How to invest money and make profits?

Are you looking for information about how to invest your hard earned money and make profits from them? Read this complete article based on my experience or click on the links to know about the different avenues available to invest your money and make profits.

"The world has become a restless place."

I do not know who has written this expression or whether it is just another English phrase. But is equally true. The Hindi movie “Kal Ho Na Ho” describes New York as the city of 24 hours and where there is no place for slow movers. This has been becoming true for many places of the world and the existence is ruled and dominated by how you perform and how well you are able to keep up with your finances and profits.

Money – Dead paper or playful Jack

Everyone knows what is money. People moved on from exchanging big plates of stones to notes printed on paper and coins. Everyone wanted to have a medium of exchange by which the emotion of valuation could be taken care of. This could actually help people understand the demand of selling coffee beans and how well they could earn by selling precious metals and food articles.

Slowly enough and as if the human mind was not satisfied with this exchange, the exchange system developed into banking system and then to investment system. Moving on from the heavy stone plates to paper notes and coins, people of today do not even have the paper notes in their hands. Money gets transferred from one bank account to other in the form of numbers in exchange of goods and services. So the next morning you will get to see the 5 digits more in your (or your company) bank account. The next moment you decide to spend 4 digits to buy the service and goods you require.

This goes on. The banking system introduced plastic cards with magnetic tapes and now microchips with extra and added security functions connected with your mobile phone devices so that your money (the numbers in your bank account) remains safe and can be exchanged safely.

Hats off to all the inventors of numbers in different languages of the world, the world has become a delusion where we live, love drink and eat with numbers. Go to MacDonald and get a burger for $ 2.5. A decade before the same burger was available for $0.5 less. People plan and book services well in advance, well, sometimes many years in advance so that they can get the desired service / good in less cost and thus get the satisfactory service that they have profited and saved and earned some more numbers because of their planning.

Numbers, Numbers, Numbers, Numbers and Numbers!!!

The Choice

Man evolved in the nature. The fire, rivers, sky, air and earth. He loved the beauty and grew up in the lap of mother nature and developed himself. This has given way to numbers and happiness is measured in numbers. Although I say this, it is not yet a universal truth and there are places where you can still be Mother Nature all the time for Free or you may decide to be with these numbers all the time. Some may want to lead a life in a balance of Mother Nature and money. Choice is yours.

So stay in nature and enjoy life without any worries of finances in the wilderness of Africa, live in Seychelles and countries alike to maintain a balance or think only of money and numbers in the high rich cities of the world like New York, London and alike. Choice is yours!

The magic of money and moving forward – 1 to 0!

So ultimately money came in and did come such a integral part of the society that barter system was bid goodbye and people starting exchanging with money and started to save money – well, started saving numbers!

Commerce started to increase and people began to rely more and more on money for their daily needs. Traveling, getting groceries, education, health and all sectors of life started being exchanged for money. Money became a integral part of the economy and as the world started growing up in their currency, exchange of money for the different currencies also started to take place as people moved from one place to other – for leisure or for business.

Thus instead of exchanging 2o kilos of stone for 2 grams of gold, the world saw a global standard being set up as a medium of exchange and money got known in its different forms. Standards such as development, progress, industrialization, economies to name a few, play a major role in deciding the exchange of the currency and this was being set on a global standard. This led further to investments, savings and ways of earning more than what you have in a legalized and standardized manner.

The need to save money and increase your net worth has become a need for the day. Mother Nature is still there you can relish her presence in whichever way you prefer – free or paid – but even to get to the free places, you need money! So, here we are – we discuss further how to save money and further how to rework with them and make profits.

How to save money?

As a start and a very common route to save money, cut down your expenses. This has always been a evergreen formula and just like your health – recover yourself by trimming down the carbs you push down you throat – improving your net worth is the mantra for today.

So, your first step towards making profits is to save money. This mantra is not a one time story but an everyday exercise. Set up goals and work up with your expenses every single day. Decide what you need, what you need and what you have to spend. And most important, keep your goals, aim and objectives only to yourself; at the most share with your spouse. The reason behind this is that every other person has different needs and different goals. You might be a miser but your best friend might be a foodie. So you might think of saving money by eating your teeth while your friend may have no plans to save money. And then your third friend who might be business minded, might think of not saving money but to reinvest 90.33% of his money into a new business model and go job free after 5 years!

