Saving In Economic Analysis

The concept of saving plays an important role in economic analysis. Saving is defined as the difference between income and consumption. During pre-Independence period in India, people spent most of their income on consumption and only a small amount of income was left in the form of saving. As a result the saving rate was very low, especially in the rural sector. Since the attainment of Independence in 1947, the major objective of the government policy has been the promotion of saving and capital formation as they are the primary instruments of economic growth, use of the increased savings for a further financing the required investment constitute the strategy of economic growth. This process may continue till saving, investment

One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases.

The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or service in the future as it does now or did in the past. The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding increases your income, by accumulating the principal and the interest or dividend earned on it, year after

A futures contract is an agreement to purchase or sell, also known as trade, some underlying product such as gold, crude oil, or agricultural items at a future date and at a preset price. Options are contracts that give traders an option to buy other financial instruments, including stocks, at a predetermined price within a given time frame.

Alone, derivatives hold no value. The value of these financial instruments is determined by the underlying security or asset, such as a stock or natural resource. Various investment avenues available in India:

Investment avenues/Alternatives

Financial assets Real assets

Marketable Non- marketable Commodities Real Estate Precious securities securities objects Bank Deposits Shares Other deposits Debentures Insurance Bonds Money market Instruments Foreign exchange Mutual Funds