Saving's not enough, invest your money

When we hear the word money, what comes to mind — savings in banks, investment in mutual funds, investment in equity, investment in real estate, investment in antiques?

In my opinion, it is a combination of all. Investment gurus call it the ‘diversification of portfolio’.

We learn the discipline to manage money effectively outside the classrooms. It reminds me of an old incident.

Once, almost 20 years ago, I visited my friend and we were busy talking when her young son entered happily, showing his mom a $100 note gifted by his granny. All he wanted to do with it is buy chocolate.

His mother explained to him that chocolates are unhealthy and he should do something else with the note, preferably put it in his piggy bank. Reluctantly, he agreed.

saving money

A few months later, I happened to visit her again. That day she was busy with her son, helping him open his piggy bank, overloaded with coins and notes. They both counted them and were delighted that the total was beyond their expectations.

Again this time as a responsible mother, she advised him to put this fund into a savings account. She taught him to fill up the deposit slip. The boy tried, but could not. So his mom filled the slip and he left for the bank along with an office help.

Years rolled by, and his mom is now proud of his saving habits. However, the amount is earning interest only in the bank. “To save must be a habit of childhood, but to invest must be the habit of adulthood.” My friend, as a responsible mother, could reach only her son’s childhood and not beyond.

What is the count of your investment portfolios? Are you working for money or is money working for you?

“The poor and the middle-class work for money. The rich get the money to work for them”- Robert Kiyosaki, the author of Rich dad poor dad said in the book. It’s generally seen that many people have the habit of switching off their minds when it comes to money matters. People in the other category have a habit of exercising their minds when it comes to money.

The difference depends on many criteria. It doesn’t matter if the child doesn’t listen to you, or doesn’t obey you. The child always observes you.

Since childhood, we listen to and observe many things in our parents, teachers, friends and others. This plays a vital role in developing our thinking patterns.

I will explain two different thinking patterns by picking up some of the effective sentences from Rich dad poor dad.

Generally, we veer towards high returns with low risk. We often fear taking risks, but always expect to have high returns.

So to overcome our fears, it’s advisable not to have all eggs in one basket, but to diversify the investment to different avenues, so as to benefit in times of inflation, interest rate changes or market volatility.

Our thinking patterns depend upon our age, sex, goals and objectives, risk appetite, future needs etc. With a simple thinking pattern, people can accumulate money, whereas a dynamic thinking pattern leads to generation of wealth.

One survey conducted in the US revealed the fact that only 4% of the population was confident of the future financial security of self and family as they had generated enough wealth. More than 60% of the population has to work part-time even after retirement.

It’s best to have financial independence and financial literacy. As per a recent survey, almost 50% of our population is young, that is, in the age group of 15-35 years. The Indian working population is increasing. Hence, with a proper financial literacy we can enhance our economic growth.

Chhaya Kothari