Why Should I Invest?

1.1 – 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. 1 Need to Invest 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. Going by these assumptions, here is what the cash balance will look like in 20 years.