Blog #11 - What is Investment? - Finance With Atul


Finance With Atul is a online platform where the knowledge of finance and business will be explored. Follow Finance With Atul to stay updated and motivated. Finance With Atul is dedicated to all the people who wants to make their life smooth.

About Me

Money MakEs Money

Wednesday, April 21, 2021

Blog #11 - What is Investment?

What is Investment?

We are living in 21st century where all persons including women, men, students etc. wants to create wealth, if we include a working professional even then it is not wrong. Everyone wants to create wealth. But due to lack of time and knowledge many people don’t take right decisions with in remaining time toward this step and at end they compromise with their current financial situation. Even if someone take steps and unfortunately they fails then instead of trying one more time they start misguiding other people by telling their stories and a common man instead of taking initiatives believes on their thoughts. They start making excuses.


This is not the solution.


Business is one way to accomplish this but 7 out of 10 people are doing 9 am to 5 pm job why, because everyone cannot do a business. Even business can take time to spread and build up. If it is a successful then your life start running smoothly and luxurious. But if it gets failed, it seems for you that life is finished. Today’s time is time of competition everywhere is competition, from taking admission in a school to take a job.


Now question arises how a person working 9 am to 5 pm will create wealth.


Here comes the answer.


The best way to create wealth with your job is “Investment”. Investing a small amount of your savings/salary, whatever is in excess for you, can lead to a great wealth creation. If we define for investment it can be defined as –


Investment means that an asset is bought, or that money is put into a bank to get a future interest on it.




Any definition that suits you best for purpose of generating income through your idle money (money from which you can take risk).


Share Price of Stock - Chart - Intraday



The main purpose of investment is to generate income for yourself for a long period of time which is independent of your primary income.


Now for some people, investment is their primary source of income, if we talk about traders who regularly trade and invest in share market and virtual currencies etc.


Whenever word “investment” comes in society 90% of people create the image of share market which is not good. Investment may be anything like –

1.        Buy a home – give for rent.

2.        Buy home today – sell it after some years.

3.        Buy gold – sell it when gold price goes high etc.


Anything can be the investment but main purpose should be generating income.


Share market is one of the best way to invest money, to multiply your money. People fear when it comes to share market. There is a mentality in our society against share market that it will dip our money.


The cost of living is simply what it costs to buy the goods and services you need to live. The rate at which the cost of living increases is called inflation. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if there is 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years. It is very important to consider inflation as a factor in any long-term investment strategy.


     One needs to invest surplus money to take care of uncertain future by keeping inflation as one of the factors.

      To earn a return on your idle resources.

     To generate a specified sum of money for a specific goal in life.


Remember to look at an investment's 'real' rate of return, which is the return after inflation. The ultimate aim of an investment should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For example, if the annual inflation rate is 5%, then the investment will need to earn more than 5% to ensure it increases in value. One needs to remove tax component on maturity value. If it is less than 5% after tax, then the value of the investment is decreased. One has to understand that the matured amount won't buy as much as they bought at the time of investment.


Investment can be taken as tool to reduce your burden which arises due to future of your children. How? Let see suppose you buy some share of a good company for your child at age of 12 years, and the company you choose is very good and you are sure that this company will perform better in future then surely your price value for the share of that company will rise after some years. And when you will sell these share after a very long time say 10-15 years you will get very good results. (Here example of share market is taken but it is not necessary that you should buy shares. Alternate options which suit your risk are available for example fixed deposits in banks, post offices, mutual funds etc – or anything that suits you best, but it should give returns on invested amount).


No comments:

Post a Comment

Suggestion Will Be Appreciated