Investments are everyone’s need, without investing the future cannot be secure. Investment motives may differ. One may invest for Child’s Education another would be doing it for retirement. Investment goals differ so does the strategies but there are few thumb rules everyone must remember before investing the hard-earned money. The rosy pictures that financial organizations show before investments are made by investors never take the shape and the salesman vanishes. The money invested to erode instead of growing.
The above fact cannot bind anyone from investing since money which is not invested is a true loss not only for an individual but for the society as a whole. By keeping the money idle in lockers oneself is actually removing it from being utilized in the economy for more productive purpose through proper monetary channels. Hence hampers economic activity. Apart from this the concept of the time value of money makes it imperative to invest wisely. The “Rupee today would value more today than tomorrow” is the simple concept of economy. Inflation has its own impact on the savings and investments. So the investments shall fulfill two basic goals: i.e first it should beat the inflation rate, secondly, it should earn return more than its opportunity cost. (Opportunity cost is the best second option available for that money if invested).
So if you are looking for investment strategies? Then these 11 thumb rules are for you….!
1. Don’t keep all the eggs in one basket: This is the greatest risk an investor would ever take! Always have a mix of investments. If something goes wrong with one investment plan another is there to support.
2. Systematic way of investing: Systematic ways of investments are the best for the investors who cannot track the investments daily. It provides professional outlook to the goals of small investors.
3. Invest when its low and redeem when its high: The real gainer would be the one who times his investments and knows when to redeem them. A decision has to be in the trend that invest when low and redeem/refrain when its high.
4. Invest as per goals: Knowing the goals for which one wants to make the investments is the main thing. If it’s for retirement the portfolio would be different than that of the goal of daughter’s marriage. But no matter what the goal is start investing as early as possible.
5. Insurance as investment: Till date insurance has not been seen as an investment option, but now the trends are changing with the companies bringing up the new plans. Now insurance can also be seen as a good investment option. At one hand where it gives security and on the other returns. Can anything be a better deal than this?
6. Think of long run: It’s advisable to go for the long run for investments to grow. History has shown that stock market has shown better results for those who remain invested for the longer time periods.
7. Know your risk profile: The risk profile is not same for every investor. The investment plans has to be as per risk profiles of the individuals. The plan which might work for one may be a disaster for another. So better to know about the risk profile and then invest. One may choose between long term plan or short term plans. The term may also differ, for one the same time frame may be long term and for another it may be short.
8. Start early: Timing matters a lot. The early its started the better! Don’t wait for the better tomorrow. Today is the best day. Once it was asked to Warren Buffet, when is the best time to Invest? The answer was shocking! He replied it was Yesterday! Imagine the importance of time in investing.
9. Taxes that you pay: Yes! Saving Tax is as important as investing but which option to choose? Taking PPF gives secure returns and returns are also tax free but the long term and lesser returns would not be acceptable to all. But those who can afford less returns but with short time span FD is a good option for them. Whereas equity would be an easier option for those who can afford higher risk and time span should be short. So saving tax is also an investment option. and yes not to forget the tax which is saved just be investing is the clear return earned.
10. Emotional angle of investment: This is one of the most important aspects. Emotional angle usually comes when investments are made in jewelry. As a prudent investor it is suggested to invest in gold bullions then jewelry. Since jewelry involves making charges, wastage etc., on top of it selling jewelry in India is considered as a situation of not being prosperous. The investment should be give liquidity, and safety shall be its main characteristic.
11. Just don’t invest and sit: After choosing the right mix of investment and investing into it, just don’t sit and relax keep a check on it. Monitoring is even more important than investing because opportunity knocks at the door only once. One never knows which decision would be lucrative. If the strategies aren’t just working we can churn the portfolio and take corrective steps.
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