Are you making your money work for you?
It’s not how much money you make, but how much money you keep, how hard it works for you. ~Robert Kiyosaki
Just as you work hard to make money, you must ensure that your money also works for you. Merely saving money is not enough, it should be invested properly so that it grows in value and helps you to realise your financial goals.
Why do you need to grow your money?
Nobody needs to be told how unpleasant inflation is! It erodes the value of your money. As prices go up due to inflation, the same money will fetch you lesser goods. You cannot control inflation but you can beat the inflation by protecting yourself against it. That is possible when your money also grows in value at least equal to or more than the increase in the cost of living.
Your investment should help you at least to preserve the purchasing power of your money.
But then, inflation is not the only devil. When you make more money, you tend to spend more. Your and your family’s standard of living goes up and you incur more expenses to maintain that standard. The increase in your cost of living due to changes in your consumption patterns is called ‘Lifestyle Inflation’. To maintain the desired standard of living and meet the long-term financial goals for your family, it is essential to invest in instruments that offer higher returns and help you with future wealth gain.
This means your investment should not only help to preserve but also to grow your money.
What about the Risk of Capital Loss?
Traditionally, stock markets are considered volatile and risky investment avenue. Nonetheless, all investments involve taking on some risk, though the extent of the risk varies. Besides, not all investors have a similar risk appetite. Many investors are totally averse to the idea of losing their capital in a stock market. They fear that during a downturn, their hard earned money may get wiped out.
Safeguarding their capital is a prime concern for such investors. So they typically keep their money in savings account or in fixed deposits. But, when you invest in a saving account or a fixed deposit, the increase in the amount of money may not help you to beat the inflation. So, even though your money may be safe, you could be losing the value of your money.
For investors with a conservative outlook, products that aim to protect the principal amount against downside risk, while taking benefit of market upsides appear to be better suited. Since the downside risk is limited, investors can stay invested for a long period, even during periods of uncertainty and ultimately ensure that all the financial goals for their family are achieved.
Bajaj Allianz Life Insurance is coming up with a product on the 22nd June 2017 that will help investors to realise their long-term financial goals and provide the dual benefits of protection and growth.
By charting out your financial plans, you can make your money work for you without having to worry too much about the downturns. Over the years, you can gain financial security for yourself and for your family. #InvestBefikar –> #JiyoBefikar
More details can be found on the Bajaj Alliance website
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