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  • 1. Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.www.funancialquest.com Online Course Module Online Course Module 4 www.funancialquest.com Vol. 1.1-4n4
  • 2. www.funancialquest.com Investing Duration: 20 Mins Module 4Vol. 1.1-4n4 Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.
  • 3. www.funancialquest.com Module 4: Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Contents Saving How to save more Saving vs. Investing Investment Instruments Getting Started How to Build Wealth Vol. 1.1-4n4
  • 4. www.funancialquest.com Module 4: Investing | Saving Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Why is saving important?Saving is the art of not spending ones money in order to use it at alater point in time. The possible reasons why saving money isimportant:1. Emergency funds2. Retirement3. Large, necessary payments4. Education5. Luxuries Vol. 1.1-4n4
  • 5. www.funancialquest.com Module 4: Investing | Saving Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.The Rule of 72Number of years x interest = 72The Rule of 72 is a simple rule of thumb to calculate compound interest. For e.g., ifputting your money in a savings account gets you an interest rate of 8%, we canquickly calculate:Y = 72 / 8 = 9 yearsTherefore, at 8% interest, your money will double in 9 years. Vol. 1.1-4n4
  • 6. www.funancialquest.com Module 4: Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Contents Saving How to save more Saving vs. Investing Investment Instruments Getting Started How to Build Wealth Vol. 1.1-4n4
  • 7. www.funancialquest.com Module 4: Investing | How To Save More Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Get a savings accountSaving some money in a piggy bank is well and good, but if youre serious aboutsaving in the long term, open a savings account. If you already have a bankaccount, this account should be a different one, so that you spend from only one ofthe two accounts.Look for a bank offering the highest interest rates, so that you earn the most onyour money, year on year. Vol. 1.1-4n4
  • 8. www.funancialquest.com Module 4: Investing | How To Save More Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Start saving NOW.The next step is to start putting money in your account. Start with whatever youhave, whether its five bucks or a thousand,it all helps. The best thing to do is tomake asaving plan. Decide how much youre willing to put aside every month andthendo it.If you already have an account, set up an automatic transfer every month, so thatyour money can go automatically into your savings account. Vol. 1.1-4n4
  • 9. www.funancialquest.com Module 4: Investing | How To Save More Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.InvestPutting your money in a savings account is a passive way to earn interest and growyour money. But if you have a serious goal (paying for college, backpackingthroughEuropeafter graduation, etc.) the best idea is to start making yourmoneywork for you. The way to do this is to invest your money somewhere whereits going to make more interest than in your savings account. Vol. 1.1-4n4
  • 10. www.funancialquest.com Module 4: Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Contents Saving How to save more Saving vs. Investing Investment Instruments Getting Started How to Build Wealth Vol. 1.1-4n4
  • 11. www.funancialquest.com Module 4: Investing | Saving vs. Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Saving vs. InvestingSaving is not the same as investing, though the two are often confusedfor each other.Saving is the act of preserving Investingis the act of placing moneyincome for a future use. Therefore, in an asset that is expected to grow,The main objective of saving is i.e. that the asset will generate antopreserve the money. Money is acceptable return over time, makingusually saved in extremely safe, liquid you wealthier with each passing year.securities or accounts, so that it can Investing is a much longer process,be converted to cash in a very short often yielding better returns in thetime. long run. Vol. 1.1-4n4
  • 12. www.funancialquest.com Module 4: Investing | Saving vs. Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Are you saving or investing?Various forms of saving and investment are availableThe following are ways in which you A few examples of investmentcan save your money: options:1.Checking accounts 1.Stocks2.Savings accounts 2.Mutual funds3.Short-termcertificates of deposit 3.Bonds4.Treasury Bills 4.Real estate 5.Insurance Vol. 1.1-4n4
  • 13. www.funancialquest.com Module 4: Investing | Saving vs. Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Differences between saving andinvestment Savings Investment1. Considered to be very low risk 1. Can be risky2. Money can be quickly accessed 2. Money is usually locked for a any time longer period of time3. The objective of saving is to 3. The objective of investment is to preserve the money (e.g. Saving make more money (i.e. long term for a car, or for retirement) financial growth and wealth-4. Money remains idle building)5. There is very little risk of losing 4. Money is active money 5. There is a risk of losing money if6. Inflation may erode any earnings investments decline in value 6. Usually earns more than value of inflation in the long term Vol. 1.1-4n4
  • 14. www.funancialquest.com Module 4: Investing Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Contents Saving How to save more Saving vs. Investing Investment Instruments Glossary Vol. 1.1-4n4
  • 15. www.funancialquest.com Module 4: Investing | Investing Instruments Copyright 2012 National Stock Exchange of India Ltd. All rights reserved.Investment instrumentsThe following investment options are available to the India