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Thursday, November 3, 2016

Investment Lessons: What everyone should know about Investing

After starting the series on investment ideas, I have now come up with an article on Investment and Savings lesson everyone of us should learn today to lead a happier life tomorrow. I will try to explain and make you understand in very simpler manner instead using complex terminology.

People earn much but save less. This is applicable for many of us as we are very much concentrated on earnings and spendings but least bothered on savings. Savings must be an integral part of our life as each penny we save today will be accumulated and cumulatively yield greater returns tomorrow. 

Investment Lessons: What everyone should know about Investing
It's our pity that our schools teach us many ways to earn money but doesn't even care about investment part. Investment and savings must be inculcated in the minds of children so that they will more care towards their money during later stages of the life. 

One has to think that one's regular job or source of income is just one of the many sources of income. He has to search for the other ways where he can generate additional income. The one thing everyone should keep in mind is " Spend the remnant money after Saving than Saving the remnant money after spending". This is the foremost quote everyone should keep in mind. 

Investment resides on three risk parameters:

  1. High risk investment
  2. Medium risk investment
  3. Low risk investment
Usually, risk correlates returns; Means that high-risk investments yields higher returns and in the same sense low risk investments yield lower returns.

Each category of investment have many ways one can choose investing. Now, you might be in a confused mode in choosing the category of investment. I will solve your confusion now.

There is a formula to calculate the percentage of risk one has to take before investing. That is...

Percentage of risk to be taken = 100 - (minus) your current age

For example, your current age is 30. So the risk you can take is 100 - 30 = 70%

So, you can easily keep 70% of your money in high risk investment and rest 30% in low risk investment.

Remember “Money is always eager and ready to work for anyone who is ready to employ it.” 
― Idowu Koyenikan,

By now I can assume that you might have understood the basics of investing. In my next article, I will come with different ways of investing in each risk category

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