Chapter .1 "Need to Invest"

 Why Should I Invest?

Before we address the above question, let us understand what would happen if one chooses not to invest. Assume you earn Rs.50,000/- per month, and you spend Rs.30,000/-towards your day-to-day living; this can include expenses like housing, food, transport, shopping, medical, etc. The balance of Rs.20,000/- is your monthly surplus.

For the sake of simplicity, let us ignore the tax effect in this discussion.

To drive the point across, let us make a few simple assumptions -

• The employer is kind enough to give you a 10% salary hike every year.

• The cost of living is likely to go up by 8% yearly.

• You are 30 years old and plan to retire at 50, this translates to 20 working years.

• You don't intend to work after you retire.

• Your expenses are fixed, and you don't foresee any other expenses.

• The balance cash of Rs.20,000/- per month is retained as hard cash.