What's my thoughts before Investing or Saving
Just to make myself clear that Just saving is not equal to investing. If you are just saving than you are in big trouble, but if you are saving and investing then you are doing great. Saving and Investment are just two sides of the same coin where Savings means Income - Expenditure whereas Investing is buying assets like stocks, mutual funds, real estate, or Cryptocurrencies.
Since I am from the middle class, and most of the middle-class mindset revolves around saving money in the bank i.e. we wait for our savings to accumulate so that our future will be saved if any emergency comes in like today's pandemic situation. Most of the middle class think that investing is risky because you will not have that money with you when you need it.
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If we go by definition Saving money is parking it somewhere for future whereas investing is a process of buying assets that will give rate of return over time. Now, most people think Savings is equal to investing, i.e. you buy Fixed Deposit in bank then you have an asset, which is wrong.
Saving money always comes before investing, everyone should save money before investing because it will give you a foundation or capital to feed to your investment. If times become tough just like Covid-19/ Coronavirus, you need your savings and not investing because you don't want to sell your investment in a loss.
How I see it is to save at least three to six months of my monthly expenditure in a bank fd as well as when you know that you need certain cash like marriage, child school admission then also you should keep that money in fd so that you will get it when required. After that, you should take your health insurance, term insurance and other insurance before starting the investment.
Now comes the investment, the above scenario is the foundation where you have secured yourself in any foreseen condition, now you are safe to start your investment journey. The investment can start as low as 5$ or Rs. 500 per month, and you can invest more and more when you have that money. Start investing in Mutual Funds, Bonds, Currencies in whatever form you think you want that investment. Investment is not equal to savings because in the longer run, your investment will always outperform your savings where you have compounded your money.
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So coming back to the topic, what's my thoughts before investing or savings :
Identifying my life goals - I don't want to invest everything for my retirement, I do want my investment to grow so that I can buy a Car, a Home or fund my child's education. Now for that, I need to identify my life goals and start investing accordingly. If I want a car in 5 years, I will invest in less risky assets rather than my retirement which is after 30 years. In that way, I have created Goal-based investment which makes the investment very disciplined.
Risk-taking ability - For Car, I can take little more risk than for my retirement because buying a car can be postponed but not the retirement so I have to access my life goals based on how risky my investment can be.
Mix and Match - You don't want all your eggs on the same basket, that means you don't want your investment to become zero if any investment strategy fails that means we need to allocate our investment into a set of financial instruments like different kinds of mutual funds, different types of stocks or different types of cryptocurrencies.
Review - Now this is very important, I always ask everyone that we should review our investment every year or so that if any asset is not performing well or not up to the mark, we can come out of it as early as possible.
What are your thoughts about Savings and Investment?
I believe finding your life-goal will make you passionate about your action, as a result you are likely to take risks on your investment. One might really put how compound interest can multiply their income. But taking risks to your dedicated goal, contained with your capabilities, can bring true investment outcomes. Sometimes investments can be your skills, time, and your ideas. So, every investment might not be futile, however, one bad opportunity shouldn't drown the investment optimism.
Just a thought
That absolutely true, investing on your self is always better. Because if you invest yourself you can earn much more than you are earning now.
Yes this is a correct ways to maintain your financial condition. We should divide our money in three parts- expenditure, investment and saving.
This way we can make more money, save our future, and can make a good income.
So in your thinking what the best source of investment in India in which we can invest safely and less, for every month🙂.
If you want less risk, then Debt Mutual Fund is best where you can easily get around 8% per year, but if you are looking for longer like 5 to 10 years than 50% in Equity Mutual Fund and 50% in Debt mutual fund.
Okay!
I will search about these. Thank you for suggesting 🤗
you will believe, but I have invested more then 50 % of my slary in saving 🤣
The first sentence goes perfect. I would say save something to invest.
The middle class is always fed with the idea of saving for future. My dad is the best example I find even today.
One instance
A piece of land which was offered for 40k (17 yrs back) now costs around 18-20 lakhs. He opted saving. His savings would have turned to 2 lakhs at max 🤷♂️
I regret not forcing him to buy that land 😁 I find investing on land is always the best thing 😊
Yes, that's correct we should invest as much as possible if you have enough savings. Might be your dad wouldn't have saving enough to invest, or he might be thinking about any emergency which might come.
True, he is a zero risk man 😊 he has lived his life with very less needs. May be I will follow him after 10-15yrs. But now i can take some risk 😉
All the previous generation people are like that only, but we can take risk Because we know there are ample opportunities outside.
True that 👍