Smart Investment
What is Smart Investment?
Smart investment means to take investment decisions based on analytics. In smart investment one has to analyze potential risks related to returns. A beginner can invest in various options such as mutual funds, real state, stock market etc. but before investing your money complete knowledge should be taken.
In this blog we will provide you complete guidance about smart investment.
Why to invest?
Maximum people have fear to lose money so they don’t invest. They put their money in account which is the guaranteed lose of money because that provide you low interest rate which is not capable to cope up with inflation, it means your purchasing power will reduced and that’s why we have to park our money at right place.
If you make smart investment, you can reduce the risk and also can increase your return. Best way to invest money is to compare risks with potential returns.
To be a smart investor follow some golden rules mention here:
Start Early:
Try to start investing as early as you can. Early start means long journey of investment and long time to grow your money.
Invest Regularly:
Regular investment habit is the key to achieve financial goals. Always invest in discipline way, be consistent and regular. Choose investing option such as monthly, quarterly or yearly and invest for long period of time at least for 5 years.
Set Goals:
Before start investment set your goals such as education, marriage, retirement etc and choose investment options as per your goals. Try to get optimum return not the highest return. Highest returns always associated with highest risks so choose investment option as per your goal, risk bearing capacity and time for which you are investing money.
Design A Balanced Portfolio:
Create your portfolio in balanced way which can provide you good liquidity, average risk and optimum returns. For creation of portfolio you can take investment experts help.
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Keep on eyes on investment:
Always check your investment on regular interval and make necessary changes as per market trends and situations.
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Stay informed:
Keep knowledge of market trends, economic indicators and financial events to take timely decisions.
Consider tax provisions:
Consider tax provisions related to investments and take advantages of these provisions. Try to minimize taxes and maximize returns.
Stay for long term:
Always invest for long term. Avoid short term gains, keep patience and focus on building wealth.
Seek Professional advice if needed:
If you are not sure about the investment decisions or need assistance managing your portfolio, consider seeking advice from a qualified financial advisor. A professional advisor can provide personalized guidance based on you individual goals and conditions. moneytrick.in will help you to make smart investment. You can contact us for free advice.
How much to invest?
Save at least 20% of your income and invest it regularly to build your emergency fund corpus. Saving is the key to building wealth and achieving financial freedom and making smart investment makes it easier.
How to invest:
In financial market to buy and sell any securities, bonds, others assets or investing in other way you need to open an account with relevant entity after that you can start investment. Invest wisely and multiply your money.
Where to invest?
There are many options available where one can invest such as Stocks, Bonds, Real Estate, Mutual Funds, Debt Fund, PPF, NPS, ETC, Crypto currencies etc. Before investing anywhere consider following factors.
· Risk
· Return
· Diversification
· Liquidity
Risk:
Every kind of investment involves some kind of risk, in some options risk is less on the other hands some options involved high risk. Before taking investment decision measure risk associated with investment and take smart investment decision as per your goal, age and risk capacity.
Return:
Everyone invest their money for some kind of return. There is direct relation between risk and return. High risk, high return and low risk associated with low return. Such as FDs have low risk but low return and stock market have high risk but high return. So smart investment says create a balance of risk and return in your portfolio.
Diversification:
Never put all egg in one basket; always park your money in various options. Make a smart investment decision and add 2-3 investment instruments in your portfolio to increase your return and reduce your risk.
Liquidity:
Liquidity means access your money when it is required. Some portion of your investment should not be blocked for years; some part should be free for withdrawal in case of urgent need. So liquidity is also important factor to be considered while taking smart investment decision.
Investment Instruments
· Stocks
· Bonds
· Exchange Traded Fund (ETF)
· Mutual Fund
· Fixed Deposit
· Public Provident Fund (PPF)
· National Pension Scheme (NPS)
· Gold
· Real Estate
· Alternative Investment
Stocks:
Stocks are good option to invest. This option is associated with high return and also with high risk. Volatility is very high in this option. Smart investor always chooses this option for long term. Choose stock of fundamentally strong companies and invest in them for long term. This option has the capacity to provide very high return. Before investing in this option take expert advice and gain some sought of knowledge.
Bonds:
Bonds are generally called debt instrument like debt securities issued by government and corporate sectors. These are less volatile compared to stocks. These involve less risk, some kind of regular interest payments.
Electronic Traded Funds:
ETFs are a kind of mutual fund which is traded on stock exchanges. You can choose specific sectors and region to invest. This is good option to diversify your portfolio.
Mutual Funds:
Mutual Funds are the pool of money collected from multiple investors which invest money in various stocks, bonds and other securities. This is good option for investment because mutual funds are managed by professionally expert people. There is no need for extensive research stock market.
Fixed Deposits:
Fixed Deposits are generally called safe investment. You can park your money in this for short term as well as long term. This provides you a fixed interest on your investment or you can say saving. You can open your fixed deposit account in any bank or NBFC.
Public Provident Fund (PPF):
PPF is a kind of saving cum investment option which provide you good interest and tax saving. SIP option is also available in this. You can contribute monthly in this scheme. This is available in banks as well as in post offices also. This is safe investment which tied you for long term such as 15 years. Partial withdrawal option is also available in this after some years of investment.
National Pension Scheme (NPS):
NPS is a central government launched retirement scheme which is linked with market and provide you high return. This is long term scheme which provide you pension after the retirement age. For more details about NPS read our article on this.
Gold:
Gold is also a good option to invest. You can invest in paper gold or gold coins/ gold jewelry. This investment can provide you good return because prices of gold generally grow.
Real Estate:
Investing in land or some kind of other property is also a good option of investment. This investment provides good return in long run as well as creates some renting income.
Alternative Investment:
There are some other options also available for smart investment. Here is a list
Recurring Deposits (RD)
Commodities
Hedge Funds
Gold Bonds
Insurance Savings Plans
Unit Linked Insurance Plan
Crypto currencies
Commercial Papers etc.
Conclusion:
Smart investment is just to analyze some important facts such as risk, return, liquidity etc and add some good options in your portfolio. Smart investment always reduce risk provide optimum return with diversification and liquidity. Smart investor always considers all the factors before investing.
Disclaimer: The opinions expressed here are for general informational purposes only. It is important to do your own research and analysis before making any financial decisions. We recommend speaking to an independent advisor if you are unsure how to proceed.