What is Investment? Why do anyone need to Invest?

In simple words, investment is how you can save money for your future requirements with the hope that your invested value will grow and make a profit. After spending your daily or monthly expenses the rest amount should be saved and a part of it should be invested instead of keeping it idle in your savings account.

Now the question is – Why investment is important? Why do anyone need to Invest?

1. To beat the inflation :- One of the important reasons why one needs to invest wisely is to meet the cost of inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of goods or services in future, as it does now, or did in the past.For example, suppose there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor in any long-term investment strategy.
2. To create walth :- It is expected that your invested amount would beat the inflation rate in long run and build a bigger corpus by the end of the target period.Target period is the time duration of your choice to stay invested to, it can be anything from early retirement to child’s education,marriage,house purchase etc.Not only that you can see the compounding effect on your wealth in the long term.
3. To live a better life :- As a human being we all want to be free from this 9 to 5 job, daily work and this monotonous life and somehow it’s our wish to achive financial freedom. Investment regularly in various asset class can help us to achieve this.
4. Financial security :- People need to have extra money to live in happily,they will be able to challenge any kind of financial hurdles,it may be major health issue or natural calamity. By doing investments you will stand strong against these unforeseen situations.
5. To fulfil life goals :- If it is your dream to buy a house or a new car or take a trip around the world then these goals would be your motivations to invest. It is very important to list down your goals and how much money you need to achieve that goal.Your goals could be short term, medium or a long term in nature.Investing your money according to your goals will enable you to grow your money and achieve your goals quickly without having to work all your life.