So, it is almost worthless to think about discussing about saving money with your friends and colleagues. Discuss with your spouse / partner if you both are planning to save together.

Why to save in the first place?

Nice question! I could spend all the money that I earn through my working years and enjoy my life to the last penny. The government will take good care of me with the pensions they provide after retirement. Alas! This is not true for most of the people. Governments have started cutting down expenses on paying pensions to people. Moreover, if you get addicted to your lifestyle that you are having now, then living a “crippled” life on pensions will be disastrous. So, SAVE!

OK, so how to save?

There you are, 🙂 now that you have decided to read further down this long article, you can read further about the different avenues about how to save money. True, we save about how to get profits, but we will discuss about that, further down.

The golden rule of savings, investment and earning profits

Savings are very good habits and will surely lead you to better prospects. As your personal values increase, your salaries increase and your abilities to save and to spend also increase. Many people have different thoughts and formula of saving and investing money; we present over here general formula which is traditional and time proven.

The 1/3 formula

Let us say you are earning net salary of 90,000 per month. The idea over here is to:

  • Save 30,000
  • Invest 30,000
  • Use 30,000

In this way, you are sure that you have 30,000 in your savings account, 30,000 in your investments and 30,000 to use. Over here do not hesitate to use the complete 30,000. This will give you a mental satisfaction that you are spending your money as well and are not miserly.

In the 30,000 that you have set for investment, put 20,000 for guaranteed investments and 10,000 for dynamic and risk involved investment. Guaranteed investments can be done into fixed deposits, recurring deposits, insurance policies, money back policies.

Risk involved investments can be done into share and equity markets, mutual funds and Forex market. This way your money will be secure and you do not disturb your main balances. Let us go through the following sections first which describe about how to save your money.

So, here are your first steps to save money:

  1. Trim down your expenses.
  2. Open a bank account and earn interest on your money in the account.
  3. Open fixed deposits
  4. Recurring deposits

Open your bank account

Opening a bank account is a golden rule and a must for today. It helps you to be away from so many worries. Keeping money at home is not save at all. Gone are those days and we must accept this with 100% sure confidence, that people easily know that you have money at home and the next day, you will have a burglary at home. Some thieves will not take anything else. They will only take your money. Even if you have the costliest diamond at your home, it will still stay at home. But all of your cash will be gone.

Opening a bank account is the first step towards investment. Be careful to avoid false people and establishments with low repute. As a thumb rule, it is the safest to open your bank account with a nationalized bank, although you may get better service from other private banks.

This also helps you when you do not have all of your money in your hands. When you know that you have to go to the bank to take out money (Well – this statement is no more valid, but still mentioned for the sake of completeness), you tend to spend a little less. When you are aware that you have a certain amount of money in your bank account, you tend to decide first whether you want to spend the money or not. This is really a psychological factor. Most of us tend to be reckless and reckless minds gave rise to the Credit Card system – still a shrewd way to rob you of your money.

The interest factor

This is probably the biggest pulling factor to earn the first profits on your hard earned money. It is absolutely OK to keep your hard earned money with a banking institution and let them invest in bigger projects of your country or the world  and thus to let them earn profits and thus to give you a part of their profits in the way of quarterly interests.

Whoever be your God, they have said that giving lessens your sins and thus this banking system is your first step to giving. So, ever quarter of a year, you earn some interest on it. This interest can be from a measly 2% to a generous interest of up to 10% on your savings. This differs from the country you live in, the financial policies that are in place and the way of working of the government.

But whatever be the value, you are still earning something for you did not have to do any hard work. And all that you have to do for this is to keep your money in your savings account in your favorite bank and maintain the requisite minimum balance and spend wisely.

Remember, you can earn interest even on the smallest amount if you are maintaining the minimum balance, but, the more you save, the more you earn interest.

Opening a Fixed deposit

The next step to save money is by opening a fixed deposit account. What is a fixed deposit? A fixed deposit is a way of hard locking your money for a longer duration. This longer duration can span from a minimum of 21 days to 10 years or more, depending on the laws of your land. During this duration, you are not allowed to withdraw the money from your bank. You may withdraw if you have any dire needs but then you stand to face losses in the form of no interest, deduction of bank charges and other stuff.

