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Why is investing necessary

Investment is to your money what working out is to your body – both ensure fitness, discipline and endurance in the long term. Investment basically means setting aside a sum of money for devoting into a financial instrument, so that after certain period of time, the money will earn you an interest and grow.

What you read above is just the tip of the iceberg; the universe of investing is mammoth sized. Most of us often get weighed down by the common myths about investing, especially before we start. While some myths are born out of unawareness; others are due to sheer ignorance. So, let’s crack the most common myths about investing, right here:

 

Myth:  You have to possess Einstein’s brains to invest.

Fact:   Investing is a process that can be learnt over time

Just like you need not be a bodybuilder to start working out, you don’t need to be an Einstein prodigy to start investing. You just need to start simple. Make it a regular habit to set aside a small amount; decide the financial instrument that you wish to invest in, for which you could take help from a financial advisor and finally, instill discipline – to spend only what is left after investing.

 

Myth:  You need a plump bank account to start investing

Fact:   You can start investing with as little as what you have in hand

Do you ever workout for 10 hours at a go? Obviously not. Similarly, investing too can be done by taking small steps. Just take your pocket money, for instance here. Spare 30-50% of your pocket money every month, till you have accumulated the minimum investible amount of say Rs. 500 or Rs. 1,000 and then, start investing!

 

Myth:  It’s very risky

Fact:   Do your homework to invest smartly

While crash diets can be luring, more often than not, they are known to backfire. True effort goes a long way. While investing too, calculated steps and research could help you evade the ‘risks’ associated with investing. Investment in the market sure carries risk, but there are ways to mitigate that risk and not every instrument is as risky as the other.

Fitness and prosperity – both require discipline. The fruits of effort can only be experienced with time. And thus, to understand the potential of the market, you have to dip your feet and experience it for yourself. In today’s world, investing is a must. With cost of living touching the sky, just earning an income may not be enough to make ends meet.

 

Let’s understand some basic reasons why you must invest your money:

•  Because money does not grow by itself

You would have never heard of anyone developing a toned physique sitting at home; fitness is a process. Similarly, your idle money will never grow unless invested. That is why we have financial instruments which work on your money, earn you interest and help it grow.

•  To maintain your financial health, even after 30 years

There is a reason why parents inculcate healthy habits in their children, early on. Because fitness – whether physical or financial is achieved over a period of time. And likewise, however big your goal may be, if you start planning and investing early, you could fulfil them. Just invest correctly and start early.

•  To beat the junk - inflation

Junk food is often the pitfall in our fitness process. And when it comes to money, the ‘junk food’ is inflation – it slowly eats into your savings and erodes it with time. While your salary may keep increasing, it may not be sufficient to counter inflation. Your money needs the additional push to grow. Investing in the equity markets, especially over the long term, could help you earn relatively higher returns than the rate of inflation.

The route to being financially fit is easy - all you have to do is know your basics and take the right steps. Discipline is the key and your goal is the beacon. Don’t be afraid to dream of goals, be it a fit body or the fitness of your money - just make sure you start early, be regular and never stop!

 

An investor education & awareness Initiative.

 

Investors should deal only with Registered Mutual Funds, to be verified on SEBI website under Intermediaries/Market Infrastructure Institutions". Refer www.ltfs.com for details on completing one-time KYC (Know Your Customer) process, change of details like address, phone number etc. and change of bank details etc. For complaints redressal, either visit www.ltfs.com or SEBI's website www.scores.gov.in

 

Disclaimer – This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. Investments in MFs and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

 

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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