the form of
certificates. Equity shares, bonds, debentures, fix deposits, mutual funds,
provident funds etc. are the example of financial assets.
In India,
people have been more comfortable with physical assets, which have drawn a
large portion of their wealth. As physical assets held by an investor do not
benefit the economy, they are termed as unproductive assets. In order to help
the economy grow and in turn benefit from the growth of the economy, people
need to deploy a portion of their investments towards financial assets.
We will discuss more about financial
assets in next articles. For more detail and any other query related
investment, you can contact me through my email.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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