Investing means using your money to buy stock, gold property or any other commodity with a view to selling the same at a price higher than what you had paid and there by making a profit. Putting your money in fixed deposit with the bank or post office is not investing. Investors are compensated for the risk they take in the form of higher returns.
Yes, you must invest a part of your savings because it is only through investment that you can enjoy the twin benefits of capital appreciation plus high returns. However there is no guarantee that either or both of these objectives would be realized. If that is the case you would naturally ask why should I invest and thereby expose my hardearned money to the risk of losing the whole or a part of it.
You have in fact little or no choice. As the things stand today the phenomenon of scarcity which is the basis of all economic activity is going to assume serious proportions. Your savings plus the interest that you are likely to earn on it is not going to be enough to help you meet your financial obligations and needs relating to the higher education of your children and to take care of your financial requirements during your retirement period. Your savings have got to be deployed in a manner as to create a second source of income for you or add up to a reasonably big corpus over the years.

Meaningful Life

Investment is really the way that would help you lead a meaningful life once your regular source of income is snapped the day your retire. The choice is between subsistence and super existence. Surely you wouldn't like to put yourself on the shelf waiting for the final moments after going through seemingly unending monotonous and uneventful years. If that be the case it is all the more important that you learn the tricks of money farming for bigger and better money crops on continuous basis.
A simple analogy would put the things in a better perspective and make things easy to understand. Think of your savings as if it were a shop. You can either rent out your shop or run your own business from it. In case you find that you have not time to devote or no experience in running a business entirely on your own you have another choice, you can run your business from it with the help of people who are used to running businesses. They do it for others and can also do it for you on terms and conditions which are enforceable by law. You only have to pay a small fee for their service.
How much of your savings you must invest? The rule of thumb in this context is very simple. Deduct your current age from sixty. The difference represents the percentage of your savings which should be invested without giving you any serious shocks in the event of a loss. II you are 55 today then 5% of your savings only should be exposed to risk prone assets. The logic is simple . When you are young you can take more risk because you have the time and energy to make good the loss and put your finances in their original shape.

Investment Methodology

Methodology or the approach to investment will depend upon the time that you can spare for this activity and the knowledge and the experience that you have to take on the challenges which any investment throws up.
Since direct investment in the stock of a company through purchase of its shares is a bit of a tricky affair, it is better if it is left to the care of those who are qualified to play the game. For retail investors the easiest and the safest route is the mutual fund route. In fact mutual funds are meant to help small investors deploy their saving into various kinds of assets in the manner of well informed people which would be a difficult thing to do if they were to do it all on their own.
Like if they want to own real estate they must shell out a huge amount of money which either they do not have or they do not want to put into real estate. Through mutual funds they would be able to get exposure to real estate to the extent they want or are in a position to do. Further if a retail investor wants to tag on to the stock index he must create a portfolio which has the same number of each share which constitutes the index - an extremely difficult task.
By opting for the mutual fund route you can have an index base investment for a fraction of the amount. If you are going to do it entirely on your own then here are some rules of the game:

Diversification - Spread your investment across asset classes, sectors and companies. This will help you reduce your chances of losing your money because historically not all assets and for that matter all sectors in industry fare badly at any given point of time. Some sector, companies or assets are likely to do better than others. The sectors or assets or companies doing better would help make good the losses suffered on other fronts.

Time Horizon. Investment yields good returns only over a long period of time. So your investment horizon should be reasonably long. Whether you go for the mutual fund route or invest in financial instruments or real assets directly you would only be helping brokers and middlemen fill their pockets if you shuffle your investment too quickly or if you invest for short period . You will earn just enough to pay fees and brokerages.
On the face of it these levies may look too small too be of any significance but in real life they add to a humongous amount. On the other hand if stick to your investment decision for a long period you not only end up paying less of these annoying fees, you also reap the benefit of compounding. Growth schemes of mutual funds, remaining invested in blue chips for long period should be the preferred approach to profitable/successful investing.

Keep your cool - Volatility is inherent in stock markets. Do not panic and resort to hasty decisions. Keep away from tips and rely on your own counsel based on available data about the fundamentals of a company. Any investment at levels completely unrelated to fundamentals amounts to trading in dreams and expectations which might look ulcerative but is not without the possibility of danger lurking behind it.