Fixed deposit investments alone will not make us rich
It has been a practice to invest in Fixed deposits if we want a safe investment. I have also done that. Today I wanted to close one of my fixed deposits and open a new one later as the interest rates are getting better in India. People see Fixed deposits as safe investments. I would say this is the case because there are no complications and we don't have to spend time understanding about the investment strategies. A simple fixed deposit scheme is easily understandable for everyone. Most people who are not ready to take any risks would prefer going for a fixed deposit investment.
Countries like India are encouraging people to do more Fixed deposits compared to other investments. That is one of the reasons probably why they are giving better interest rates to Fixed deposits compared to other types of investments. The point of this article is that fixed deposits are good but if we want to become rich, we have to keep looking for other opportunities that would give us a better yield compared to Fixed deposits.
Looking for additional investments
Yeah, looking for additional investment options is very important. Sometimes this task is going to be a difficult one but some people might be lucky and they would be able to easily find their niche and go for the additional investment. We have to read and understand more about investments before we start investing. This way it helps in learning how to safeguard our investments and what action we should be taking if the investments are not doing very well. Sometimes people who are of young age might find this easy to explore and find the right opportunity for them.
It doesn't mean that we should not be doing regular investments. As people always say, not putting all the eggs in the same basket is good but at the same time we have to also understand that there is no point in having just one egg in each basket and it may also not be useful and not give any great returns to us if we spread too thin.
Risk-based investments
Age is one of the most important factors when it comes to determining whether we should be taking risks or not. If we want to take risks, starting early is great because we should be able to compensate if we come across any loss. Additionally, people who don't want to take risks or people who fear taking risks would go for safe investments or take risks with very small amounts. This is also good in a way but this won't make us rich. Starting at the right age gives us more freedom to take risks and keep going because we will have the strength to get up and stand even if we fall down.
Diversifying investments
Not everyone would have the same area of interest. People will definitely have different plans and based on every individual's plan, diversification should happen. Starting this early is very good because we should be able to watch and make adjustments to the diversification if required. The amount of money we use to diversify also plays an important role here. If the amount we are investing is not significant enough, it may not give the desired results.
There shouldn't be a single point of failure. At the same time, we shouldn't spread too thin either. Focusing on the right thing is very important and investing a considerable amount of money on a particular thing gives us decent returns. At the same time, we shouldn't just rely on that source alone. There should be other ways to earn. Passive income should be the primary focus and it should come from several diversified investments.
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It's very good to start investment on time. So that one can go all the way in instead of playing safe because playing safe never make one rich just as you said.
This is one great read.
Yeah calculated risks are very important for fast growth. 🙂
You are absolutely right as long as we are afraid we will never make good profit from the market. The way it is today and we all know that everything has become expensive, we can never run our house with you coming from one place. Unless we have three or four ways to earn money, we will not be able to live a good life.
Yes true. Multiple streams of passive income only helps these days. 🙂
It is difficult to live without it nowadays.
Getting rich will require taking risks at some point because playing it safe can't bring in enough money to create wealth. One of the best ways to minimise risk when starting early is diversifying our investments. If one or two fails, two or more will succeed.
Yes true. We cannot be sure that all our investments would be successful. So having multiple income streams can support even if one fails, another can help.
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In investing, one wants to go for return on investment, but in my short life, I have learned that the first thing to manage is risk and then return. Fixed deposits are usually a very secure investment, and investing in the stock market can be very risky. Now, the trick is the balancing act of risk and return. You are right that fixed deposits are not going to bring us wealth, and with the current inflation rate, they will probably not even preserve our wealth. One has to look at other investment options. So, the question is, how do I invest with lesser risk in the stock market? I agree that diversification is a good approach. With banks failing in the USA, one might even consider gold and silver.
Agree with whatever you have said and I also personally think that Gold and Silver are the best investments to make. We cannot rely so much on fiat alone. The value can be variable.
I share the same thought that FD is not the only way that can make us rich, Though the interest rates are slightly increased but still this is too low as compared to other investment instruments and in some cases with FD we are somehow able to manage the inflation only. Going with multiple options for investment is the better strategy to follow.
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Yeah maybe having a small fund allocated in FD is good for safety but having other plans to increase our wealth is very important.
My understanding of FD is more of a 'keep your money safe' account. People who are earning from FD are taxed too. There are other investments that can give the same level of returns, even more, depending on your risk appetite.
But FD is FD, I believe that one should have minimum a FD account.
Yeah FD is exposed to tax as well as inflation so most likely it is just keeping the money as it is instead of gaining something from that money. 🙂
Totally. FD is savings without losing money. Because savings account can never catch up to inflation.
People have to take risk to grow no other way right
I strongly agree with you. I believe instead of focusing on FD alone we can spread around our investment because FD is not bad too
Yes keeping a minimum value in FD is definitely good and important. 🙂