CONVERSATION WITH GOD.. Me- I can’t find free time. Life has become hectic. God : Activity gets you busy. But productivity gets you free. Me : Why has life become complicated now? God : Stop analyzing life. Just live it. Me : Why are we constantly unhappy? God : Worrying has become your habit. That’s why you are not happy. Me: Why do good people always suffer? God : Diamond cannot be polished without friction. Gold cannot be purified without fire. Good people go through trials, but don’t suffer. With that experience their life becomes better, not bitter. Me : You mean to say such experience is useful? God : Yes. In every term, Experience is a hard teacher. She gives the test first and the lessons afterwards. Me : Bcoz of so many problems, we don’t know where we are heading… God : If you look outside you will not know where you are heading. Look inside. Eyes provide sight. Heart provides the way. Me : Why does failure hurt more than moving in the right direction? God : Success is a measure as decided by others. Satisfaction is a measure as decided by you. Me : In tough times, how do you stay motivated? God : Always look at how far you have come rather than how far you have to go. Always count your blessing, not what you are missing. Me : What surprises you about people? God : When they suffer they ask, “why me?” When they prosper, they never ask “Why me?” Me : How can I get the best out of life? God : Face your past without regret. Handle your present with confidence. Prepare for the future without fear. Me : One last question. Sometimes I feel my prayers are not answered. God : There are no unanswered prayers. Keep the faith and drop the fear. Life is a mystery to solve, not a problem to resolve. Trust me. Life is wonderful if you know how to live

Investing

children's education, their marriage, your retirement; amongst a host of other ones. 

Think about it. 

Do you know, over the years, the money that you have saved - kept aside in your vault, bank locker, savings account, or under the mattress - may lose value as the inflation bug eats into your savings if it is not allowed to grow at a decent pace? Therefore, in order for it to grow, you need to put your 'money saved' to productive use - and make money work for you! 

And what should you do to make money work for you? 

Well, the answer lies in INVESTING!


Investing Meaning:

• An act of laying out your 'money saved' for productive use with an expectation ofearning return more than inflation to preserve purchasing power of money
  
• A process of making your 'money saved' work for you (instead of simply stacking in your vault / bank locker or under the mattress)
  

Advantages of Investing

• Can grow your savings
  
• Helps your money work for you since it is put to productive use
  
• Can help in countering inflation and maintain purchasing power of money (You see, as money tends to lose its value over time due to inflation - which eats into your hard earned savings - you can counter the inflation bug by investing and maintain the purchasing power of money for your future)
  
• You can achieve your financial goals in life (...which could be...buying a dream home, a car, taking care of children's education needs, their marriage and your retirementamongst a host of others)
  
• Helps wealth creation
  
• Provides a sense of financial security 
  

The Right Approach to Investing

• Understand your own risk tolerance (...if volatility makes you nervous then risky investments such as stocks and equity mutual funds may not be the ones for you. You then might as well invest in fixed income instruments instead, such as fixed deposits, PPF, etc.)
  
• Ascertain the risk involved while investing (...you see, every asset class - equity, gold, debt and real estate - has risk associated with it and therefore it is necessary to know about the same before investing your hard earned money)
  
• Know your investment objective (... It is important to know that there are various investment avenues which are meant to cater to respective investment objectives. So enough care should be taken while investing your hard earned money. Ideally each of your investments should match your investment objectives)
  
• Consider your age (...this can help you have the right investment instruments appropriate for your age)
  
• Consider the time period before you need money (...Remember: The longer you are away from the time you require your hard earned money, the more risk you can take, and hopefully even earn more by investing in risky asset classes.)
  
