What is the Purpose of Investing?
Why should you invest?
The benefits of investment are many and varied. To understand why investment is important,
it is necessary to know the difference that investing makes to your finances in the long run.
Let’s consider an example to look into this.
Meet Amit. He’s a 30-year old who saves around Rs. 20,000 every month. Irrespective of any
hikes in his monthly income and any changes in his expenditure, he diligently saves up the
same amount each month.
Now, consider these two scenarios.
Scenario 1:
● Amit saves up Rs. 20,000 per month, but he doesn’t invest the money.
● So, each year, he saves up Rs. 2,40,000.
● He plans to retire when he’s 50 years old.
● So, at the end of 20 years, when he’s 50, Amit will have Rs. 48,00,000 saved up.
Let’s now consider another scenario, where Amit invests his monthly savings instead of just
keeping them idle.
Scenario 2:
● He invests Rs. 20,000 per month in a scheme that offers a rate of return of 12%.
● Again, he plans to retire when he’s 50 years old.
● But this time, at the end of 20 years, his money will grow to Rs. 1,99,82,958.
That’s almost Rs. 2 crores
You see, Amit gained around Rs. 1.5 crores (Rs. 1,51,82,958 to be exact) by simply investing the
amount that he saved each month.
Purpose of investment
There’s so much talk of investing and investment options these days. But have you ever
stopped to wonder about one fundamental question - what is the purpose of investment? The
answer is quite simple, really. Investments need to help you achieve your life goals. This
includes both short-term and long-term goals.
Why should you invest?
The benefits of investment are many and varied. To understand why investment is important,
it is necessary to know the difference that investing makes to your finances in the long run.
Let’s consider an example to look into this.
Meet Amit. He’s a 30-year old who saves around Rs. 20,000 every month. Irrespective of any
hikes in his monthly income and any changes in his expenditure, he diligently saves up the
same amount each month.
Now, consider these two scenarios.
Scenario 1:
● Amit saves up Rs. 20,000 per month, but he doesn’t invest the money.
● So, each year, he saves up Rs. 2,40,000.
● He plans to retire when he’s 50 years old.
● So, at the end of 20 years, when he’s 50, Amit will have Rs. 48,00,000 saved up.
Let’s now consider another scenario, where Amit invests his monthly savings instead of just
keeping them idle.
Scenario 2:
● He invests Rs. 20,000 per month in a scheme that offers a rate of return of 12%.
● Again, he plans to retire when he’s 50 years old.
● But this time, at the end of 20 years, his money will grow to Rs. 1,99,82,958.
That’s almost Rs. 2 crores
You see, Amit gained around Rs. 1.5 crores (Rs. 1,51,82,958 to be exact) by simply investing the
amount that he saved each month.
Purpose of investment
There’s so much talk of investing and investment options these days. But have you ever
stopped to wonder about one fundamental question - what is the purpose of investment? The
answer is quite simple, really. Investments need to help you achieve your life goals. This
includes both short-term and long-term goals.
