Why Should You Invest Your Savings?

Spare8, a micro investment platform will guide you through the benefits of investing your money.

Imagine you save a 100 rupees for 10 years. 10 years later, you still only have a 100 rupees but if you invest it, you could have almost 2000 rupees!

This can be a tricky and rather controversial question. Spare8 offers an easier explanation through 3 main principles:

1. Inflation

Investment is the best way to get ahead of inflation. Inflation can be understood as a consistent rise in prices in an economy. Taking arbitrary values, Rs 100 in 2020 would be Rs 95.11 in 2021 (using data from Statista and taking inflation rate as 4.89% in 2021). Therefore, investments would allow consumers to maintain a consistent purchasing power. With inflation, the value of your money will reduce but if you invest, the money multiplies and stays afloat the same level.

2. Higher the Risk, Higher the Return

This is Spare8’s classic advice. The risk-return trade-off is an important concept to understand while investing. There is a wider margin of profit that can be achieved if more money is put into investment. For example, if a stock offers a 7.6% rate of return and you invest Rs 500, you will receive Rs 38. But if you invest that Rs 500 in something riskier, say Dogecoin when it was rising, you would’ve received a 30-35% (Rs 169.7) return on investment!

3. Passive Income

The notion of passive income may not be widely known so if you don’t, it's as simple as earning without doing any work! Income earned through investments are passive in nature. Apart from research, once your money is invested correctly, you have to sit back and wait for it to go on increasing. When you invest your savings, you receive an additional income without having to log in hours at your office or attend meetings all day. It is a reward for choosing to save and further, smartly place your money in the right stocks.