• Do sufficient research (...It is vital not to get carried away by exuberance and / or what your friends and family say. Instead, undertake solid fundamental research on respective investments, and please do not get caught up in hype....understand how the product works)
  

• Evaluate cost of investing (...Remember: gains can be easily eroded if you don't consider cost of investing and thus it is vital to keep an eye on terms and conditions associated with the investment avenue. Very often many indulge in trading in the stock market to make a quick buck without really understanding the associated costs they arepaying for regular trading or churning)
  
• Aim at investing in investment products that can help you earn more than inflation(...if your investments manage to outpace inflation, it will help you achieve your financial goals smartly and efficiently)
  
• Recognise the tax implication (...this is important...after all, the objective is also to earn tax efficient returns. If you do not plan well, you may end up paying higher tax on your returns)
  
• Always start early (...as there are benefits of doing so. You can understand it well by taking a look at the following table and chart)
  
  

An Early Bird Gets A Bigger Pie
Let us take an example of 3 friends - Vijay, Ajay and Sanjay - All 3 had good jobs and wanted to retire at the age of 60. Vijay being the smarter of the lot, started planning for his retirement at the very initial stage, at 25, and invested Rs. 7,000 per month. Ajay realised the importance of planning for retirement once he was 30, while Sanjay could feel the guilt of being left out only when he was 35. See what they accumulated when they were on the verge of their retirement. 

Particulars	Vijay	Ajay	Sanjay
Present age (years)	25	30	35
Retirement age (years)	60	60	60
Investment tenure (years)	35	30	25
Monthly investment (Rs.)	7,000	7,000	7,000
Returns per annum	10%	10%	10%
Sum accumulated (Rs)	2,65,76,466	1,58,23,415	92,87,834

(Source: PersonalFN Research)
Disclaimer: The names and figures are fictitious and used for example purpose only.
Also, return per annum mentioned above is for illustration purpose only.

Not only this, they also noticed a wide deviation in the proportion of growth they saw on their invested corpus. While Vijay's money grew around 9 times, Ajay's money grew 6 times and Sanjay saw a growth of just 4 times


(Source: PersonalFN Research)
Disclaimer: The names and figures are fictitious and used for example purpose only.

Points to Remember for You to Save & Invest Wisely!
(Finally, to wrap-up this session of learning, here are some points one must keep in mind, now that you may have recognised why investing is imperative once you have saved)


To Save

• Do not splurge all what you earn...SAVE! (...Remember: It is important to economise on your expenses and save for a rainy day)
  
• It is never too early to save (...in fact, savings can help you feel financially secure and even sleep better at night)
  
• Start small but maintain the regularity 
  

While Investing

• Do not rush with investing (...undertake thoughtful research by doing a holistic study)
  
• Investing is a serious activity (...in fact, it could be essentially boring, and not exciting)
  
• Do not speculate (...while it can be a thrilling experience, it can be killing as well if the tide turns against you. So it is best not to fall for excitement and exuberance)
  
• Never use contingency funds to invest (...Remember, they are put aside as part of your savings to meet your requirements on a rainy day)
  
• Never invest from borrowed funds (...except in the case of investing in real estate or your own business; but again, while investing therein don't go beyond your means)
  
• Know your investment product (...understand how it works and undertake research; recognise the risk-reward relationship the product offers)
  
• Diversify (...Remember, this can help you reduce your risk to your overall portfolio if you diversify wisely)
  

Some Important Ratios to Track Your Personal Finance

Savings to Income Ratio =	Total Annual Savings
	Total Annual Income

This ratio simply tells you what part of your income you are saving annually. Higher the ratio, the better it is, as it facilitates you to invest and lets your money work for you. 

Total investment to Income Ratio =	Current Value of Total Investments
	Total Annual Income

This ratio helps you understand the current value of investments done as a ratio of current income. 

At a younger age this ratio tends to be lower. However with time one needs to accumulate enough savings and invest to fulfil various financial goals in life. 

Debt to Income Ratio =	Total Debt
	Total Annual Income

This ratio would help you evaluate the proportion of total debt as against the total annual income you earn. 

Lower the ratio, the better it is. 

Following these ratios, which you have just learned of, can help you keep a track of your finances.


So to end our today's learning exercise we now invite you to test your learning by taking up this simple quiz (and win exciting prizes!)