“Aaj mere paas paisa hai, bangla hai, gaadi hai, naukar hai, bank balance hai, aur tumhare paas kya hai?” – “Mere paas investments hai!”

An iconic dialogue, that still reflects the mind set of most Indians today and will reflect their mindset ,probably for generations to come.

A lot of people believe that having money in their account is a smart thing, but actually it’s not.

Keeping money in savings accounts gives you a maximum return of 8%. Whereas, investing these funds in shares or other financial instruments can easily get you returns of 30-40%.

Most businessmen know this, but they are sometimes stung by their inability to invest, as they need to invest in their own businesses. However, any sound small scale business can still give you a return of at least 20-30%, which is again better than having your money lying in a bank account.

Similarly, HNI investors, Private Equities and Investment Banks that invest in start-ups are able to get astronomical returns on their investments. Some lucky investors who backed companies such as Amazon and Facebook, while they were still small, have managed to extract returns as high as a 1000%!

The first step to being a savvy investor is to understand the two words – savings & investment.

Savings – It is that amount of money which is left with us after spending on our expenses. This amount can be used during an emergency. This money can be taken out at any point of time. We can also earn interest by lending this money to the bank.

Now the question is why should we save money?

  1. For emergency use
  2. For future needs

Investment- Investment is the purchase of financial products (such as a mutual funds or shares) with the aim  of reaping the benefits of its appreciating value.

It is important to set your goals in order to know what you wish to achieve by investing. Your long term goal should be such that you can devote resources towards achieving your passion such as working for a social cause, travelling abroad or buying a property.

Goals can be of various types – short term, medium term, long term.

Short-term goal:  Planning to invest your money for the next 1 to 5 years, in order to buy a Mercedes/ BMW.

Medium-term goal: Planning to invest your money for 5 to 15 years, in order to buy a house.

Long-term goal:  Planning to invest the money for 15 years or more, in order to have a fund ready for your child’s education and wedding or a long world trip.

Every investment/ goal has its own set of risks and opportunities. Hence, it is important to have a sound understanding of the financial instruments one invests in. Your first goal should be to have all the right information, necessary to take an informed decision about any investment – be it a Fixed Deposit, a Mutual Fund or Real Estate.

BSE Institute offers some of the best short term courses for all those who wish to begin investing. The Institute’s Basic Course on Stock Charting is one of the best for learning about stock markets and investing in just 4 days.

Hence, it is advisable to have a plan and an investing strategy which will take care of all your current and future financial needs. It is necessary to have a certified financial planner to guide you when you are just beginning.