But if you do have a good plan, then you can keep this money aside and earn a good interest on the same. This interest is more than the interests earned on savings accounts and you are assured of the value after the maturity of the locked period.

The positive aspect of the concept of fixed deposits are that they increase your net worth. Loan lending institutions measure your net worth before providing you with loans. Whether it be a vehicle loan or property loans, you will be assessed and having fixed deposits will certainly add to your net worth.

Opening a Recurring Deposit

Banking systems have been very flexible and the need to save has been given the utmost importance. Various tools have been created to help people in understanding this importance and thus enter into the world of saving and earning profits on their savings.

Recurring deposits have been a mark in the same lines. Many of us, are not able to make a big deposit in one shot. Many of us are working hand to mouth and are still having objectives throughout life where we might need a considerable amount in hand and yet would not be able to bear the load of such loans. This is where recurring loans come into the picture.

Recurring deposits help you to move a small amount of money to a deposit account which cannot be accessed. Thus, it is very much similar to fixed deposits, but different in a way that you have to put in an amount of money into the account at equal intervals of time duration. Some banking institutions have become more flexible in allowing people to invest money in their recurring deposits at their desired intervals and at an amount they desire to invest.

The profits and interest in a recurring deposits are lesser than a fixed deposit but they certainly help people to save even in the smallest cent and reach their financial goals.

From saving to investing and earning profits

Are you still reading our article? I must say that you really are die hard investor and want to really move forward in making a life through your savings and earn a second income. We have mentioned a few ways to start earning profits about how to save on investments and earning profits:

  1. The Second Income
  2. Investing in Monthly interest schemes
  3. Investing in Insurance Policies
  4. Investing in Share and Equity market
  5. Investing in Mutual Funds
  6. Investing in Precious metals
  7. Investment in foreign currencies

1. The second income

Until a few decades back, second income was never a question. Thanks to the way of living life, two things have changed. People have stopped thinking of having too many children and couples are thinking of working the extra hours or trying to make extra income by working from home. Until a few years back, making a second income meant going out of home and doing another job which is usually related to a hobby and making a small earning out of the same. This usually helps to get monthly expenses covered up by the second income so that the primary income is left completely for savings – well, at least a bigger part of the same.

This concept seems to have been carried on further with the concept of work from home being on the rise and many people opting for making attempts to earning from working through the internet. Hold on! Working on the internet is still not legitimized and thus you will find 99.99% crap and only a few gems exist. Search online for Legitimate online jobs, how to earn online and read our article about IndiaStudyChannel website and start earning online.

2. Monthly interest schemes

The role of monthly interest schemes came on to surface after the boom of industrialization, upcoming of private company jobs and after government companies starting pulling off the pension programmes.

That was a sad part of course! But things have to change as economies move forward and pensions started becoming a huge burden on the shoulders of freckled governments. Well, nothing personal, but this is the state all over the world. Nevertheless, people were shocked and felt helpless for the few months before pension schemes started popping up. The story remains the same, just that instead of the government saving the money for their employees, people started saving for themselves. Now because people started saving for themselves, they were not able to save money in bulk amounts and thus started opting for smaller investments. Financial institutions took a step further and started offering monthly interests on their savings. Thus, people were being offered pensions in the form of interests. Thus, the more you save, the more interest can you get.

This offer had been lucrative enough for people to invest. It was just the way the offer was put up that people could realize the potential of their savings that they could serve themselves through their retirement age without worries of generating money. Although they have to change their lifestyles, it was not as crippled as before.

Thus, a person could ideally start investing in such schemes about 10 years before their retirement. It really depends on how you want to lead your post retirement life and your ability to invest. In countries like India and alike, you can get an interest of about 8 to 10 thousand Rupees if you were able to save 1 to 2 million Indian Rupees (10 to 20 Lakh). In this amount you can lead a fairly satisfactory post retirement life. Still it largely remains to your taste whether you can work it out or not. Otherwise even a 100,000 are not enough to make the month go through. Thus again our formula of trimming down comes in save money.

