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Hello guys

Hello friends we all must have heard the story of the ant and the grasshopper let’s go through the story once again during the summers the ant works hard and saves the food for winter while the grasshopper spends all the time playing music and relaxing grasshopper asks the ant also to relax and not to worry a lot about the winters but the ant kept working hard

And saved the food winters came early than expected and there was no food for grasshopper he remembers that ant did save a lot of food for winters he had no option so he went to the aunt’s house for asking help and did help him saying that from next year you will work hard and save the food for future the moral of the story is that work hard and safe today so

That you can reap the benefits tomorrow i’m sure no one wants to be in the place of grasshopper right keeping this story in mind today we are going to understand how savings play a very important part in our lives you must have heard it from your parents about saving and investing the money a lot of times well you can start saving money from your pocket money to

Buy the latest game or to go to the camping trip you always wanted to you can save the money in a piggy bank but where do parents or elders save their money i’m sure a lot of you might have said the word bank well that’s correct bank is really good option to save money and in return you also get interest on your savings which in turns become as investment when

You put your money in a bank or post office for a year or two to get good return it is known as investing your money now why is it important to invest the money than just saving it well friends will you prefer 100 rupees now or 120 rupees in two days a lot of you must have said 120 and that’s the benefit of investing the money you get a good return friends this

Entire process of saving money and making a careful and considerate investment in the right place at the right time is known as financial planning so what are the places where you can invest the money you can invest in property real estate like buying a house you can invest in gold bank post office private sector well in banks you can make a recurring deposit ppf

Savings account fixed deposits etc in post office also you can have the same things and more like postal life insurance etc you have a variety of options in private sector like mutual funds elss sip shares bonds debentures etc but why do we need to save and make these investments we need to start to think like the ant now like in the story winter was coming and

The ant knew that during winter there will not be much food available hence the ant saved in the similar way in our lives also we can save for a variety of predictable expenses like buying a house buying a car to save for child’s education for building your businesses etc however there can be certain unforeseen or unpredictable expenses like a natural disaster or

A medical expense etc you also need to have saved money for these situations too i hope guys till now you know what is savings and investment why is it important and where to save and invest your money however this is not the end it is equally important to manage and look and analyze your investments not much care is required in banking and post office centers

Because the risks are low here but an immense care is required when you go in the private sector because the risks are higher and so is the investment return on a regular basis we should check that how the investments are performing and are we getting the desired results or not now how do we calculate that our investment is giving us a profit or not let’s have

A look at the situation and get the answer mr alex invested 4 lakh 20 000 in a bank at 12 compound interest he also invested 1 lakh 20 000 in mutual funds as the market rates go high mr alex got 1 lakh 86 000 as returned from mutual funds in three years how much money did mr alex gain and which one of his investment was more profitable here we can see that we

Have two places where mr alex has invested the money that is the bank and in the mutual funds so here it is not a very difficult question it clearly says that we need to find the gain by mr alex and which one of his investment was more profitable so let’s start with the solution let’s have a look at the first part mr alex invested 4 lakh 20 000 in a bank at

12 compound interest here it is important that you guys should remember the formula for compound interest which is amount minus principal now amount is calculated by this formula now here we will take p common which will give us the final formula for compound interest here p is the principal amount which is given at the start of the investment r is the rate of

Interest and n is the number of years for which investment was done now we know that principal amount is 4 lakh 20 000 and the rate of interest is 12 but what is the time period here well since we are comparing to investments that which gave more profit to mr alex the time span of both the investments should also be the same correct so since mutual funds were

Invested for three years we will consider that money in the bank is also invested for three years only on solving further the cube of 1.12 comes to 1.404928 here we can consider this till 3 digits and write it as one point four zero five and here we get the compound interest as one lakh seventy thousand this is the gain from investment made in bank as we need

To do the comparison of both the investment we will also have to calculate the percentage of interest that we got in one single year only then we’ll be able to compare it right so the percentage of interest will be equal to 100 multiplied by the interest divided by the principal amount so after inputting the values the percentage of interest comes to 40.5 percent

Well that’s some great return let’s see what happened in the case of mutual funds mr alex invested 1 lakh 20 000 for 3 years and the amount received by him was 1 lakh 86 000. so here the calculation of gain is very simple it will be amount received minus amount invested which comes to 66 000. now here we also need to calculate the percentage of interest the same way

We did it in the bank investment so here the percentage of interest will be equal to 100 multiplied by interest or gain divided by the principle which will come to 55 percent well it is clearly visible that mr alex’s mutual funds investment was more profitable than the bank’s investment well friends it is always important to keep a track on all your investments

That you have made and also on their performances that which one is giving you more profits well i hope you guys have liked this session please hit the like button and if you have any queries then comment down and don’t forget to subscribe to our channel till then keep watching keep learning thank you

Transcribed from video

Financial Planning | Savings and Investment | Algebra | Math | Letstute By Let’stute