Why do humans save money? They save money for a variety of reasons, including:
Financial security: Saving money provides a safety net in case of
unexpected expenses or financial emergencies.
Future goals: People may save money to purchase a house, pay for
education, or plan for retirement.
Peace of mind: Having money saved can provide a sense of financial
stability and security.
Compound interest: By saving money and investing it over time, people
can benefit from the power of compound interest and grow their savings.
Inheritance: Some people may save money to preserve it for their heirs or loved ones.
But now the question is this:
"Does saving money makes us achieve our financial goals?"
Let's observe how rich people are managing their money. According to a report by UBS(Union Bank of Switzerland) and PwC (Price Waterhouse Coopers) in 2021, the top 100 billionaires have an average of $7.9 billion in cash and other liquid assets, representing approximately 22% of their net worth. The remaining percentage is typically invested in various assets, such as stocks, real estate, and private businesses.
So, rich people have less than a quarter of their money in savings or cash. On average, they are investing approximately 78% of their total wealth. Through this study, we can conclude that
"Only savings do not make you wealthy, but investing does."
Investing may seem daunting to many people, but there are many resources
available to help individuals get started.
If you are new to investing, this article will provide you with a spark to get you started on your path to financial success.
So let's get into the arena of investments and look at the performance of every player one by one:
1. Fixed Deposit (FD): just like pyrite is fool's gold,
I call it "a fool's investment," and here's why:
During the period of observation from 1960 to 2021, the average
inflation rate was 7.5% per year. For example, an item that cost $100 in 1960
now costs $7,800 in 2021.
So if I am investing 1 lakh rupees for a year, here's the calculation:
₹1,000,000 in a FD with an interest rate of 7%. Profit in 1 year: ₹7,000
TDS: 10-20% according to the RBI
TDS: ₹7000 * 10% = ₹700
Profit after tax (₹): 7000 - 700 = 6300 (6.3%)
Current Inflation Rate: 8-10%
So you've lost between 2,000 and 3,000 rupees per year.
What kind of investment decreases your wealth? That's why a fixed deposit in the bank is a fool's investment.
2. Precious metals: Now let's talk about real gold, Gold has been considered a valuable investment for generations due to its ability to retain its value over time. It is often seen as a "haven" asset that can protect investors from economic instability and inflation.
So what if you have invested your 1 lakh rupees in precious metals? Here's a look at investment returns in gold and silver in the past decade:
In 2010, if we had invested 1 lakh rupees in:
Silver price (₹): 33,000/KG (3 KG)
Gold; Price: ₹ 1,650/GM (60 GM)
Today’s, Returns:
Siver: ₹61,500×3 = ₹1,84,500
Gold: ₹5,200×60 = ₹3,12,000
Isn't it good? Three times the appreciation of your investment Let's go further, to the next player in the arena of investment.
3. Stock Market: The stock market is also known as the share market or equity market. The common people don't understand it very well, which is why many of them consider it gambling. But it isn't if taught and practised correctly under an expert's guidance.
So what if you have invested your money in some shares with good fundamentals? Here's a look at investment returns in the stock market in the past decade:
In 2010, if we had invested 1 lakh rupees in
Nestle, Share Price: 2500 (for 40 shares)
Britannia, share price: 160 (630 shares).
Today's, Returns:
Nestle: 19,000/40 = 7,60,000
Britannia: 3,600 x 630 = 22,68,000
Indeed, the share market has become a standard of richness in the past century. The rise of capitalism, the growth of the middle class, and the emergence of new technologies and industries have all contributed to the increasing importance of the stock market as a measure of wealth. Moving on to our next arena participant, who debuted only a decade ago.
4. Cryptocurrency: Cryptocurrency is an increasingly popular investment option that many see as a promising technology of the future. As a decentralized digital currency, cryptocurrencies offer unique advantages such as fast and secure transactions, low fees, and transparency. While the market can be volatile, those who believe in the potential of blockchain technology and the growing adoption of cryptocurrencies may see it as a worthwhile investment for the future.
Now let's look at a few cryptocurrencies and their past performance:
Bitcoin (BTC): The first cryptocurrency, this term was first coined in
2008 in a white paper authored under the name "Satoshi Nakamoto" and
talking about a peer-to-peer electronic cash system.
In 2010, if we had invested 1 lakh rupees in Bitcoin:
Bitcoin price in 2010 - Rs. 0.20 (5 lakh BTC) Bitcoin price
Today's Bitcoin price is Rs. 20 lakh.
Today, it is worth 1 lakh cores.
Even if you purchased bitcoins for one rupee, you would now have one
crore rupees.
Ethereum (ETH) is a cryptocurrency created in 2014. It is a limited
digital currency that can be used on the internet, similar to Bitcoin.
In 2015, if we had invested 1 lakh rupees in Ethereum:
Ethereum price: 2015 – Rs. 50 (2000 ETH)
Today's Ethereum price is Rs.1.4 lakh.
Today, it is worth Rs. 28 crore.
BNB coin (BNB) is a 2017 cryptocurrency that is widely used as digital
currency on the Binance cryptocurrency exchange.
In 2017, if we had invested 1 lakh rupees in BNB coins:
BNB coin price 2017: Rs.10 (10,000 BNB)
BNB coin price today: Rs.26,000
Today, it is worth Rs. 26 crore.
2600 times growth in 5 years
Cardano (ADA) is another cryptocurrency that debuted in 2020.
If we had invested 1 lakh rupees in Cardano:
Cardano valuation 2020 - Rs.2 (50,000 ADA)
Cardano is current price- Rs.30.
It is now worth Rs.15 lakh.
In just two years, the company has grown 15 times.
Emocoin (EMO): A young and innovative cryptocurrency, Emocoin, came in
May 2021, and its community is working on "The Fight against
Inflation." With its true crypto utility projects and education program,
this coin has given good returns as well.
If we had invested 1 lakh rupees in Emocoin:
Emocoin price in May 2021: Rs.0.06 (16.6 lakh EMO).
Emocoin price today: Rs.0.63
It is now worth Rs.10,50,000.
"Whereas every crypto in the world is trending only for buying and
selling options, EMO is the first cryptocurrency to launch some utilities with
the goal of creating more, which would eventually fight inflation."
Keshav Thakur (Promoter at EMOPAY)
In conclusion, there are a variety of investment options available, each
with its own potential benefits and drawbacks. Traditional investments like
stocks, bonds, and real estate can offer reliable returns over the long term,
while alternative investments like precious metals and cryptocurrencies may
provide diversification and unique advantages. Cryptocurrency, in particular,
has emerged as a promising investment option in the technology and future
space, but it is important to do your research, manage your risk, and invest
responsibly. You should get guidance from a mentor, but ultimately, the best
investment strategy will depend on your individual financial goals, risk
tolerance, and time horizon.
Manager Sales, EMOPAY
