Speaking about Personal Finance, 3 main aspects comes into consideration. Let's say for example, a person earns Rs.1,00,000 monthly and uses Rs.60,000 for his basic needs, later he has Rs.40,000
What can be done with the remaining Rs.40,000 ?
1. Saving
2. Investment
3. Spend it (Luxury Expenses)
Saving is something which do not appreciate in value but the money / resource saved will be the same for longer period of time, which can be used when needed. Eg: if the remaining Rs. 40,000 is kept in the bank locker, it does not appreciate but can be used in future
Investment is something which appreciates in value. For example, if the person buys Gold or good shares for the remaining cash, it appreciates with respect to time and in future when the resource is sold, it gives additional money compared to invested amount
Option 3 is left to the individual decision and if the excess money is not saved or invested, then he/she needs to be employed for the life time
Ancient days, people used to invest and also save the resource for the future, lets say Rice, Wheat and other commodities are saved for future and Gold is one of the important form of Investment those days which appreciates in value
Even these days, Gold is considered as the better Investment tool. Every Indian family buys gold whenever they are able to (No matter whatever the price gold is sold at) - it is always believed that Gold will always appreciate in value and the main reason is Gold can be converted to cash at any point of time
What about buying a house ? Yes, definitely it is an emotional factor that people willing to own a house but it doesn't give immediate cash / cannot be liquidated immediately when needed
In personal finance, Savings & Investment are 2 important factor one should concentrate on to have a safe future. It is always advisable to have half of the excess money to be invested and half of the excess money to be saved.
Best Regards
B G Nareshkumar
No comments:
Post a Comment