Basic Rules Of Investing

23 Dec

We all do different investments on regular basis to fulfill various objectives for our current or future needs. But did we ever sit and think how these investments can be done in a right manner to actually achieve our objectives. To understand this, first we need to know some of the basic rules of investing.

Set your objective: There is always some amount of risk associated with investments which is directly proportional to the return it gives. Therefore, if your interest is in short-term investments, don’t go beyond the risk level. The level of risk should always be reasonable. And if your interest lies in long-term investment, go for equities.

Make it simple: When considering for investment in equity, one should count on diversification which keeps it safe. Considering debt funds, Floating-rate bond fund is less volatile than others. There are many more schemes you can go for like Gilt, MNC, Serial Plans, Fixed Maturity etc. Also look for safe funds rather than sector funds to invest in.

Ignore the ones that seem attractive: It always happens that things which rise high fall down too. Therefore, the ones which may provide high profit the current year, may do exactly the reverse next year.

Regularity: No one can forecast future and so the market moves. In order to get the maximum possible benefit with limited level of risk, the investment should be made at a regular basis.

Prefer long-term investment to short-term investment: In order to make a considerable amount of money, go for long-term investments. The reason being, short-term investments fill pockets of brokers more than the investors. Also, invest in schemes only which you understand rather than listening to others blind folded.

Investment from an early stage: The early you start investing, the higher is the amount you get. It’s because money gets compounded and more the time it’s invested for, more is the maturity amount.

It can thus be concluded that investment needs determination and perseverance. One should be aware of the objective and associated risk that can be tolerated to decide on a scheme suitable for the investor. Please share your views and comments on this.