In order to be financially successful, one should know how to handle their money. Keeping the money idle is not a wise thing to do. It can sometimes end up dangerous because we might as well end up losing the money or its value as years pass. We have to find a way to multiply the money we have every year and that is what makes it a wise investment. The main reason is that idle money often loses its value due to several reasons and inflation is one of the biggest reasons.
Having money idle and especially in the form of bank notes are also very dangerous. We are moving fast towards a digital economy and at the same time we are also using cryptocurrencies a lot. Having fiat in hand can lose its value if we don't use it then and there. Governments can also take aggressive methods to say that the old currency notes may not be valid anymore. The Indian government took that stand a few years back to bring the black money out. They were also successful in that. What if we miss such announcements and our currency in hand loses its value? This can be a dangerous thing for anyone.
Inflation can affect the value
The government keeps printing new money every year and that can sometimes reduce the value of the money we hold. 10 years back 10 lakh was sufficient to purchase a 2 bedroom flat near my area but today we need close to 50 lakh to purchase similar flats. The older flats have also gone up in value and people who bought them for 10 lakhs are able to sell them for 30 lakhs today. This is a good thing if invested right.
Now imagine if someone had kept the money 10 lakh on their bank account idle, it would have been the same after 10 years and there is no possibility to increase the value. We can even say that it is a risk too because the value of 10 lakh about 10 years back is not the same as 10 lakh right now. We have to understand that money is losing its value every year. Only some countries are able to keep their money value stable.
Focus on simple risk-free investments
In order to prevent money from losing its value, a simple investment is also good. Instead of keeping the fund idle, we can invest it in something and make sure we get some returns from it and that return should be a little over the inflation percentage. Normal bank-based investments can fall under this category and some investments that are government-based investments can also be a safe one.
In order to expect high returns we have to invest in something that gives us bigger returns. Sometimes these investments may not be risk-free. People lose their money by giving it a try and some people are very lucky to find a huge profit too. People usually keep the funds in the banks under a risk-free investment scheme after retirement so that they can make use of the returns from that investment and make their living.
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Posted Using LeoFinance Alpha
