Why should one invest?

Let us assume that your age is 25 and you want to retire at 45 (retire after 20 year). Now you are earning 50,000/month with 10% hike in salary every year. Your expense is 30,000 and your saving is 20,000/month in the first year but your expense is also increasing with 8% per year (due to inflation) and you save your rest of the income.

Total cash you have at the age of 45 year (after 20 year)= 17,890,693 (1.789 Crore)

After you retire, you have a fixed amount in you bank i.e. 1.789 crore. If your expenses still increasing with 8% yearly then your 1.789 crore will last long 8 years only. What would you do after that??

Now lets assume another situation in which all the conditons are same but instead of saving your income in the bank, you invest it at the rate of 12% per annum. Which is 4.27 Crore after 20 years or at the age of 45.

Again back to same question i.e. why to invest?

To Fight inflation
To Create Wealth
To get Financial Freedom

Where to invest?

Fixed income instruments ( examples are: mutual funds, fixed deposits offered by banks, bonds issued by the government, bonds issued by corporates). Return you get in this investment is approx 8% to 10% per annum.
Equity Market: It means to invest your money in the share market by buying share of some company for a long time. Here, there is no guarantee of return but if you invest in good companies your average return is 14-15% per annum
Real Estate: Real estate means buying or selling of lands, appartments, house, flats, etc but it requires a lot amount of money.
Commoditis (precious metals): Mostly golds and silvers are the important commodity which is bought by the people. Return from the gold is about 8% per annum from last 20 years.

Key takeways from this blog are:

Invest to secure your Future.
Equity should be a part of your investment if you want to beat the inflation in the long run.

Thank you for reading...

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