Why Investments are important?

nvestment plays a crucial role in financial planning. We all work hard to earn money online. It’s equally important to make that money work hard to secure your future. Investment does that job and allows you to take charge of your future financial security.

Investment plans are financial products that allow people to invest in creating wealth for the future. People generally have financial goals in their lives. While working hard and saving is a traditional way, not everyone gets that dream job they like and pays them well enough to secure their future. By making a disciplined and periodic investment, you can grow your money and build a corpus for the future.

At various stages of life, we require a financial corpus. Whether it’s for paying for your children’s education or marriage or even after retirement, you need enough funds to tackle them peacefully. By investing in proper investment plans, you can sit back and relax while your money does the work for you. The returns generated through investments can provide financial stability.

Investment plans help you develop the habit of saving regularly and be prepared to meet your family’s financial requirements in the future. Not investing means a longer working life, where you will have to sweat it out as long as you live. Practically speaking, that is not possible as our health weakens with age.

Savings vs Investment

A lot of people confuse savings and investment. Savings is a passive way of accumulating wealth. For example, you deposit money into the bank, and the bank keeps it, lending you a small interest rate. The interest rates offered by the banks are low, and so you will not receive returns sufficient to the value of money during that time. On the other hand, investment is an aggressive way of growing your money. Investments are made with a target of higher returns more than safety.

Types of Investment Plans

Indian investors have different investment options to choose from. While some like shares, bonds, and stocks are traditional ways of investment. New age investment avenues like ULIP and Mutual funds are preferred by many people these days. Investments can be broadly classified into two Traditional Investments & Alternative Investments.

Traditional Investments

1. Stocks
2. Bonds
3. Deposit
4. Public Provident Fund (PPF)
5. Employee Provident Fund

Alternative Investments

1. Mutual Funds
2. Real Estate
3. Gold
4. Hedge Funds

Reasons for Investing

1. Investing money ensures that your money grows instead of idly lying in your savings account
2. Investments provide more significant returns that will guarantee your family financial stability
3. You can take care of sudden medical emergencies with investment plans that have high liquidity value
4. Investments give you a steady income in your retirement years from accumulated wealth. It is the main reasons why people must start investing at a young age
5. The value of money decreases with the growing inflation. You can offset the effect of inflation on your assets by investing and generating a good corpus
6. The money you invest in investment schemes are eligible for tax deduction under Section 80C of the Income Tax Act, 1961.

It’s never too late to begin investing. Don’t let the fear of the future take control over you. Once you set investment into motion, you can sit back, relax and watch your funds grow. Sites like Fincover, allows you to choose from different investment options. Make a wise choice now!