Investment

Investment is the purchase of an asset or item with the hope that it will generate income or appreciate in the future and be sold at the higher price.Money we earn is partly spent and rest saved for meeting future expenses. Instead of keeping the savings idle we like to use savings in order to get return on it in the future. This is called Investment.

Reasons For Investing

•        Earn Return from idle resources
•        Generate sum of money for specified  goal in life
•        Make provision for uncertain future
•        To meet the cost of inflation

Three Golden Rules for Investors/Investments

•       Invest Early
•       Invest Regularly
•       Invest for Long Term not for Short Term

12 Important steps before Investing/Investment

1. Obtaining written documents explanation about the Investment

2. Read & Understanding the Documents

3. Verifying the legitimacy of the Investment

4. Finding the costs and benefits associated with the Investment

5. Assessing the Risk-Return Profile of  the Investment

6. Knowing the Liquidity  and Safety aspects of the Investment

7. Ascertaining that Investment meets your Specific Goal

8. Compare these details with other available Investment Opportunities

9. Examine if it fits in with other investments you are considering or already     have Investments

10. Dealing only through an authorized Intermedaiary

11. Getting all Clarifications about the Intermediary and the Investment

12.  Exploring the options available to you if  something were to go wrong

If all these steps are satisfied then Investment should be made.

Inflation

 Inflation is one factor to consider for Long Term Investment.Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.Inflation is the rate at which the cost of living increases .Inflation causes money to lose value because it will not buy the same amount of a good or service in the future like present stage or past.So,wise Investment should be made only Inflation to be considered.

For example 

Today the amount is Rs.1000 worth of purchases at Inflation Rate  8% for 20  Years would cost Rs.4660.

That s why real investment should grow more than that of Inflation.

Investment-Inflation and Interest Rates--- Read more