Personal Finance: Investing

Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.

What is Investing?

Investing is the process of buying assets that increase in value over time and provide returns in the form of income payments or capital gains. In a larger sense, investing can also be about spending time or money to improve your own life or the lives of others.

How does it help?

Investing will help you generate a passive income. Now you may ask why we need a passive income, as the pandemic has proved things can go wrong and many people lose their jobs in such circumstances. A passive income ensures you won’t suddenly lose all ways of making money.

How can I as a student do it?

So, the easiest way to invest as a student is to make a student fixed deposit (FD) account. Why this in particular, well some reasons are:-

1. No technical knowledge is required.

2. Safe.

3. Guaranteed returns.

How does this work?

A Fixed Deposit is a type of account opened with a bank where an assured rate of interest is paid for keeping the funds for a period of time.

Investable assets

Well that was the basics there is much, much more you can do with investing, these are some of the investable assets that you could invest in. We’ll cover all of these soon!

• Stock

• Real Estate

• Gold

• NFT’s

• Cryptocurrencies

• Startups

What are some drawbacks and how can I mitigate them?

While the methods we have outlined are safe, if you want to continue it can get risky and you should always be careful with the stock market. Some ways to mitigate damage are to diversify your investments so all of them can’t be lost at once and to monitor your investments regularly.

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Author

Samik Heda