Why should one invest ? Is it necessary to invest ?

Why should one invest? Where to invest? These are the biggest questions among the people at earlier age, even some people with middle age as well. I will answer both the questions in this blog.

The most important thing is that everyone wants to grow their money. They want their money should earn money for them. Many have financial planning to achieve their goals like house, car, vacations, children’s education, retirement planning, etc.

Most people save money to achieve their financial goals. But they didn’t invest it properly. Most of them invest in Bank Fix Deposits only. But is it right? Is it sufficient? No, this is not right. Before investing anywhere, one should think why he is investing. Is it necessary to invest? Yes, it is necessary to invest, even if you don’t have any financial goals. If you don’t invest your hard earned money anywhere, inflation will kill all your money. So, at least to maintain the cost of your money, you must invest. 

But what should be the minimum rate of return per annum on the investing amount? Suppose inflation is 7% per annum and Bank FD 6% per annum, it means you are loosing 1%. You must beat inflation to grow your money. You should earn more than inflation. But how much more? What is the standard parameter? Suppose inflation rate is 7% and GDP growth rate is 8% then you must earn minimum (Inflation + GDP growth rate) 7+8 = 15% per annum at least. Whatever above 15% means you are outperforming, whatever below 15% means you are underperforming. So, 15% is the BENCHMARK. Whatever above this benchmark is GOOD. Whatever below this benchmark is BAD.   

Remember, in 1980 people were used to say RICH who have some lakh rupees (LAKHPATI). Today's definition of RICH is being changed. Now at least someone has 10 to 15 Crore assets to be called RICH (CROREPATI). So, one could earn at least to 15% BENCHMARK to maintain his status of money. 

So, where to invest to beat this benchmark of 15% per annum? Follow this blog. We will tell you all about this in the next blog.