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Importance of Investments

Pros & Cons of Investments

What are the benefits and disbenefits associated with investments?

Pros:

1. Investing helps us beat inflationary pressure. In fact, investing in the equity segment can often make money grow at a rate which beats inflation in the future.

2. Investing beats inflation with a unique feature known as the compounding of wealth. Simply put, the earlier we invest, the more our earnings will multiply with the passage of time.

3. It is because of the power of compounding that we do fulfill our goals by sacrificing little amounts of money over a long period of time.

 

Cons:

1. Investing requires domain knowledge, along with some basic analytical skills, and emotional intelligence. It takes intensive practice to become a skilful investor.

2. Investments are affected by a wide range of factors like economical events, company results, etc. One has to study all the relevant factors to be successful.

3. Investing returns come at the cost of proportionate risks. Returns are never guaranteed in any form of investing.

 

Note: Till now, in this module, we have covered the basics of investment and also the pros and cons of investment. But what are different investment avenues available? Let us discuss them in the next unit. 

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