Growing money is more important than cutting your expenses, says the author of Rich Dad poor Dad, Robert Kiyosaki. Ever wondered how people get wealthy faster than others when factors are same? The answer is, they don’t work hard for earning money, it is the other way round.
Saving is an important factor in increasing your wealth, but saving alone can’t make your money grow. The only way is making your money work for you, which means, putting it in such use, where your money keeps multiplying. People hesitate while investing in mutual funds. Is it safe? Does it really make people rich? Let’s see.
- One of the most famous ways to multiply your money is through investment. Your current assets can be put into work for generating long or short-term income. The more risks you take, the greater the possibility of both failure and success.
- Usually, mutual funds are considered to be more stable and safer investments. Though they are much riskier than individual stock investment, mutual funds posses the potential to produce huge returns. Bond and high-yield funds are designed specifically to produce the highest profits possible through investment in the riskiest assets.
- High-yield dividend funds mainly focus on stocks consistently paying high dividends for investors willing to receive the maximum amount of income. In this type of stock, a very active manager is required who is high experienced with the ability to take big fall. Though it has a higher risk, it offers a greater opportunity for substantial and quick profits. Certainly, these are not the most aggressive type, but if you posses a significant amount for investment, the annual dividend income generated can be substantial.
- Bond funds are considered to be one of the safest ways of investment but they are quite risky. The bonds that are issued by governments and high rated corporations generate most of the returns from interest payments, investments in low-rated bonds, called junk bonds. The market price of these bonds fluctuates depending on the change in national interests or the loss or gain in credibility of entities.
Even though the returns from mutual funds fluctuate every year, usually they provide higher returns for investment of longer durations. Let us understand by taking an example. The Aditya Birla Sun Life invested Rs. 1,00,000 in both mutual funds and fixed deposits in 2013. Currently, the value of the fixed deposit and mutual fund is Rs. 1,45,329 and Rs. 2,25,000 respectively.