Saving V/s. Investment
Now let us move to the worse side i.e. loss. From everywhere the frustrated sounds and full of depression words can be heard like:
“I lost all my savings in the stock market scam of 1992.”
“I lost all my savings in the panic that ensued after the nuclear tests in 1998.”
“I lost all my savings at the time of CRB Capital markets fall down.”
“I lost all my savings in the ‘New’ economy meltdown of 2000.”
Actually we were advised repeatedly and most of the time it remain sounding frequently in our ears that save money for bad period and we do so but some of us due to misfortune loosed it all.
In such situation we start the recap of advised given by our teachers, parents and well wishers during young age. My English teacher used to teach; even penny saved is equivalent to penny earned. But as we grow up forget such small things and this penny left after some period. Unfortunately, I was not taught about the Inflation who is the quiet enemy that can result to the waste of coin. My Mathematics teacher also taught how to calculate interest but I ignore and haven’t taken sincerely and seriously and now I am realizing that it is the best protection against that secret and silent enemy called inflation. And I didn’t save my penny and due to lack of understanding the importance of interest I am in bad position.
Realization dawns
What are basic fundamentals of world finance and economics and its miserable science was taught during my education. During inflation the safest way to save money is to store in your bank account or invest anywhere so that the money get secured and interest can be earned on it. This is to save penny in rainy day.
Life rolled on
At age of 22 I start working. The value of money I realize and habituate to save them too and the sound surrounding my head were prompting and mentioning me “-a penny saved….”.
I decide and became firm that I don’t allow to hit the unwarned enemy inflation on my savings. The small margins like Bank saving accounts and fixed deposits are not for me. To beat the hell of inflation and to make more profit from my savings in chooses the path of stock trading. I am confident for beating inflation with sound strategy. This wide margin will now overcome and break the rate of inflation. For conclusion of impeccable period the statement of Harshad Mehta case which was orchestrated boom should kept in mind. Here I was caught the total impact of the downdraught that followed the famous boom.
Some more…
The lessons which the teachers have taught me is now kept a side and new forth host of aphorisms included –No free Lunch, No pain-No gain….
It is important to save money for rainy day but to protect it from inflation it is necessary to invest in asset like shares, debentures, bonds, gold or even real estate.
At this stage the decisive point of issue arise and at back end of term investment many stories of poor to riches as well as riches to poor ones are the saved money now convert into risky business. Your expectation of higher return will put you in higher risk which you have to take. Your savings are now crossing the Rubicon threshold as soon as you decide to invest your savings and take form of risk capital.
By hearing the term Risk Capital there is nothing to get panic. The other type of investments where there is no risk and you remain relaxed. The investment like government bond or in a NSC but it is very different from the investments of equities in which risk is very high. But right now keep a side this discussion.
