Four reasons why investing is better than fixed deposit.




Concisely to save money is basically amassing money over time. A little amount of interest can be accrued from the account you save money. In addition, it will not satisfy your expectation. Investing in contrast is about increasing money by buying valuable assets that generate money. Valuable assets can be exemplified by property, bonds, arts and stocks. Saving and investing are important to excel in grabbing financial targets.

Unilateral saving cannot grow more money

Inflation is the reason for which the price of daily products increases day to day. If you look at the CPI (Consumer Price Index), you can easily understand the rise of prices.

Since the recent years, average CPI is around 4%. In the meantime, your hoarded money (left out of investing) has not increased a little bit on the impact of inflation. In fact, the value of it has declined over time. So it can be assumed that if the CPI remains stable at 4%, after 10 years the value of your money will actually be worth 30% less. Moreover, the amount you deposit in your account will never be close to or equal to 4% CPI.

A better protection against inflation is investing in Equities

A big amount of accumulated capital is not required to get started. For example, $1000 is good enough to initiate. Interestingly, there are huge number of products for investment on the market for beating inflation, for instance, Singapore REITS, which generate nearly 9%.

If you have the accumulated capital, it is wise to invest in permanent income bonds, in which you will receive payouts in regular basis. Furthermore, a good characteristic of equities is high liquidity, in which buying and selling can be done within minutes.

CPF Account with Equities can also be promoted

If you actually intend to depend on the CPF account for retiring on, it is a must to know that the growth of CPF is 2.5% with the Ordinary Account (OA) and 4% with the Special Account (SA).

If your deposit is more than $20,000 in your OA and $40,000 in SA, a greater portion of it can be invested in stocks. By this way, you can earn CPF’s 2.5% return as like as a Singapore REIT.

Unnecessary or reasonless fright of stock market

The stock market is risky indeed for those people who would like to play the trading game as same as the Hollywood movie. So the most secure and profit-making way for investors who tend to be passive is to invest in stock market to grow savings.

You do not need to busily buy and sell. Considering the risks and rewards, you can make your choice limited to buy only. When you make the right choice, all you have to do is to see and count the profits coming in.

 

Kirtton Chandro Das's picture

About the Author

About: 

Kirtton, who is a freelance writer of  web contents and newspaper editorials, is presently studying at University of Dhaka.