We are going to look deep into the aspect of why we should not save money and why we should invest it instead?
Investing is discussed a lot but the answer to why we should invest instead of saving is not very clear in many minds of the new generation, so let’s explore the area of finance!
In simple terms, Inflation is the decrease in purchasing power of a currency over time. Inflation occurs when the price of the products in the market increases due to more demand, or increased prices of raw materials.
Long term decay:
When the price of the products increases, the purchasing power of the currency decreases. Hence, we lose money without even spending it.
So if we save money in our bank accounts or at home in cash, they will eventually lose their worth over time.
This is a process of investing money in different assets over time which will eventually lead to possible higher returns in the future.
When we invest in a property, mutual fund, or stock, etc, we are purchasing an asset that ideally gives higher ROI (Return on Investment) in the future.
This would allow us to save more money and create more wealth from it, Which would eventually lead to a higher standard of living because you have multiple sources of income across your assets, But if we keep that extra money in our saving accounts we will eventually lose that money because of inflation, rather we should acquire wealth in form of assets to make sure that at least we can keep up with the inflation in the market.
Overspending can be controlled
When we invest money in a particular asset, We are bound to spend money left after the investment that would control overspending on unnecessary things.
If you have multiple sources of passive income, you can have and can give a life that you and your loved ones would like to live and secure a better future for the next generations to come.
When we have a good passive income, we can do whatever we want. We don’t have to worry about money before starting anything that our hearts desire. We can truly be free to do anything as we have acquired the most important asset that is time.
Some Basic Points to keep in Mind
A fund that is kept aside for future financial emergency is know
Emergency fund. This fund is to improve financial security and be helpful in times of crisis. Cash and other liquid assets are considered emergency funds.