Investment precautions you must take to ensure best returns, avoid risks of losing hard-earned money
Investment tips: In the modern day, earning money is not enough. You may work hard but the money earned might not be enough to help you live a comfortable life. For any individual to fulfil their dreams and goals, it is important to make their hard-earned money grow.
Investment tips: In the modern day, earning money is not enough. You may work hard but the money earned might not be enough to help you live a comfortable life. For any individual to fulfil their dreams and goals, it is important to make their hard-earned money grow. This could be achieved by investing in various schemes like Public Provident Fund (PPF), National Pension System (NPS) and Mutual Funds, among others. With so many investment vehicles available in the market, people often get confused and are unable to decide the best possible scheme for themselves.
How to decide the right investment option?
Apart from the government-backed schemes, no investment option comes with guaranteed returns. So, wrong investment choice can lead to financial losses, which is something that no one wants. This is why investors should consider these factors before investing their money -
Age - The young investors have more time and can obviously opt for more aggressive schemes. This helps them get better returns in the long run. But on the other hand, older investors should opt for safer avenues like Fixed Deposits.
Goal - Any investment should be made keeping in mind a fixed goal. You should opt for a safer investment and use the return-generating potential of equities for long-term goals. Right investments can even help you meet goals before time.
Profile - It is very important to maintain a good investment profile. This means that you should consider factors like how much you are earning and how many financial dependents you have. Also, investors should try to invest in more than one scheme to reduce the risk involved.
What precautions should be taken?
Archit Gupta, Founder & CEO ClearTax told Zee Business Online that while choosing investments for goal accomplishment, investors need to exercise a few precautions. He said that you should also take into account the related costs around their goal. For example, if your investing money to purchase a car, you should also calculate its maintenance cost. The next thing to consider is inflation. "If the goal is 15 years away and today it costs Rs 5 lakh, then assuming 6% inflation, it’s future value will be around Rs 12 lakh. For other goals, you may consider similar guidelines," Gupta said.
He added that the investment tool should also be decided after calculation the time horizon. "Firstly, calculate how far is your goal (short term or long term). A goal which is 10 years away may warrant investment in equity-related avenues. Equity funds generate a higher return on investment in the long run which may be ideal for wealth creation for the said goal. But if it’s 3 years away, then you may choose safer havens like debt funds," he added.