You cannot rely on your monthly salary for whole of your life. If you plan to spend everything that you earn now, you will remain empty handed in near future and result will be survival through loan, which has more adverse affect on your life.
A wise man always save portion of its earning on regular basis and along with saving , options for further adding into this financial source are searched in the market, implemented and carried on with struggle for more earning on these investments.
So here, we have realized saving has some fruitful outcome for us when we are jobless or retired from job. If good amount can be accumulating as savings, it will make part of our business capital and hence a relative secure source of financial survival.
In your life, unavoidably, there are certain things that would require you to save:
How can you start saving a reasonable amount at regular intervals? First think about your income, liability that need to be paid in near future and your monthly expenses like fuel, rent, medical, clothing and other general expenses. Compare what you earn and what you spend. If resulting balance is, a positive balance that means you left with some surplus amount at month end for saving. Now you can put in bank, earn interest on saved amount that would be percentage of your saved amount.
Market based tools for saving are:
Savings accounts Bonds
Certificates of deposit
Another way to multiply your money is investment in those commodities or business activities through which you can earn incrementally,
Market based investments methods include:
Certificates of deposit Stocks
Checking accounts Mutual funds
All investments involve risk. It is important that you get the complete knowledge about the pattern of industry in which you are investing. Any investment in stocks, bonds or mutual funds could lose some or all of your money in any one investment.
It is often said that “greater the risk, greater the return” but few risks being so heavy need to be avoided.Investors’ best protect themselves against risk by spreading their money among several investments, anticipating that if single investment loses money, moreover investments wouldfurther make up for losses.
This strategy, often sound like a phrase i-e “Do not put all your Eggs in one basket.”
Once you have saved money for investing, consider carefully all your options and think about what diversification strategy makes sense for you.
Diversification cannot secure your 100% investment but it can minimize the loss if some other investment market has been gone into recession. With change in Govt. policies, financial scheme and over all infrastructures, certainty about profits fluctuates.
Many companies offer investors the opportunity to buy either stocks or bonds. Following example shows you how to stocks as well as bonds differ.
If the company profits or is perceived as having strong potential, its stock may go up in value and pay dividends. You also can make extra money from bonds. Hidden risk is : The company may do poorly, and you will lose a portion or all of your investment.
The company promises to return money plus interest. Hidden risk is: If the company goes bankrupt your money may be lost. However, if there is any money gone, you would be paid before stockholders.
When you are going to invest in bond or stock, keeping evaluating the profitability potential of that company that will be apparent from public information, rising quality of its product and sale.