3. Investment in Insurance Policies

Although there are options for short term investors and investors who are nearing their retirement age, Insurance policies are actually for long term planners and people who are in their young age. Insurance policies exist in multiple shapes and sizes and provide expense coverage. Certain insurance policies are only for Assurance. These are Medical policies where you have to pay only a certain amount every specified period and they provide money for accident and death benefits or even cover your health related expenses. This gives you a guarantee that if you happen to meet with a calamity, you have a support for bigger expenses which might not be possible for you or even with the help of friends and family.

Certain other investment policies help you to invest money and provide you money back guarantee along with a good interest. Thus the more you are able to “lock down” your money into investments, the higher will be your interests and better will be your profits in the coming years. The main theme over here is patience where you will NOT see any returns in the first few years, but will be able to see the profits only after. Such first few years are where the insurance companies derive their profits first and then only will you start getting your benefits. Usually, insurance companies put a lock in period where you will either not be able to take your money out or if you do decide to cancel the investment, you will have to face losses. But still, if the principal investor faces an accident causing permanent disability or death, then the insurance company will start paying the promised amount right from the first month of initiation of policy.

Thus you get returns on your investment with guaranteed profits and benefits related to Accidents and Death.

The domain of Insurance policies is vast and present with multiple opportunities for various goals and very flexible according to the capacity of the person.

4. Investment in Share and Equity Market

The concept of Share and Equity market is a very huge one, but easy to understand. Let me give a simple example. Mr. Robert has been working as an article writer in KasaKaru website since last 5 years. He saved 30% of his salary every month and now he wants to start his own company. He has decided this so that he can work with KasaKaru as a outsourced entrepreneur and also work for other websites. He has about 1 million rupees with him but he needs another 4 million for a smooth start up of his company. He wants help from other people who will rely on his work and then either get their money back with interest or keep on investing in his company and keep on getting interests.

This demand brought in the scenario of Share markets. People wanting to launch their businesses can approach public investors like you and me through the share and equity market. When a company requests for investments through this route, the company becomes a public company and every investor is a part owner of the company.

Thus Mr. Robert approached the share market and people started investing into his company to make it a public company. Now he can invest this money into his company infrastructure and thus start with a decent set up so that he can have proper hardware, good software and hire qualified writers and pay his returns to the government.

This helps him to grow. On the other side, public investors can reap benefits from the share market. Thus as the share price rises, the investor can benefit from the rising share. Thus, let us say, Krishna decides to buy shares of KasaKaru. Initially the cost of each share of KasaKaru was standing at $50 per share. Thus if Krishna had to invest in KasaKaru, he could invest so, through the share market mediated by a share market broker, at a minimum price of $50 per unit per share. Krishna makes an investment of $500 and gets 10 shares in KasaKaru. He also paid 10 dollars as broker’s charges and taxes, thus a total investment of $510.

Now let us say that KasaKaru improves on its records and thus the company progresses and thus the share price of KasaKaru goes up to $60 a share. As KasaKaru keeps on doing progress, the company shares keep on rising. Krishna decides to keep his shares for another 3 months.

After 3 months, a share of KasaKaru goes up to $75 a share. Krishna decides to sell his shares of KasaKaru and earn his profits. He sells his 10 shares of KasaKaru and gets $725 in return. He gets 25 dollars less because the share market broker charged his fees and also that Krishna was charged the taxes at source. Thus instead of $750, he gets $725.

Even then, Krishna made a profit of 725 – 510 = $215. This much of profit amounts to nearly 30% profit in 3 months or nearly 10% every month, which is higher than interest gained in a bank savings account or recurring deposit or even a fixed deposit.

The other scenario

In contrast to the above benefiting scenario, if KasaKaru would had been in a loss and if the share would had fallen down to $45 a share then Krishna would had been in loss. The way that KasaKaru would make loss or profit highly depends on how KasaKaru would fare in its articles and other sources as KasaKaru is just a website and a domain selling and product selling website. If it does not sell enough or does not present newer articles for people to read, KasaKaru will go into a loss.

Thus you can see that share market is very volatile. Thanks to the competition and numbers, the working of companies in a particular trade are fairly similar and the companies do not land up into no trade or no business scenarios. So companies in pharma business would be similarly running in the share markets. Similarly companies in banking, construction and other sectors will run in similar fashion.

