SAVING VERSUS INVESTING

  The conventional understanding of saving is the amount remaining from your monthly income after meeting all your expenses.
A very interesting definition of saving, as per the financially wise, is that saving is  the amount set aside in the beginning, based on your plan for meeting your major financial goals, and the remaining amount from your income is used to meet your  monthly expenses ! Some wise thought indeed. But how many of us are ready to follow such inputs ?

  Now, coming to saving, we know it is the amount set aside to meet some unexpected expense in the future. Fair enough. While such saved amount are allowed to be in your Saving Bank account, the annual interest it would earn is hardly 4%, if it is in Fixed Deposit it may touch 7.25 %.

  While we  are considering the interest earned by our savings kept in the bank, it would be interesting to know that the annual inflation rate in India is in the range of 5-7% per annum ! So what happens to your hard earned money ? While the interest earned gets negated by the inflation, your money in the bank steadily looses its buying power at the rate of 5-7% per year. What costed Rs 100/- today would cost Rs 140 in five years and Rs 200/- in 10 years !

  By now you must have realized that inflation is a silent killer. Merely saving and hoping that you will have enough to meet your future needs can turnout to be a painful  reality.

  The only way to stay ahead of inflation is to INVEST. Investing is deploying your money to grow at a faster rate than inflation, to ensure  a steady  growth of your saved amount. The only issue is we must invest our hard earned money in such a manner as to ensure that the principal amount is safe and beyond that it must generate a good rate of interest.

 What are the different investment instruments which meets such a criteria ?



















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