According to my knowledge, investing is nothing but buying an asset to protect your money from inflation and for wealth generation. People invest their money in real estate, gold, silver, bonds, stock market or might be in your own business by assuming that it will grow your money in future. By the end of this article, you will get an answer to your question “WHY YOU SHOULD INVEST YOUR MONEY?“
Companies which require funds uses stock market and sells share for cash. By doing this, they provide a platform for the public to invest in their favourite companies. Most people in India don’t even think about the stock market. The two main reasons are lack of appropriate knowledge, fear of bubble bursts.
I will write about the solution to the above two problems in my upcoming posts. Now, if we come to our main topic “WHY YOU SHOULD INVEST YOUR MONEY?”. The answer is to protect money from inflation and to generate wealth.
Why invest in India?
A developing country like India has a lot of growing space compared with America which already reached a saturated stage. India population is mainly middle and lower middle class. The living quality is improving along with time. To meet the requirements of the people companies of all the sectors such as consumption, auto, pharma etc has to increase their production to keep up with the demand.
As a result of more consumption, there will be growth in the companies which bring profit. If a company runs in profit share value of that company increases. Later the company shares profit in the form of a regular dividend to the shareholders. Let us say you have invested in a company that has an annual growth of a minimum of 15%. It will double your money within a few years as the power of compounding handles the rest of the game. I hope you got the answer to the question – WHY YOU SHOULD INVEST YOUR MONEY?
READ ABOUT POWER OF COMPOUNDING HERE
The above screenshot of Nifty 50 shows the constant development of the companies. Nifty itself grown 11 times in a span of 20 years. There are many companies that have beaten nifty in terms of growth. Many think that investing is a slow process of generating wealth but believe me over a long span of time you will definitely observe the change and way how your money works for you instead of you working for money. One should learn Fundamental Analysis for the identification of wealth-creating companies. We will learn about it in my upcoming posts.