Share market

Share Market Beginners Guide : Need of Investment.

Should we invest our money in the Share market or not?

There are a lot of reasons to invest our money. But today we will talk about some important reasons and try to understand the basic cycle of how our money works if we invest it.

If we talk about India, Indians are good at saving but not investing cause Indian Education never teaches about investments, money management, financial management and how money works. And this is the biggest reason for the poor economy in India.

How one’s investments in any company affect the country’s economy?

This is the part of the basic cycle that we will go to understand and this is the most important reason to Invest.

Cycle – As I thought we are good at savings, so you save money in your lockers or anywhere because of that your money could flow in the economy therefore neither its increase nor the government can take advantage of that

You invest your money in share market, mutual funds, SIP’s or directly in any startup/ company, FD’s, government bonds, etc.

Some Cases are-:

  • You invested money in any company and with the help of your investment they mass produce their product and services then the valuation of that company increases and their contribution in that particular industry increase the GDP of the country.
  • Same in the case of SIP’s and mutual funds, they diversify your money in many companies through the share market and cause an increase in the economy of a country.
  • If you put your money in FD’s, government bonds or savings accounts then the bank uses your money to help in the contribution of the country’s GDP.

Now the last part of the cycle, if the economy of the country is getting better than they can easily provide loans to startups or companies for their expansion and than startups produce jobs and employee gets his salary and he again initiates the cycle by start investing.

Now you know the investment cycle and get the biggest reason to invest. So, by the investment, you and country both get profit.

Also, Read about-: What is Stock Market, What is Mutual Funds

What is the problem of saving money?

As the author of “Rich dad poor dad” Robert. T. Kiyosaki says, “Savers are losers” because if you save your money then its value decreased with time because of inflation.

If you don’t know what is inflation, google it. XD Wait waits, You don’t need to go anywhere I am here to tell you everything.

Inflation: The rate at which prices rise. Let take an example- let say the inflation rate is 6%, if you have 1000 rupees now then the value of that 1000 rupees decreases by 6% after one year means the value of your 1000 rupees came to 940 rupees. There is no profit to save money.

If you invest with 10% returns then you are in profit of 4% and this interest is compound interest (8th wonder of the world).

We will talk about this in further chapters.

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