The best way of savings is savings first, expense second. And the second way is to invest the savings so that interests or profit must come in. These are the two basic ideas the concept of money-making works around.
We are living in a world where the money is momentary. It just goes out in income tax or maintaining lifestyles, without having a prior prediction. But will you believe if you get to know that you can even earn money while you are dreaming in sleep or enjoying your holidays?
Though it may sound unbelievable you should definitely rely on it. It becomes true when you start investing your money right-of-way. The ways are FD, Real Estate, Mutual Fund and Share Market. However, it is apt to invest proportionally a little less in case of mutual fund and the stock market. On the other hand, investments in PPF, ELSS etc. earn you rebate in income tax.
Let’s discuss in details!
Invest by Rule:
First, one should learn to invest methodically to be a prudent investor. Commonly, people invest their money illogically, having no proper plan chalked out! But, the best way of it is to invest a certain amount of money monthly, according to the SIP which is Systematic Investment Plan.
Calculation of Compounding:
Calculation of compounding plays a vital role in the investment. Albert Einstein, one of the greatest scientists of all time, once termed it as the 8th wonder of the world! Here you can connect this. Because your profits generated from the Mutual Fund and the Share Market should be reinvested again in the right sectors. And this is called compounding.
Benjamin Graham, the father of value investing, is famous for his path-breaking book, ‘The Intelligent Investor’. According to his principles, if the intrinsic value of a stock is more than its current market price you should definitely go for it.
Do not invest the maximum in a single scheme! Rather diversify it. Invest in stocks, bonds or anything similar to these with little amount whether be it for a short term or for a long term.
Investment in share markets is not for you if you do not have reflexive business ideas about it. In that case, you can invest in the index fund which is a kind of mutual fund.