If you are not married yet, then sooner or later you are probably
going to get married. After that you will probably going to go in for a
house. After that you will probably go in for a vehicle. Then you might
want to go for a long vacation. Then you might want to buy a buy a
bigger house. Then you might fall sick and have a big operation.
Why are we saying all this? These are events that occur in almost
everyone’s lives. All of them are “big buys”! They
take up a huge amount of money. If after a few years you randomly
decide to do one of these things, then arranging the money for this
suddenly will be a problem. If you have a salary of Rs.10-20 thousand
and you have to arrange for Rs.2.5 lakh next month, then will you be
able to do so? Probably not.
You might say, that now-a-days, loans are easily available. I will just
take a loan! I will just buy on credit! BAAAAD IDEAA!! BAD IDEA!!!!
Why is taking a loan a bad idea?
Obvious reason: Assume you have to make a “big buy” of
Rs.15 lakh (Like a house etc.) Now, when you take a loan for making the
purchase, you will not only have to pay the Rs.15 lakh. You will also
have to pay the interest. So you might end up paying Rs.18 lakh for
something that actually costs you Rs.15 lakh. 3 lakh more!!!!
If for some reason you think that 3 lakh is a small amount and it is
okay to waste it, think not only about the 3 lakh. Think about the
earning power of the 3 lakh. The 3 lakh can be invested in an asset
that makes around Rs.2,000 each month!
If you told you, “Would you like an extra Rs.2,000 each month for
free, for doing nothing?” what will you say? I bet most people
will not throw it away. Then why throw away 3 lakh?
Besides this, the other problem with credit is that once you buy
something on credit, you get into to habit of taking a lot of things on
credit. Now, this point is a little hard to appreciate. However, there
are a lot of people out there who get into the habit of buying
everything on credit because credit makes it so easy for you to buy
things. People love the “Buy now. Pay Later!” idea. They
get hooked to it.
There are people who buy a big house, a big car, a big T.V. etc. all on
credit. Because of this, they have to pay their monthly installments
for all these items and their monthly installments alone take up half
of their salary. The rest of their salary, is taken away by basic
things like food and other necessities. If any part of the salary
remains it goes into the maintenance of the big TV, big house or the
fuel for the big car.
These people can forget about investing and creating assets. They live
a hand-to-mouth existence. If for some reason they loose their job, or
fall ill and are unable to work, then they will not be in the position
to pay their monthly installments and all their big T.V., big car, big
house etc. will be taken away from them. In case they expire, they
leave the credit burden for their family to bare!
So, do you want to live this way? If you do not then “good
financial planning” and “good investing” is the key!
In case you forgot the original pint, you need to invest so that you
can make the “big buys” that you need to make!
Next - Investing for Tax saving! >>
<< Previous - Why should you invest your money?
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Table Of Contents
- How to manage your money? - Intro
- Why should you invest your money?
- >> For making "big buys"!
- >> For tax saving!
- >> Inflation
- >> "The power of compounding!"
-
How to invest?
-
Investing in Mutual Funds!
- Assured return investments...
- >> Fixed Deposits (FD's)
- >> Public Provident Fund (PPF)
- >> Employees Provident Fund (EPF)
- >> National Savings Certificate (NSC)
- >> Kisan Vikas Patra
- >> Post-office - Monthly Income Scheme
- >> Post-office - Time Deposits
- Insurance