Indians being natural savers they generally “save” a part of their monthly income whatever they are earning, but it is sufficient now and in future? What people are forgetting is the wealth destroyer- “Inflation”, without assuming future inflation our current investments won’t suffice to meet your long-term goals.
Earlier people save their hard-earned money in chits, LIC, Bank Fixed Deposits, but have you ever estimated what’s the return generated from these safer instruments; Hardly 4-6%(4% for bank savings a/c and 6% on bank fixed deposits)do you think it would suffice to meet your future needs?Absolutely No; Then what to do then- You should “Invest” rather than “Save”
Why “Investing”?– In olden days housewives save their money in various pouches which is nothing but “Diversifying Their Savings” This is a good habit; No doubt about it! But as the prices are increasing (due to inflation) your purchasing power of money declines. For example in 2000 price of 1 litre milk packet is 6-10 rupees but now in 2020 it was 60 Rupees. Do you know the reason why?Due to inflation
If you keep on saving your hard-earned money you would purchase a few items in the future than what you can purchase today. So identify the monster- Inflation which eats away your savings without your permission.
You can save your money, but can you control inflation? Absolutely it is not possible! Will your future financial goals would be left as a “dream”? Most of the people are not ready to leave their financial goals as “unfulfilled dream”. To do so, what can they do? They should invest their money across various asset classes.
Why Diversifying? Likewise in olden days housewives saves money among various pouches, kitchen utilitises etc you should diversify your money across various asset classes like Gold, Real Estate, Shares, Mutual Funds, Bank Fixed Deposits(Though you should not allocate 100% of savings in bank fixed deposits you might allocate minor proportion of 5-10% of your savings)as a part of diversification.
Though Investing carries some risk you should be ready to bear some risk in order to beat inflation. By investing across all asset classes you would beat inflation and meet your financial goals in the future. This would become possible only if you-
- Invest across all asset classes
- Diversifying your investments according to your risk appetite
No two investors risk taking ability is same. Before investing you should have proper idea on your risk appetite and choose your investment products accordingly.
Do remember to beat Inflation you should invest, not save! If you still save you would never meet your financial goals as inflation eats up your savings gradually! That’s why it is a “Silent Killer”