Money is something that needs to be managed well and any delay in its management can lead to losses that could have proven to be large profits. Given the present Indian scenario, I will be highlighting a few things to keep in mind while making investments. I am sure that these will prove good in long as well short term however reading the fine prints during investment is a must as the investments may be subjected to market risks
An old saying but it holds true while making investment decisions. The concept behind this is that when you put all your money in one kind of investment then your entire money is prone to market risk which means that incase the market falls your entire value of investment will be directly proportional to the market reaction. By investing in different instruments of investment you are offsetting your losses with investments that yield profit. In such cases even if there is a loss it will not be as huge as in case of non-diversification.
2. A Bank Fixed Deposit is a must in a portfolio
A lot has been debated on this but Bank Fixed Deposits are a great way to start investment and I personally feel even a risky investor should have some investment in the form of bank FD. This is like a starter to a meal. Hence it is a safe way for people who want to gradually start safe and move gradually to riskier options with better returns.
3. Invest in Gold ETF
Gold has always been kept in the form of jewellery or coins and known to be rising in its value. Surrendering gold jewellery is a cumbersome task especially, when one does not have a reliable family jeweler as in such cases they have to settle for a lesser value than its original market rate. Lately leading gold brands have come forward and decided to quote the right market value for gold which is to be sold. However what goes unnoticed is that a certain percentage or a fixed value as per weight is cut and is termed as ‘making or labor charges’. The calculation method for labor charges is definitely higher in case it’s the percentage method as it is directly proportional to the market value of gold but a fixed amount is depends on the weight of gold and is usually lesser in value. In either case there is a certain loss in selling the gold. Gold Equity traded funds cuts such complications and gives back its customer the right value. Now there might be some 1% on exit load in some cases which is justified since a lot more is given back in return. Investing in Gold ETFs also avoids the worry of keeping gold in lockers and paying money on locker rents. So by and large this is a good choice for people looking for investing in gold.
4. LIC Policy or Post Office Savings
This is traditional but yet a very safe option. Reason being that the government gives a much lesser returns but never defaults in payments. Parking some money here is second to Bank FDs but for a longer term.
5. Mutual Funds
I am a bit biased towards investments in Mutual Funds because I feel if rightly invested these yield good returns with a fair amount of risk. Though these should be held for a long term and one should be willing to face markets risks. Having said that, I feel one can never go wrong if invested in different types of top rated mutual funds even if it’s a small portion of money. One should be very careful in which and what type of mutual fund to choose. A past performance of the fund manager and the different sector that fund puts the investor’s money holds equal importance. Before picking and investing, fine print should be read carefully as there might be something which holds much value to an investor.
One can go on and on about how to save and invest money but the above is quite safe and excellent to start with. However, one should research and try to balance out with a good mix and remember rule no. 1 of this article- diversify the portfolio. By the end of the day the money should yield profits and once you start it just get better. Always remember to keep track of your portfolio especially incase of investments made in mutual funds.