People are fascinated about tips and tricks in general. These tips help to ease out life and help dealing with emergency situations. In investment, there are a few tips I would like to share with you. Having said that, there is no secret tip that would multiply your money overnight. A few habits (tips) can make you wealthier over a period of time.
The purpose behind sharing tips in investment is to improve your awareness and impact your life in a good way.
Be ready for Rainy-day
Rainy-day, a time of need or trouble. It is very important to have adequate Health insurance & Life insurance. On the other hand, it is equally important to build an emergency fund. An emergency fund is usually equal to three or six months of your monthly expenses. Save this amount in liquid form, so that it can be utilized instantly when needed.
Set a Target in investment
The first thing is to decide “Why”. Why are you investing? Which financial goal do you want to plan? In short, list down your goals, and decide the amount and tenure of goal. Without this step, the investment is clueless. If you don’t know where you want to go, you can’t reach the right place.
Dedicated investment for each target
After getting clarity about your financial goals, create a different investment portfolio for each goal. Creating a distinct dedicated investment portfolio will prevent you from making unnecessary withdrawals. A portfolio build with an aim of retirement corpus may not be useful for purchasing a home. The probability of achieving the target will improve, if not interrupted by withdrawal.
Start your journey early towards the target
There is no rocket science here.
- Earlier you start your investment journey, earlier you reach to the target.
- The more time “Compounding” gets, the more power it exhibits.
The more time you have, you can select riskier assets such as “Equity”. You can hit the target even with a small amount if you stay invested for a long time.
Evaluate the Risk and Reward ratio
While investing, assessment of the risk and reward ratio is really important. The risk you are taking and returns you can get for taking the risk, need to be assessed. If you have a long-time horizon, your risk-taking ability is more and hence you can choose to invest in equity through Mutual Funds or direct stocks. Beating inflation and earning more than that, is the key.
Spread out your Risk in investment
After listing all the objectives, you will realize that your financial goals are having different time-lines, a few are short-term, a few goals are medium-term and a few are long-term in nature. Hence, the strategy of investment needs to be diversified like your goals. Investing in different assets such as Equity, Debt, and Gold helps you spread and minimize your risk. The proportion of asset classes will change according to your risk and the time frame of financial goals.
Analyze your progress frequently
Making a plan and implementing the same is important. However, the more important thing is to take review at regular intervals and make sure that you are on the right path. Reviewing the investment includes tracking its performance, assessing changes in financial goals, changes in risk profile, asset allocation, and re-balancing of the portfolio. You need to be flexible in terms of changing the investment plan and asset allocation according to market conditions and your own priorities.
Take the help of investment experts in time instead of, going off the track
We believe in ourselves. We are confident to plan our finances well. It is a good thing. However, you should not be overconfident. There is no harm in taking an expert’s help when you want to take certain investment decisions. They are experts in the field of investing. By consulting them, you can explore different investment options, save your time and plan your finances well. One of the biggest benefits of consulting the investment expert is that you will save time which otherwise would have spent in gaining knowledge and research. You can invest that time into your job, business or profession.
Be smart and implement these tips in your day-to-day life.
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