Why saving money ends up losing money?

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From our childhood days, we are taught to save money from our pocket money to buy the belongings what we wanted the most. This frame of mind carries to the age of later life and we try to save money for the thing we wants the most. But here we commit a drastic gaffe of life that makes difference of becoming prosperous or reduced in terms of financial augmentation. 

Here we present the list of slip-ups that usually people commit and think they are doing it right but actually they are going no-where: 

1) Over Spender:

Most people “buy more than they save”. Let us say a person has saved 8 lakhs of Indian rupees to buy his dream dwelling with a dream car but it is not actually possible to buy those two in his savings.

Impossible! They buy it by taking debt from banks or relatives. The problem is “these things” are not going to give him any returns and added the anxiety of paying the debt from the future salary.             

2) Satisfied Savers:

They are actually better than “Buy more than they save” kind of people. These people are satisfied with their savings and spend according to their savings. They buy dwelling and car both that fits into their budget of saving by saying, “NO! To Debt”. But here problem is the same as before. No returns again but extra expenditure of maintenance.      

3) Fixed Deposit Lovers:  

They are doing good but very slow in evolution. They are keeping their money in banks and gaining returns of almost 7% per year. They are not spending their savings in foolish luxury. But they are facing inflation or CPI. 

CPI Explained -

A consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by households. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.      

In simple words you can understand it as the value of money is decreasing every passing year. What are buying today in 100 Indian rupees? You may end up paying 104 Indian Rupees in the next year as the inflation rate in India is around 4%.

The fixed deposit lovers are gaining 7% but they are losing 4% due to inflation too. Hence net return drops down to 3% (7% - 4% = 3%) only. “This is quite low”, I guess. 

What do to with my savings?

The answer of this question is explained by fourth category of people. 

4) Smart Investors:

They are the people who literally grow financially. They do not clutch their savings in banks but invest it in diverse sectors such as Real Estate, Commodities (Gold and Silver) and Stock markets etc. They gain returns of almost 15 to 20% per annum.

My advice for those readers out here, please go and fall in the fourth category to attain good returns and grow financially well-off. See ya! Soon when you guys will be rich enough to meet me...Hahaha...LOL...It was just a joke, sorry from my side.   

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