Why would you want to invest money when you can happily save and earn a decent return on investment with your savings account which is in the range of 4 to 6 percent? However, unless you have a huge money say for example, you have 100 crores in the bank for which you get four percent interest which is around four crores, saving money is not going to help you.
Most of us do not have that luxury and if you have so much money I am sure we would not just save it in the bank and eat on the interest alone. We would surely invest. But in case you do not have so much amount of money; the problem is not with investing but the way the money is invested. You have to factor in the risk associated with it and then choose the investments wisely.
For example, even if you invested the money in fixed deposit, say you invested rupees 100 in 2006 and got around 8.5 percent on the deposit you would have got only 200 rupees in nine years. On the other hand from the last decade the inflation has been at 9.3 percent. For example if a broiler costs around 60 rupees in 2006, it is around 120 rupees today. So for 100 rupees chicken in 2006 we are paying 200 in 2014. This clearly shows that merely saving money or putting in FDs is not going to help. To survive we have to earn, save or invest in such a way that we always get more than the rate of inflation.
Now the question is not to invest or to invest but where to invest. If you look at throughout history and over a longer period of time the best asset has always been equities. Yes, the share market has always given the highest returns but also higher risks.
So when you invest in shares make sure you know everything about them or the broker whom you trust to invest is explaining you everything and the risk associated with it. Once you reach the investment profit or the target you set make sure you withdraw the amount or you use it for some other purpose. As earlier said share markets are risky as well, so also be ready to remove the amount if it is not performing well. In short keep a loss target, say if you are business is selling phones, then you offer discount if the sales are not going well. Similarly, see the minimum amount you can afford to sell the shares.
You can also try mutual funds which invest in variety of shares but offer lesser risks and also you can start with lesser amount.
Off course, then you have the real estate, gold, silver, foreign currency and commodities etc. So like these there are many opportunities. Just see which one matches your skills, interest areas and in which you are willing to take risk. As always make sure you have minimum loss and maximum profit target. If the investment did well and achieved your profit expectations, sell it or save the profit or diversify your investment in a new area.
If the investment did below your expectations, do not wait for the losses to pile up and put you under debts, make sure you have a plan B and remove the investment and go for the new thing.
Lastly, sometimes in spite of going according to plan, things might fail in terms of a death, natural calamities or a mishap etc. To save your investments or business from such events, make sure you have a life insurance or general insurance accordingly.
Most importantly, make sure you are reviewing your investment plans from time to time and adjust accordingly in case of any new changes.
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