Why is investing important? | Edelweiss Wealth Management

Summary

This video emphasizes the importance of saving and investing, tracing the habit of saving from early human history to modern times. It highlights the crucial role of investments in countering the impact of inflation, using an example where a person’s Rs. 100 income becomes insufficient due to rising costs. The script underscores that investing money rather than simply saving it can help shield against inflation and ensure financial stability. It encourages viewers to start investing now to secure their future and avoid financial shocks. The video concludes with a call to action to like, share, and visit the website for more information.

Takeaways

• 😀 Saving has been a part of human nature since the Stone Age, highlighting the importance of storing resources for future use.
• 😀 Humans have always understood the value of saving, but today, we need to learn how money can grow through investments.
• 😀 Money invested can generate additional returns, providing a valuable way to increase wealth over time.
• 😀 Common reasons to invest include creating a secondary income, saving for emergencies, and benefiting from tax advantages.
• 😀 A crucial factor to consider when managing finances is inflation, which erodes the value of money over time.
• 😀 Inflation increases the cost of living, meaning the same income buys fewer goods or services as time passes.
• 😀 For example, if you earn Rs. 100 and spend Rs. 75 on groceries, saving the remaining Rs. 25, inflation will reduce the value of your savings over time.
• 😀 If inflation causes grocery prices to rise to Rs. 80, your Rs. 100 income would no longer be sufficient to maintain the same savings.
• 😀 Investing your savings, such as earning a 10% return on Rs. 25, can protect you from inflation and maintain the value of your savings.
• 😀 Investing now is important to shield your future from potential economic shocks, rather than relying solely on savings in a locker.
• 😀 Start investing today to secure your financial future and benefit from the power of compounding over time.

Q & A

Why is saving considered an important habit, even from the stone-age?

Saving has been crucial since ancient times because humans instinctively understood the need to store resources for future use. This basic principle of preservation has evolved into our modern habit of saving money.

Why isn't there more emphasis on how money can grow with time?

Although many people understand the concept of saving, there is less focus on how investments can generate returns over time. This lack of financial education often prevents people from realizing the full potential of their money.

What are some traditional reasons people invest?

Some traditional reasons for investing include building a secondary income, saving for emergencies, and taking advantage of tax benefits.

What role does inflation play in the importance of investing?

Inflation reduces the purchasing power of money over time. Without investing, savings lose value as inflation increases, making it harder to cover expenses in the future.

Can you provide an example of how inflation impacts savings?

Certainly. If you save Rs. 25 every month, but inflation causes grocery costs to rise from Rs. 75 to Rs. 80, you’ll need to spend an extra Rs. 5 every month, reducing the amount you can save.

How could investing Rs. 25 help mitigate the effects of inflation?

By investing the Rs. 25 at a 10% return, your investment grows over time, helping to offset the effects of inflation. This way, the money you save continues to grow and retain its value.

Why is it important to start investing now, rather than waiting?

Starting early allows you to take advantage of compounding returns, helping your investments grow over time. Delaying investment means you miss out on this growth potential and expose yourself to inflation risks.

What are some ways investing can protect your future financially?

Investing helps build wealth over time, providing a cushion against inflation, unexpected financial needs, and economic uncertainties. It can also offer passive income streams and tax advantages.

How can the example in the video help viewers understand the impact of inflation?

The example shows how inflation erodes savings by increasing the cost of goods over time. It emphasizes that investing is necessary to maintain the purchasing power of money, which savings alone cannot protect against.

Where can viewers go for more information on investing and financial advice?

Viewers can visit the website www.edelweiss.in for more information on investing, financial tips, and resources.