Tuesday, August 30, 2016

Why is investment important

Investment is one of the most important aspects of financial planning. The aim is to make sure that the money earned by you does not lie around being unproductive. It is a good and profitable idea to make money from any extra cash that a person might have. Investing in various financial products lends growth to any financial portfolio. One thing that is absolutely clear is that any amount of money is sure to appear less with each passing day. This is because the value of say Rs.1000 will not be the same 5 years down the line as it is today. Same holds true for the value of Rs.100 10 years ago as compared to its value today. Hence, it is important to understand that saving alone is not enough for future financial goals. Any investor or common man needs to ensure that his or her money grows as well. Investment can be defined as any activity that involves using money in a way which offers returns in future. Mentioned below are some of the most important reasons for investing money.
Investing money in various financial avenues ensures that your money grows instead of just lying there in your bank account

Investments yield returns which take care of emergency expenses such as medical expenditure etc.
Investments are a good way to earn income from your accumulated wealth. For example, earning rent from a real estate investment or earning dividends from stock market investment
Tax minimization is a secondary objective that can be achieved by investing your money in various investment tools
Fighting inflation can be one of the key reasons to ensure that your money grows. The value attached to a quantum of money depreciates with rising inflation. The effect of inflation in lowering the value of your assets can be tamed by investing and generating returns on your corpus
Investments lead to a certain amount of corpus that plays a vital role in providing financial security to your loved ones
Distant financial goals, both log-term as well as short-term can be planned and fulfilled by making intelligent and relevant investments

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