Why Financial Literacy is important ?

The most important question for the beginners who want to start investing is

Why should I Invest ❓😕

Before coming to our topic, just imagine for a minute or ask your parents how much pocket money they used to get when they were kids, most probably 5-10 rupees monthly(If really getting at that time).  

And how much do you get in a month?

Can you compare the price of 1Kg Sugar today and same 1 Kg sugar price 10 year back. Is it same or different ? 

Obviously different, but what is the reason?

The reason is INFLATION (increase in prices of goods and services in an economy).

It means, if you have 100 in the year 2000. At that time 100 currency notes had a value of 100 but today, in 2021, the value of 100 currency notes has decreased which means you will get less goods and services today as compared to the year2000.

Therefore investment is the only way to increase the worth of your capital or to beat inflation. But the right type investment knowledge and consultancy is necessary which crycle will be giving you. We are committed to work day and night to provide you the best Financial Consulting on your fingertips from the top class financial researchers using all the latest tekstac.  😀😃😃😃😃😃😃😃😃

 

There are majorly 4 most important asset classes where one can invest and earn returns in short or long term.

Before moving ahead Let me clear what actually Asset is? Asset means something valuable belonging to a person or organization.

Ø  Fixed income instruments       (FDs)

Ø  Equities                                        (Shares)

Ø  Real Estate                                   (Property)

Ø  Commodities                              (Metals)

 

An asset class is a category of investment with particular risk and returns.

Risk is directly proportional to the returns.

 

1. Fixed Income Instruments-💲🔒

                     The risk factor in this type of asset class is very minimal. An investor gets interest on the principal amount (invested amount). The interest paid could be quarterly, semi – annually, annually. At the end of the maturity period (term of deposit) capital is returned to the investor.

 

2. Equity-💱💹

            Equity means buying and selling of shares in the share market (Stock Exchanges- BSE and NSE). In equity the risk percentage is higher with higher returns. Over the last 15 years equities have generated returns of 14% - 15%. Unlike the fixed income instruments, there is no guarantee of capital in equity.

 

3. Real Estate-🏠🏠

                Real estate involves buying and selling of commercial and non-commercial land and property.

There are majorly 2 sources of income from real estate

v  Rental

v  Capital Appreciation of the investment amount (Buy property at lower price and sell it at higher price)

In real estate the liquidity of money is very viscous. As it takes a long time in paperwork and other processes.

 

4. Commodities-💍💍👑

                  Commodities involve gold and silver majorly. Commodity price can be extremely volatile. There are many factors which affect the prices of gold and silver. Over the last 10 years, around 10% returns would be generated by this asset class.

   

 

Instruments	Returns (annually)	Risk Level	Sources
1. Fixed-Income	4%-5%	Minimum	Bonds / Fixed deposit
2. Equity	14%-15%	Maximum	Shares
3. Real Estate	Not predictable	Moderate	Property
4. Commodities	8%-10%	Average	Gold/ Silver