How often have heard people say - "money attracts money"? Quite often, right? But is it true? Well, it's true and it's not true, at the same time. I am afraid there can't be a simple yes or no answer to this question. It is true that to make money you need to have some money on hand, on the other hand, saving and intelligent investment can also make you rich. But to put things in perspective, let's analyse how people become rich. Their methods of earning money may defer, but there is a great possibility, that their methods of investment may have a lot in common.
The Key To Success
The ideal investor is the one who not only saves regularly but also invests regularly. It is imperative to have discipline in your investment. Brick by brick you can build a castle. When you see the glaring success of rich people you should always spare a thought for all the hard work which must have gone into becoming rich.
Investment has a unique ability to make you rich. The only thing which matters is - what you are investing in. So, let's explore the alternatives of good investment and the possibilities and prospects it has to offer.
First Things First
Many people don't understand the basic idea of investment. Some people confuse it with post savings and fixed deposits. Then there's a group of people who live under the impression that insurance is a form of investment.
The general idea of investment is to put your money in instruments which will keep its value either ahead or at par with the inflation rate. Investment is for the future, hence, whatever investment instrument you opt for, it has to be growth-oriented.
So what are the investment instruments which can give good appreciation to your capital?
Investment In Equity (Stock Market)
There are two ways to invest in equity: First, through a mutual fund. Second, through direct equity investment. Naturally, both the mediums come with their set of pros and cons. According to their needs, investors can opt any of the mediums.
a) Mutual Funds - the mutual fund is the best investment option for those who want to stay away from the day-to-day hassle of the stock market. The idea of mutual funds is to create a huge capital from several investors and invest it in multiple stocks. Over the years, it has given good results to the investors. To suit the risk appetite of the investors, there are options available like debt and hybrid funds. The USP of the mutual fund is that it's extremely simple and easy.
But it has a down side too. If you analyse the historic data of any of the best mutual funds, you will get to see that even the best funds and fund managers haven't given more than 16% annual growth. As there are big funds involved, fund managers have the limitation as they have to deliver good results year over year. But for those who seek safety and growth at the same time, the mutual fund can be their best bet.
b) Equity Investment - It's the big daddy of all the investments. Yes, equity investment sits on the top of the food chain. Here you get wide options, better prospects and most importantly - uncapped growth. As we had discussed above, the one common thing amongst all the rich people has to be that most of them invest in stocks. For years, long-term investment in stocks has been a key tool of wealth creation. Investors like Warren Buffett and Rakesh Jhunjhunwala are the shining examples of the potential of the stock market.
However, stock investment comes with its set of challenges. The only reason stock investment gets such low participation is that it is little complex compared to other forms of investment. Basically, to get the best results you have to invest in good stocks. You can't rely on stock market tips as they mostly focus on short-term gains.
To find good stocks with good growth potential you have to run the potential stocks on stern checks like - management of the company, its sustainability, historic data, etc. As stock analysis takes plenty of time and requires certain skill sets, it is not popular with the general investors. But this hurdle can be easily overcome by subscribing to the stock advisory firm. Not only do they ease your work but also provided timely entry and exit calls to ensure best returns.
Rich people, barring those who have become rich by inheritance, become rich because they make right investment choices. They take calculated risks and never rely on free advice. The stock market is an open field for all to invest and prosper, they are the one who reaps maximum benefits of it.
Source : http://www.niveza.in/