Most of us are very much concerned about our future security, especially in terms of finances or money. Due to this fear of security, most people are saving money for the future so they will not face any financial crisis.
To enhance financial security, people are saving more and investing in different investment options available in the market like Fixed deposits, Equities, SIP, Mutual Fund, Post Office Schemes, Insurance policies, Bonds, Real Estate, Crypto, star-ups, business and so many other options to enhance money so they can financially secure themselves and their family.
But are these options creating Financial Security?
To understand better, let’s see how our general thinking works in our country India.
Let’s take the first example, many young people are searching for Government jobs for two main reasons, first government jobs are secured till age 58-60 and after they will get a pension so the rest of their life becomes financially secured. In short, if you get a government job your whole life will be secured. The government salaries are not very high so one can sustain their life easily but may not be able to live luxury life.
Let’s take another example, many young people are searching for jobs in corporate or reputed companies just because these jobs are reasonably secured and they can work for a longer time with a regular monthly payout which is securing future financial security.
Let’s take one more example, many people join Arm Forces by knowing that they will get a secured income, free house and lifelong pension. Also, there is an option as per old policies that they get premature retirement after serving 11-16-21 years in defence service and after which they can leave service with a lifelong pension. After retirement, they generally work in the private sector and their pension will be like their financial Security.
Take another example, many people are investing in pension plans so after retirement they will get secured income till their end of life.
So these all examples highlight a very basic human tendency which is a secure and peaceful life. Our basic thinking is to first secured life financially and this thinking most people have at very early age 20-25 that is almost starting of their profession.
Why do we need Financial Security?
In India, there is no social security cover the government is providing even after paying hefty Income taxes and other taxes like GST.
Few welfare social schemes are available by the government which is only for poor class people.
So according to the situation, our thinking is to save money for future security or to do something that can create financial security. Saving or looking for a Government job or corporate job or taking a pension plan or any other means is just to create financial security and further for live quality life.
What is Financial Security?
If you summarize all the definitions of financial security, it comes out as “a bulk amount of Money or the secured monthly/ yearly income which helps you to sustain you and your family is Financial Security”. So here sustainability is the main factor.
What is Investment?
Investment is the way by which you can get returns by your own money. It will create income for you or enhance your money.
So Financial Security and Investment are the same?
It looks like financial security and investment both are the same but it’s not true.
Financial security is a little different from investments.
“Only well secured investments can create Financial Security” not all the investments those are risky.
Investment is one of the ways by which Financial Security can be created. So investment is one of the tools by which we can create financial security. It is very important which kind of investment we are doing. If investments are in Secured investment schemes then it will surely create financial security which will help you to sustain your life in bad times.
But if investments are made in medium risk or risk investment schemes where there is no surety of returns and your principal amount is also at risk then it cannot be your Financial Security.
Many people do not know this fine difference and they are investing all their savings in risk investment options to get higher returns and losing all their money and in distress time they are not able to fulfill their basic needs.
What is advisable to create Financial Security
Start investing some amount monthly/ regularly in secured investment schemes even if it’s fetching less return as compared to medium risk or risk investments. Balance can be invested in medium or risk investment schemes to get higher returns. This secured income will be like protection cover for you and your family.
The investments made for higher return are not necessarily the Financial Security. Financial Security can be created by Secured investments where you can get assured regular income and returns which will help to sustain the basic necessities of living in case of emergency. So whatever investments you make but do some regular/monthly investments for Financial Security too this can help in bad times.