Investments and risks are tightly intertwined. Every investment carries some element of risk, regardless of its form. This risk can deter people from making any investment. However, do you realize that not investing entails a risk than investing? There are a variety of disadvantages to not investing, which will get discussed in depth in this essay. Let’s get started.
- Unable to Meet Life’s Objectives
The purpose of investing our money is to achieve our life objectives, according to Gurbaksh Chahal. The goal of investment, whether for short, medium, or long-term goals, is to develop wealth and corpus for them. You will, however, fall short of your life goals if you do not invest.
Every aim, regardless of its nature, is worth the amount of money. That is only feasible if you make wise investments and put your money to good use. In a nutshell, you must invest to realize your life goals and achieve them with ease.
- Allowing money’s value to be eroded by inflation
Inflation, which has a decompounding effect on money, is possibly the enemy of wealth accumulation. Money loses its worth with time. Investing in inflation-beating instruments like equities is the only way to tackle it.
Today, however, things are different because of inflation, which can quickly drain your funds. Investment in inflation-beating vehicles like equity, whether through stocks or mutual funds, can help you beat inflation. It’s necessary to invest in asset classes like equity to attain long-term goals like retirement and avoid the specter of old-age poverty.
- Compounding Shouldn’t Get Ignored.
Compounding is a means of multiplying wealth, commonly described as the “eighth wonder of the world.” Have you ever considered how a monthly SIP of 5000 in an equity fund with annualized returns of 10% over 15 years may enable you to accumulate a corpus of more than 20 lakhs? After all, it is the power of compounding.
As a result, if you don’t invest, you’ll miss out on the benefits of compounding. As a result, you’ll miss out on opportunities to increase your wealth. Simultaneously, there may be a considerable gap in the corpus required for a specific aim.
- Taking Away Your Money’s Opportunity to Grow
Keeping money in your almirah prevents it from growing to meet diverse requirements, according to Gurbaksh Chahal. Life’s needs, like those of the stock market, are never linear. You may get confronted with an emergency. If you don’t put your money into instruments to establish a contingency corpus, you won’t be able to meet this unexpected need. While liquid savings or bank fixed deposits can help you prepare for an emergency, investing in equities can help you grow your money over time.
As can be seen, the risk of not investing outweighs the risks of investing. As a result, based on your objectives and risk tolerance, you should invest in well-regulated financial instruments. Monitor at regular intervals and make necessary adjustments.