Why Are We Not Investing?
Written on Friday, March 24, 2017
By Mitali Sharma
Timely Investment - perhaps, we all know how important it is to put our money into work for streamlining the perfect route for our financial prosperity. But when it comes to getting into the action with our money, we tend to procrastinate it, but can we afford to delay our investments?
You will be surprised to know that the value of Rs 1 Lakh in 1986 has become mere Rs 11,025 in 2016, all thanks to Inflation. It's not a hyperbole! In coming 30 years, you will be needing Rs. 2.3 lakhs to buy stufs that cost you Rs. 40,000 at present.
Thus, under the effect of Inflation, earning and saving are not enough, we also need to put our savings into work so that it can grow. Money kept idle never grow, Investment is the only way to grow money, yet many people intentionally or unintentionally keep delaying it believing their own reasons. So, why do we procrastinate to get started with investment?
Reason 1: Don't Have Enough Money to Start Investment:
People who refrain from investing, mostly give the reason that they don't have money to invest. In other words, they are not left with any amount for the investment purpose after meeting their expenses.
Here, you should realize that choosing to invest doesn't mean you have to have lump sum money or savings. Public Provident Fund, Mutual Funds through Systematic Investment Plan, National Pension System, etc. are some of the products, with which you can start your investment journey with the amount as small as Rs 100, Rs. 500 or Rs.1000.
And most importantly, these products are designed for goal-based investments. For instance, National Pension System is for planning the retirement, Mutual Funds through Systematic Investment Plan is suitable for achieving all sorts of personal financial goals like children higher education, wealthy retirement, children's marriage, buying a home, vacation, etc.
Renowned investor Waren Buffet quoted "DO NOT SAVE WHAT IS LEFT AFTER SPENDING, BUT SPEND WHAT IS LEFT AFTER SAVING. Thus, whatever is your income, if future's financial security is important to you, then you must save at least 10% of your income, and not just saving, you should be investing as well.
Reason 2: Not Sure Where To Invest
When it comes to investing, there are a plethora of products to choose from and anyone can get overwhelmed with so many choices, especially when most of these choices come with penalty charges. Since it is a matter of money, many people choose to avoid investing, rather than regretting of making a wrong decision. But the irony is that choosing not to invest and to keep the money idle is also a wrong decision.
Best is to take advice from professional advisors. They do a proper need analysis and based on that they recommend investment products. Professional advice is most required when you invest in Mutual Funds. There is such a wide variety of Mutual funds schemes, such as large-cap funds, mid-cap funds, small-cap funds, open- ended or close ended funds, then there are different types of funds like equity funds, debt funds, balanced funds etc. Professional advisors help you select the right category of Mutual Funds based on your requirement. And most importantly, they help you in selecting the right (Asset Management Companies). Professionals advisors keep a close eye on the performance of the funds by various AMCs and thus can best recommend on that. Keeping a record of fund's performance can be a challenging job at the individual level.
In a nutshell, if you take advice from professional, then very easily you will become sure about where to invest.
Reason 3: Managing the Investment Process Will be Difficult
Also, there is a section of people who stay away from investment just because they think that being persistent with the overall process of investment will be tiring because it involves paperwork, account handling, password remembering, etc. Just to avoid a few minutes of perseverance, something so important is left unattended.
These days, investment process for most of the financial products have become completely digitized, paper works have got reduced and so many online platforms have come up through which all the investments can be managed from a single window.
Moreover, monthly investment in products like Mutual funds through Systematic Investment Plan (SIP), PPF, etc happens through auto-debit from your saving accounts. Since the process is completely automatic, you need not get involved in any extra way. Also, various investment products have the option of one-time annual investment, one-time perseverance is very much doable.
Excuses for not doing investment can be many, some fear of loss, some don't have time, some think they don't have money, some think 'Investment' to be a grand move and thus, they wait for the best product, right time, maximum security and so on. However, there is nothing like the best time to start investment or the best route of investment. Important is to start investing, even if it is in small amounts. Investment is the only way to get your savings channelized towards diversified assets and make your money work for you over time.