কেন বিনিয়োগ করবেন Why invest at all

Suppose that one day in 2015 your grandmother put a hundred thousand taka under her mattress for a grandson's wedding. Nobody stole it, no fire touched it, no mouse chewed it. Take it out today and count it and there will be exactly a hundred thousand taka.

But what a hundred thousand taka bought in 2015 is not what it buys now. A bhori of gold then was around forty thousand taka; today it is past a lakh. Rice that was 45 taka a kilo is close to double. The number on your grandmother's money never moved. What that money can do has roughly halved.

That is the first thing this school has to say, and the most important: money left alone is not safe, it quietly decays. The thing that decays it is inflation, and it is not an accident. It runs, always, in every economy on earth.

What the decay looks like

Move the sliders below yourself. Change the inflation rate, change the years, and watch the number fall. This is not a forecast. It is division.

Notice that at 9% over ten years the buying power falls by about 42 percent. A lakh today does the work of about fifty-eight thousand taka in ten years' time. Nobody took forty-two thousand taka out of your pocket, and it is gone all the same.

Saving and investing are not the same job

In everyday speech the two words blur together. The jobs do not.

Saving is not spending: money moved aside. It is the first job and the second one is impossible without it. Investing is putting that money somewhere it earns: a share of a business, a loan to the government, a flat, a fund.

The important part is that investing means taking risk. There is no route to beating inflation without it, and anyone who says there is, is either mistaken or lying. You will hear this sentence many times in this school, because it is the single place where the most money is lost in Bangladesh.

Then how is this different from gambling?

It is a fair question and a lot of people dodge it. Prices move, people lose money, and in 2010 hundreds of thousands of Bangladeshis lost everything they had. So why is this not a bet?

Three differences, and all three are in your hands.

1. What you are buying. A lottery ticket buys you nothing: it buys a possibility. A share buys a piece of a real business with a factory, staff, sales and profit. That business makes something year after year, and you own part of it.
2. The length of time. What a share price does in a week is close to random, and trading inside that window really is near enough a bet. What it does over ten years depends far more on how the business went. Stretch the time out and the random part shrinks while the business part grows.
3. Information. There is nothing to research about a roulette wheel. Here there is an annual report, sales figures, a debt schedule, an auditor's opinion, all of it free. The person who reads them and the person who does not are not taking the same risk.

What time does

The strongest force in investing is not cleverness, it is patience. It is called compounding: your returns start earning returns of their own. Push the years out below and watch where the green line suddenly turns steep.

That bend is the whole thing. For the first five years it feels like nothing is happening, and that is precisely where most people give up. The ones who do not, look up after twenty years and find the money has brought in more than they ever put in.

What waiting costs

Check yourself

Next we decide what you are saving for, because until that is answered there is no way to choose where the money goes: Decide the goal before the money.