The profiting policy

Like in our above mentioned fictitious example, if you start investing in only internet companies, and because they all run in a fairly similar manner for profit and loss – with a few dynamic exceptions of course – you may profit if the complete sector profits as a whole or you will lose if the whole sector losses as a whole.

The best profiting policy is to invest in distinct sectors. If you invest in separate sectors and if the market does fall, chances are – you will still be in profits! Or at least you will not be in a huge loss.

Why?

The reason for being in profit or at least at not a huge loss is that your investment is distributed in various sectors and thus the sectors that have profited from the market pull your investments up and the sectors that have loss will pull you down. But the balance is still maintained and you do not face huge losses.

Thus taking our example further, you can invest in KasaKaru, Google which are in internet sector; you can invest in construction section and in banking sector. Thus if companies in internet sector rise, construction sector losses and banking remains same, you will still remain in profits and can flow through the losses in construction sector.

What do I need to do this?

As you can see over here, you do not have to do any hard work over here. Only that you have to invest your hard earned money properly and you must keep a proper track of your the advances and draw backs of the companies that you would invest in. Also keep a proper research of the new things going on in the share market. Once you are in tune with the ups and downs of the share market, you can very well invest in the share market with various options like buying and selling in the same day, buying and selling in short term and doing so in the long term. If you gain good experience, then you can invest your risk investment money with stop loss and reverse gain functions.

5. Investment in Mutual Funds

Investing in the share market can keep on becoming complicated as you look into the different sectors for investment. Also that you need to keep a constant track on the market and do a in depth study of every day movements. This is possible if you want to make trading in the equity markets as your full time profession. But this is not possible for every person who is also engaged in other jobs or businesses. Over here comes the concept of Mutual funds. Mutual funds are managed funds where dedicated personnel manage the investments in diverse sectors of share markets. Such funds focus on investments in companies which are stable which give you promising returns which may be up to 8 to 10 percent of your investments.

Then there are medium risk investments and high risks investments also termed as aggressive investments. You may decide over here what kind of investments you want to make.

High risk mutual fund investments can give you returns up to 15 to 20 % but there are chances of losing in them and thus ending up into negative returns. Medium risk investments are the ones which can give you up to 15 % returns but may end up into no profit no loss returns.

Thus Mutual fund investments give you opportunity to invest in the share markets and take part in the profits of the companies that you invest, and at the same time removes the headache of doing the study and research of the daily movements of the markets. Also that it gives you a feeling of confidence about investing in the markets and gaining returns.

6. Investment in precious metals

Investments in precious metals is another lucrative option for investing money and reaping benefits. Precious metals have always been on demand for their uses in machine parts, high demand in industries and in jewelry.

Metals like Gold, Silver, Platinum, Copper and others are in high demand. In recent years, investment in share market, mutual funds, insurance policies and precious metals can be done online. Still being similar to share market, there are ups and downs in the precious metals and a study is required to understand the risks of investments. Still, many vendors of precious metals offer lucrative returns as one month of free investment, discounts on making charges of jewelry, 8 to 10 percent more investment at no cost and so on.

Investments in precious metals has been traditionally going on through physical buying of these metals and then selling at a later on date when favorable rates have been gained. Since the last decade, options like investing in Gold Mutual funds, Futures and derivatives of precious metals, online buying have been made available, thus making it easy for people to trade and invest in precious metals.

7. Investment in Foreign exchange

While still being a relatively new type of investment and profit making, investment in foreign exchange had been traditionally present when people from other countries visit other countries. The government finances are kept in stronger currencies and thus to keep bigger reserves of capital in conditions of emergencies and also when economic changes are bro

ught in. Foreign exchange increased as people staying as Non residents and expatriates kept foreign currencies and exchanging them for currency of their home country for better returns.

This avenue was opened to the wider public over various strong currencies through the Forex market like:

  • USD – United States Dollar
  • EUR – Euro
  • GBP – Great Britain Pound
  • JPY – Japanese Yen
  • AUD – Australian Dollar
  • CAD – Canadian Dollar

and a few others…

Differences in currencies can be utilized to gain profits.

Conclusively, investments and savings can be made to proper use and instead of having them as dead stock, can be put to work and earn profits for you. If you have read this article up to here, you are pretty sure that you have completely read this article 😛 and hopefully have a better insight of investments and saving money.

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