Introduction
In today's world financial literacy is very important. Money has become the focal point of human life. While it is true that financial education should be given to each person as a life skill for their personal financial management, it is unlikely that any wealthy person will impart financial knowledge to us. We need to acquire the necessary financial knowledge ourselves and make our families financially literate. We have to face various problems like financial product complications, fraudulent and Ponzi schemes, accumulation of money to get a good quality of life after retirement etc. These issues have created the need for personal financial management with proper management of income and expenses. That is why I have brought this little informative book for you.
Financial education helps you become financially literate and develops a positive attitude to properly manage your income, expenses, assets and liabilities, warns against fraudulent schemes, which can lead to your better financial well-being.
Financial planning is essential for every family. Financial planning goes beyond savings, and that's what we need to keep in mind. Financial planning is a purposeful investment and we can say that it is a plan we have made to save and spend future income. Therefore, it is important for everyone to take financial planning lessons consciously.
It covers the concepts of financial planning, key concepts in financial literacy, various investment options, savings and investment products, insurance and pensions, retirement planning, caution against Ponzi and fraudulent schemes, tax saving options, investors. Provides you with accurate assessment. This little book is for general investors or common man, and after reading it, readers are expected to gain a better understanding of their personal savings and knowledge of how to better manage their financial well-being. This financial education is a must for every parent to take their financial knowledge and teach it to their children from school life. We are presenting this information with the aim of instilling in children the habit of saving as early as possible, teaching them to invest financially and making their financial future secure. If we continue to impart such economic education for generations, within a few years, our Indian society will definitely be known as a 'society of educated and rich' and there is no doubt that our this identity will never be erased.
What is an Investment ?
From childhood we learn about different types of investments in our lives. We will now consciously study the subject of investment from an economic perspective. An investment is a transaction made consciously, to make money, to increase your financial wealth. Wealth is divided into many different forms like house, land, car, cash, jewelry and so on. The same assets can be used to earn more wealth in the future, but it requires making the right kind of investment and earning income from it. Just because you have a lot of money doesn't mean you don't need to make a special investment. But this assumption is somewhat correct, because the value of our property, such as land and gold, increases with time. But we should understand the fact that their prices have risen to this day doesn't mean that they will continue to rise in the future. Considering that their prices may go down in the future for some reason, appropriate investments should be made in various places. At the same time, the cost of our various items, equipment, vehicles will decrease as they get older. If you buy a car and sell it after five years, you will get less than the purchase price. Therefore, it is advantageous to buy such wealth decreasing items only if needed. Even so, one can earn by lending these type of items. One can lend his car, land, house etc. In the same way you can earn income using any commodity or only using money. From this it is clear that investing is a lucrative business. It is also a kind of investment when you do a job, because you invest your hard work, skills in the workplace and you get income based on that. But a job is a way of earning your primary income. An investment can be considered as a transaction made elsewhere for the purpose of earning more by using the primary income you earn.
We can invest in many ways. In the traditional way, buying land, house, gold, etc. But most of the time, we make these investments unknowingly, so in addition, we should consider transactions made consciously and intentionally for making money as an investment. If you invest for a long period of time, you can get a lot of income from it, the return on investment depends more on time and interest rate or rate of return. Let us see an example in this regard:
Ram and Sham both start investing Rs.1000 per month in the bank at the same time at 12% interest. Ram invests for ten years while Sham invests for only five years. At the end of the investment period, Ram gets a total of Rs 2 lakh 30 thousand and a net income of Rs 1 lakh ten thousand, while Sham gets a net income of only Rs 12,500. Now, in this example, if the interest rate is 6%, then the net income of Ram will be only 44 thousand. From this we understand that it is beneficial to invest for a longer period of time and at higher interest rates. The longer you invest and the higher the interest rate, the higher your return. Even a one percent difference in interest rates can make a big difference in your income over a long period of time.