Yes, you read correctly. I don't think one should be saving money at all. But, you say, what else are we supposed to do? Haven't we grown up hearing that it is most sensible to squirrel away funds, a little every month, and save it up? That it is the only way you can get rich.
Yes, we've heard that. But it's wrong.
You shouldn't save. You should invest.
A lot of people save money, putting it into their bank accounts or fixed deposits. How much interest do you get from a bank account? Four percent? Six percent, at max? And that comes at conditions of a minimum balance to boot.
What about fixed deposits, you say? Even the best FD interest rates do not go beyond 7% in India. And they have a mandatory lock in period.
Does this equate to making money? No. It does not. Because it does not really make you any money at all. Over the long term, interest rates balance out the inflation rates that are rising every single year. What this essentially means is that while you are making money on paper, and you do get to see interest added in your account, the overall gain does nothing but bring you at par with the rising inflation.
Basically, even with the increased money in your account, you have pretty much the same purchasing power with the increased amount of money. This is an oversimplification of the fundamental theory, but you can read a little more about it here at Investopedia.
The point I am trying to make is - the money you manage to save every month? Don't just leave it in your bank account. Invest it in more viable options where you can build assets with that money.
That is the trick to building a large corpus of funds - building assets. Assets will bring you even more money in the long run. As they say, make your money work for you.
----
This is the very first post of a new series I am starting about how to manage your finances. This was something I'd been wanting to do for a long time but I never really got around to it. I felt like maybe it was time to let people know about everything I've learnt over time. I am still in the process of learning everyday and I hope you can also benefit from the same.
Join me on my Facebook page to stay updated with my posts or follow me on Instagram for posts about my life + blog post updates!
----
Photo Credit:
ohmconnect.com
No comments:
Post a Comment