Wednesday, February 09, 2011

What is Investment?


Investing is not about putting all your money into the biggest companies or into biggest or most promising projects and then keep hoping to make big profit. Investing is not at all gambling, it's about taking reasonable risks to reap steady rewards. Investing is a method of purchasing assets in order to gain profit in the form of reasonably predictable income over the long term. Notice that word long term is highlighted.
Now many ask this question, what is the need of investing? We should invest so that our money grows and saves you against rising inflation or any ups and downs in your life. Whether your money is invested in stocks, bonds, mutual funds the end result is to create wealth your retirement, marriage, college fees, vacations, better standard of living or maybe just to have some fun in your life and do things you had always dreamed of doing with a little extra cash in your pocket. You might not imagine this in your monthly salary; but trust me it is possible with investment.
So start investing today. By investing right away you are allowing your investment to grow faster. You need to invest early, invest regularly.  Invest for long term. The power of compounding is one of the most compelling reasons for investing as soon as possible. The earlier you start investing and continue to do so consistently the more money you will make. The longer you leave your money invested and the higher the interest rates, the faster your money will grow. That's why stocks are the best long-term investment tool.
Then the question arises how much should you invest? There is no mandatory minimum amount that an investor needs to invest in order to generate adequate returns from his savings. You only need to remember that no amount is too small to make a beginning. Whatever amount of money you can spare to begin with is good enough. You can keep increasing the amount you invest over a period of time as you keep growing in confidence and understanding of the investment options available.

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