Content regarding personal finance is very easy to find these days. There are numerous creators who tell you to invest in the share market, mutual funds, cryptocurrency, and other financial products. So here comes a question, “Why is investing important?”
You may get attracted to the returns in their portfolio, but you shouldn’t invest your hard-earned money only by looking at their returns. You should also keep in mind your risk-taking capability, and liquidity of that financial product before investing money.
Why Investing is Important for Everyone?
You might have a very obvious answer to this question that you want to earn more money, that’s the reason you think you should also start investing. But it’s not the fundamental reason why investing is important for everyone.
There is a phenomenon called ‘inflation‘ due to which the prices of products and services rise every year resulting in reduced purchasing power. Now, you have to pay more for the same product because of inflation. So what you can do to increase the value of your money also, here comes the term ‘investing‘.
If you keep your money at home, its value will be the same. And rising inflation rate will make prices rise, and you have to give more money to purchase anything. But if you invest your money where you’ll get a return of 6-10% then your money will also grow to beat the rate of inflation.
Why to Invest in Stock Market?
The stock market is a market where you can buy and sell stocks/shares of companies listed in stock exchanges. When you invest in any company’s stock, you basically get ownership of that company in the ratio of money you’ve invested.
So now, if the company makes a profit, you’ll also get a share of that profit and if the company gets into a loss, you’ll also have to face that loss. That’s the basics of the share market.
And the reason you should invest in the stock market is because of the returns you can get through holding stocks of some good companies. If you’re purchasing the share of a financially good company, you can expect minimum returns of 8-15% and the maximum has no limit. It is way better than investing somewhere else because not only it is beating the inflation rate, it is also giving you a good return on your investments.
Conclusion: Why to Invest and Where?
Now you might have understood the primary reason why you should also start investing your money. Not only the share market, but you can also invest in other financial products like fixed deposits, mutual funds, bonds, ETFs, and cryptocurrency. You should look at your personal risk-taking capability before putting your money anywhere. Thanks!