Understanding the Nuances of Savings and Investments

The average life span of a person in India is 70 years from which he or she works for around 35 years on an average starting from 25 to 60 years. The 36 years of our life is the only time frame during which we actively earn money. The need to save and investment is constantly haunting our mind throughout these 35 years of our life. The need to save is also accompanied by expenses in order to fulfill our different dreams and responsibilities. Phew that’s quite an elaborate plan, which we cannot escape.

In this article we will delve on various issues that obstruct our saving plans. First it is important to understand the technical issues that accompany investment and saving. Inflation is a curse that will always be a part of every financial set-up. Inflation means depreciation of the value of money. As time progress the cost of production increases, which results in a higher market retail price and this demands higher earnings. If we can afford a particular entity for Rs 100 today, we may not be able to do the same few months or years down the line. As long as our earnings increase we will be able to afford price hike of commodities, but what will happen to our savings, we just keep increasing our savings but what additional value are we adding to it? That’s were banks and different financial service providers come to play. We save money in banks and various other financial institutions on which they give us interest. The additional value we get in the form of interest help us to keep the value of our savings intact. Sometime if the interest rate is high the value of our saving might also increase. But the problem under which we are currently reeling in India is that the interest rate offered by banks and various other financial institutions is falling.

There was a phase when the interest rate offered was as high as 14%, but today they have come down to as low as 7 or 8%. A major reason for this is that earlier corporate biggies in India could only borrow money from the Indian financial institutions but today they are going abroad, since restrictions on foreign borrowings have weakened over the years. Investment in banks and other financial institution is still a viable option if it is done under able guidance of investment intermediates.

Right financial Planning is an important means to a contented life. It makes you realize your responsibilities well before they make their presence felt. It makes you aware about the financial instruments that are available and the risk return profile of each of them, apart from taxation laws and their benefits. Investments thus become an important earning member for your family. You are not slogging all the time, but can also enjoy your wealth by letting investments and the return on them share your burden.

Aditya A. Mehta is widely recognized as the Demat account specialist. and Online share trading portal expert. Investmentz India provides tips on Online stock trading, and online share trading in India.