It is the innate desire for every individual to get valuable returns from their investment. But, the gains you get depends on how well you plan the investment. In this write-up, we list down a few tips to help you choose the right investment.
No matter if you are an amateur investor or a season one, you may be wondering how to invest and grow your wealth in the future. Planning your investment well and taking the right steps can go a long way in helping you create the wealth you expect to create in the long run. The investment strategy you apply, plays a vital role in your ‘rags to riches’ story. If you are a first-time inventory, strategic planning can help you accomplish your goals.
One of the important factors that distinguish the top investors of the world like Warren Buffet to other investors is the investment plan they devised and the investment strategies they applied. So, if you aspire to emulate the success of top investors of the world, you need a strong investment plan. And, if you are wondering how to make the investment plan, here are a few steps you must follow.
Determine your goal
One of the key aspects of being successful in your investment journey is to have a fixed goal. Every investor has their unique goal. Some may want to invest for long-term goals and others may want to invest for a shorter-period. So, before you start investing, you must ask yourself, ‘why am I investing?’ ‘what do I aim to accomplish from the investment?’ Knowing the answers to these questions will help you choose the appropriate investment option.
For example, if your goal is to accumulate funds for paying home loan down payment, you can invest in short-term and low-risk schemes like bank fixed deposit, debt mutual funds, ULIPs, etc. However, if you wish to stay invested for long, you can invest in equity funds, PPF or other instruments of your choice.
Assess the risks
It is true that because of the market fluctuations and market volatility most of the investors, especially first-time investors tend to choose low-risk investment tools. However, such low-risk investment options yield low returns and it may take years to grow your wealth. So, one of the important advice that most successful investors give is to diversify the investments in high-risk and low-risk investment tools.
If your goal is long-term wealth creation, it is better to invest in high-risk investment schemes because as the risk is more, the returns potential is also higher in the long-run. However, if your goal is short-term, then investing in low-risk investment options make more sense. So, depending on the risk level you can take, choose the fund options accordingly.
Let us assume you have invested a specific sum in a certain investment scheme for 15 to 20 years. The money grows every year and makes you feel wealthy. However, what if you need funds to meet an emergency expense? If the investment scheme does not allow you to partially withdraw the funds, you may have to apply for a personal loan, which means you may be repaying a higher interest.
This could potentially eat up your savings. So, to avoid this situation, it is advisable to choose an investment carefully that comes with a specific number of lock-in periods and post that allows partial withdrawal of the accumulated funds.
Consider the brand value
Insurance is an important aspect of investment planning. While you may want to grow your wealth, you would also need financial protection to your family. And, while buying an insurance policy from you must be aware of the insurance company’s reputation and credibility.
You must check the brand value. Here the brand value means that the company is known to everyone and would recommend you. There is nothing more credible than word of mouth popularity.
Use the above tips to choose the right investment plan and grow your wealth as desired.