Investing is the key factor which exists in someone’s life. Some invest in Real Estate, some in gold, some in shares , some in bonds, some in post office schemes, some in mutual funds, some in banks and the likes , but one thing remains the same i.e. everybody do investment irrespective of in what thing they are investing but they invest that’s for sure. But the question arises: Which investment is beneficial for us? What kind of investment will give me good returns? Should I invest for long term or short term?
Such kind of common questions pop-up in ones mind. After reading this article one will be able to know what he/she should invest in, what kind of investment should be beneficial for them?
Purpose of investing
Everybody invests in different things because there exist ‘N’ number of things to invest in. And there is no use of investment’s done without any purpose & without purpose no one does anything in there life, it’s same in case of investments too. Investments are done by few to do there savings for long term, some do to get short term benefits. And by doing investments every one try to be secure financially and to satisfy there material needs and in a way it also satisfy other kind of needs too.
Investing helps one to secure there future needs and wants. One can invest and save money for there children, one can invest and can save tax too, one can invest to get good return after getting retired. I believe when someone has an aim he/she will try to achieve it and if one has no aim then he/she don’t have a right path and scale to work upon. Investments should always be done with a purpose in mind, because if you don’t decide what is the return you expect from investments then you will not be interested in knowing the profit you will just say I am investing just to invest which is totally a wrong notion.
Financial
Investments play a key role in making one financially independent. Investments form an integral part of financial planning as they generate future returns & also fulfill financial needs. Before I tell you about the planning few question are need to be answered by you:
Have you planned your finances well?
Have you planned for your child future?
Is financially your coming life is secured?
Do you have a secured portfolio of assets?
These are just few questions which need to be answered & to be planned for. All you have to do is invest to achieve your plans to satisfy your needs but before investing you should have a deep knowledge about the thing called investing or you can call up a person who has a deep knowledge about this subject & need his or her guidance to help you out but yeah the choice is all yours to choose the right person for right work.
Before investing in any thing you should plan well about how much funds you should allocate to what type of assets. Asset allocation is important part of investing and a diversified portfolio or asset allocation should be there, because investing in one asset alone you are taking a huge risk and you never know when rainy days come and you need some funds so make sure that your have always your hard earned liquid assets in your hands i.e. Cash.
Assets Allocation
Asset allocation should be done in appropriate manner which includes Gold, Equities, Real Estate, and Fixed Income Instruments. And the most important is your risk appetite,
as it decides about your risk taking capabilities & also in deciding your final destination. And a diversified portfolio helps in securing your money.
These are important for a portfolio:-
1. Equities
2. Real Estate
3. Cash
4. Gold
5. Fixed Income Instruments
Higher the Risk, Higher the Return
The point here I want to state is itself clear by its title, the more risk you take the better the return is, as if you don’t take risk you cannot rise. For example: - you cannot learn swimming without entering into the water, yeah you can take precaution so that you don’t drown. In the same manner a diversified portfolio is the best precaution in case of investments.
Lower the Risk, Lower the Return
Just like higher the risk higher the returns, the same way lower the risk lower the return. But does that mean you should not invest in them? Yes / No? It’s no, because to give stability to your portfolio lower risk funds are required.
Importance of Cash
Cash is important liquid asset and it is the basic thing to invest, without it you have nothing to save, to invest & to expense. To meet our day to day expenditure cash is needed & also for the unplanned expenditure.
You will know more about planning your retirement and few important things while planning your finances in my next article. Till then Happy Investing!
Written by- Varun Vaid ( vaid.varun@yahoo.co.in )
