Investments guarantee both current and future financial security. It enables you to increase your wealth while also producing returns that outperform inflation. You also gain from compounding’s advantages.
Additionally, investments may help you achieve your financial objectives, including buying a home, saving for retirement, and creating an emergency fund, among others.
Instilling a practice of setting away a certain sum each month or annually for your investments helps you build financial discipline.
When Covid-19 came in 2020, people realized the value of investments and savings. The covid-19 pandemic rotated the lives of people by 360 degrees. Since then a substantial hike has been observed in investments and saving patterns of people worldwide.
A few reasons why Investments are important-
- Passive source of income
We have learned from the ongoing coronavirus problem that we can’t rely only on your monthly income. We may experience severe challenges if we are unable to generate our normal money for some reason.
You’ll need a second source of income to help you support yourself through times of crisis in order to reduce this risk. You can invest in fixed deposits, stocks, mutual funds, real estate, and other assets, among others. Even after your regular income stops, these investments will continue to provide returns for you, giving you the financial security you need to get by.
- Promotes monetary Independence
Are you concerned about relying on others for your financial requirements after retirement? Be at ease. By consistently making investments to build a retirement corpus, you can enjoy financial freedom in your old age. After retirement, you will be able to easily take care of your monthly costs and other demands thanks to the passive income you would receive from this corpus.
- Aids in fighting inflation
None of us can escape inflation; it is a reality of life. As time goes on, it lessens the purchase power of our money and makes us poorer. You could get into a lot of trouble if you don’t take action to solve this issue.
Investing the cash you have on hand right now is the best method to fend off the damaging effects of inflation. By consistently investing, you can outpace inflation and maintain your purchasing power.
- Tax incentives
Did you know that you might receive tax advantages from your investments as well? Under Section 80C of the Income Tax, a number of investment instruments, including PPF, ELSS, Tax Saving Bonds, and long-term fixed deposits, provide tax advantages.