ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.

Detailed explanation-2: -Usually, you would choose to invest your money for long-term financial goals like retirement because you have a longer time frame to recover from stock market fluctuations. If the financial goal is short term, say five years or less, it’s usually smarter to park your money in a high-yield savings account.

Detailed explanation-3: -Investing not only helps you build wealth, but it also secures a nest egg for when it’s time to retire. While you don’t need much these days to start investing, the key is that you regularly contribute beyond your initial deposit so that you have more money to grow over time.

Detailed explanation-4: -Diversification is one of the most fundamental rules of investing and allows you to take a middle road through the extremes of market performance, allowing your investment to grow regularly with smaller fluctuations along the way. Diversification is the most effective means of managing risk.