Question

Explain why is it difficult to set aside funds for investment when you are in poverty.

Short answer

Because the income is not sufficient to meet the basic needs.

Step-by-step solution

Step 1. Introduction

Poverty refers to the situation when a person is not able to afford the basic necessities required for survival from their income. different countries have fixed a certain level of income that they consider necessary for survival. Any person earning lower than this level is considered poor.

Step 2. Explanation

In situations of poverty, the person does not earn enough income to meet their basic needs such as food, shelter, clothing, etc. So having any spare income to be kept as savings is out of the question. Even if there is an increase in income, the additional income goes not cover other expenses such as healthcare and education.

So, keeping aside income for savings or further investment is not possible in situations of poverty.