WHY SHOULD I INVEST ???

 I have experienced many times that many people don’t understand what’s the difference between SAVINGS AND INVESTMENT. For this our Parents are Responsible. Our Society is Responsible. They never taught why there is difference between Savings and Investments. But why, they were not able to teach us? Becoz, in there era, there exists no one thing, which is called INFLATION. This Inflation only caused difference between Saving and Investment.

Let us try to understand this - One who will understand this concept, it seems will cross First Ladder of Investment. Doing Savings is a Mental Instinct. Which means any Animal does or can do. You have read many stories in your childhood that before the Autumn season animals store and save their eatables. So, why do we do Savings. Because we fear that we don’t know what will happen in future. And Second Reason of Saving is it gives mental piece. I have done Savings. If any Problem comes, I can overcome that Problem.

What do we call Investment? Investment is the talk of Modern Era. There was no existence some time ago in the world. Investment means Financial Freedom, means I will not face any kind of problem in Life. And Investment does work for and helps Savings that you will not have to work for money. Frankly speaking, we want to work for money, we want to make money so that we will live. Will we earn whole of our life? There comes that moment in life when money works for us. This is called Investment. “Money works for us, you don’t work for money”. So, why a common man can’t understand such Difference.

Lets try to understand this, and to understand the difference between Saving and Investment, from where does it come? It comes from Money - Rupee, Dollar, Pound, etc. Any thing which includes 3 Qualities or Features - Medium of Exchange - in which you can deal, Unit of Value - which can define your kind and Easily Transfer and Store Value and Time from one Era to another Era. Any thing which comprises these three qualities is called Money. This Money has only made Investment. HOW?

When Money was firstly used in World, You have heard it was made up of Gold, Silver. This is because of Precious Priceless Metal. The Services would depend upon the Pricelessness of Metal. So, in the World, there was no Inflation. This was because of less presence and Supply of Gold and Silver. As per the rise in Economic Development, there was raise in growth of Income, and when Income was given in currencies, you were allowed to only give as per the Supply of Metals. Less Supply of Metals thus leads to Low Distribution of Income and vice versa. You have heard when Spain, Portugal, France and England ruled over other countries, they collected huge mass of Gold and heavy precious metals and stored in Europe. And after that First Time we understood Inflation. Which means when Heavy Mass of Precious Metals like Gold, Silver came in Europe, Inflation occured. Why Inflation rises as Per Economist - This is because of Rise in Supply of Currencies.

Let’s see Further ..

Slowly and Gradually, People kept moving Forward, Businesses kept moving Further, Friendliness came to exist among Countries. But there occured First World War, Second World War. And after such 2 World Wars, it was found that on the basis of Gold and Silver Metals there is difficulty to run businesses. Then seeing this, all Countries of the World signed an Agreement to use US Dollars and on the other hand USA promised to pay 1 Ounce Gold against 35 Dollars. This lead to Final Conclusion that if you have Dollar in your Pocket, you have Gold. This is called Gold Standard or Representative Money. Whenever Representative Money remained in the world, Inflation raised every moment. Inflation used to exist when there were Wars, Famines. Some countries took advantage of such incidence. Due to anxiousness of such incidence, USA President Richard Nixon before 15 August 1971 scrapped such agreement and thus would not Transfer Gold into Dollar. But Demand for Dollar continued to rise. This is because this was a legal tender. This was called FIAT CURRENCY. FIAT CURRENCY is such currency which doesn’t own any value, but Gold and Silver has their own Value. When Partition occured in my House what I experienced is that 100 years or 70 years back, there was Partition of Gold and Silver Coins, that 1 Rupee of Gold and Silver Coin has value in itself and has value of more that 1000 Rs. in current scenario. This is because it has its own value. But this Paper Rupee we are using, it doesn’t have its own value and is thus FIAT CURRENCY. FIAT CURRENCY has its value when Government is behind it. When Government stopped backing it, Rs. 500, Rs. 1000 doesn’t work. We have seen in Demonitization .

What’s problem with Fiat Currency? Problem with Fiat Currency is that it is made of Paper, Government can print it as per their wish. So, as per the rise in Supply of Currencies, the Inflation rises. This Inflation has not seen earlier by our Parents, Grandparents and not understood so they did not made difference between Saving and Investment. For Successful Investor, he should understand that Inflation is a big Enemy. This Inflation started creating Difference and gap between Saving and Investment. My Grandparents stored and saved Gold and Silver metals, so their wealth thus kept on growing whereas my Parents saved and stored Money, but it didn’t grew. Both of them saved Rupees but how come the Difference existed. This is because FIAT CURRENCY caused Inflation. How Inflation occured by FIAT CURRENCY, Let us try to understand…

Lets take an Illusion. First option is I give Rs. 2000 to You. Second Option is I give Rs. 100 to You. Among these Two Options which one would you like to Choose or go ahead with. You will take Rs. 2000 note. Because Rs. 2000 note is 1000 higher than Rs. 1000. As any one would opt for Rs. 2000. Now, Let’s imagine. As you have seen in Movies, with the help of Time - Machine you can go in the Past or in the Future. So, I uses the Time - Machine and tells you that Rs. 100 I will give you in the year 2000 and Rs. 2000 note will give you in Year 2018. Friends, what would you take? Of course Rs. 100. This is because 18 years back value of Rs. 100 was more than Rs. 2000. We call Rupees as Wealth. My mother used to tell Study Well so that when you grow old you can Earn Huge Money. She was wrong. My mother doesn’t understood that Rupee is Weak. As the time moves ahead, it decreases its value. My mother used to tell Wealth for Gold also. He used to store and save Rupees also. She used to like both. Let’s understand Gold which is second form of Wealth.

I am giving Two Options in the same way as earlier said. One is 50 gm Gold coin and other is 100 gm Gold coin. You can choose any one from these. What would you like to choose? Of course, you would take 100 gm Gold Coin because Rs. 100 gm Gold Coin value is 50 gm higher than Rs. 50 gm Gold Coin. Lets imagine. I take same Time - Machine and take you in the Past. I give Rs. 50 gm Gold Coin in Year 2000 and Rs. 100 gm Gold coin in Year 2018. Of course, Rs. 100 gm Gold Coin. This time you did not change your mind. Remember, last time you have choosen Rs. 100 instead of Rs. 2000 because the value of Rs. 100 was more than Rs. 2000 of today. But what happened in terms of Gold. Even today Rs. 100 gm Gold Coin is higher than Rs. 50 gm Gold Coin. It was higher in value long 1000 years back and will even remain in future. What is the reason? This is because it is Asset. It is Finance. Gold has power. It goes on rising as it moves ahead. But Rupee is not Finance. Rupee is not Asset. You make an Investment in Rupees, in F.D.’s is not Wealth. Because as the time will pass, the value, the Power of Rupee will fall. Those People who do Currency based Investment don’t rise, they are not called Wealthy but those who Invest in Assets - 3 types of Assets are Popular - Gold, Land and Equities are Wealthy. You have seen whenever people talk about rich people, Millionaires, they have invested in Equities, Gold, Land. If you see First 500 people in Forbes Magazine, What Rich People have? They have Equities, Ownership of Business.

Let’s remember Wealth is - which value rises with time, and that thing which falls when time passes, never invest in. This is not the route of Investment. There is a big difference in Saving and Investment which books can’t teach, life teaches us. Society and our parents cannot teach us because they have not seen such Inflation.