Yes , You read it right , Saving money will make you poor but ........ Investing money can make you very very Rich .
So read to know the difference between savings & investing ?
Simply put, fixed income returns are from "Savings", while market-related variable returns are from "Investments".
1. Saving is setting aside money for short-term use, usually less than a year, which is put in a cash account or term deposit with very little risk and limited growth potential.
2. Investing is putting away money for the medium to long term, at a measurable risk, and usually involves creating a strategy to grow wealth for achieving financial goals.
Eg. If we invest Rs 5000 per month for 20 years , we will be able to accumulate Rs 7500000 ( Rupees seventy five lakh ) at 16% CAGR which on todays scenerio only equity mutual funds can provide )
Savings--whether FDs, PPF or
anything else--yield almost no real (above inflation rate) rates of
return. The result is that those who depend on these for their old age
income need much more savings in order to avoid hardship.
Investing provides us Real Returns ( Returns above Inflation ) . The best and common example of investing is equity mutual funds . Your Long term investments must be kept in equity backed Investments . There are no Ifs and Buts here . If you do not do so you will face poverty in your old age . Every Investor must invest almost all their long term investments in equity , except people who have inflation linked lifelong income like rent or Govt pension .
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