Stock Investment

19083 WordsJun 11, 201277 Pages
Why Invest at all? Why invest? This came to me sometime in late 2004/early 2005 as I strongly felt the need for making my money work better for me. We were blessed with twin daughters, and full of hopes and dreams. I was transforming to become more financially responsible and aware. No one needed to educate me on why invest, as I suddenly realised that to achieve these dreams, I needed to shed a bit of my happy-go-lucky attitude and set longer term financial goals. And to achieve these financial goals, I needed to invest! Investing to me, is focused primarily on making my own money (work harder, and) make more money for me. It is clearly about long term financial goals. As I started reading up and thinking more about building long-term…show more content…
Probably no more than 6.5% compounded annually. You know that 's a paltry return vis-a-vis some other risk-free return instruments, right? Real Returns - Inflation And there is the bigger factor of inflation. Inflation, measured as an annual percentage increase, is a sustained increase in the general level of prices for goods and services. As inflation rises, every rupee you own buys a smaller percentage of a good or service. None of us could have missed (even if someone else buys our groceries) the high inflation figures cited by the press in 2008 - so what happens to my real rate of return? Post-tax return minus inflation? While 2008 saw inflation figures topping 11%, the long term average rate of inflation is ~5% in India. With a 6.5% post-tax return and a 5% inflation figure to absorb, my real rate of return was zilch. I didn 't need more pointers on why invest. Do you? Different Investment Options Now that you are better informed on the why invest proposition and the horrifying real-rate of return, you sure want to understand more about the common investment options available to us in India, the pros and cons, taxability, risk and typical return levels associated with each instrument. Certificates of Deposits These are short-to-medium-term interest bearing, debt instruments offered by banks. And are low-risk, low-return instruments. There is usually an early
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