We all know that we need to invest to have a chance to build wealth. However, not everybody is aware of the steps to follow before making an investment.
Savings, Fixed Deposits, Government Bonds, Debt Funds, Mutual Funds, Equities and Commodities are some of the areas where you would like to invest your hard-earned Money. Also, we should not forget some ideas culminated into startups, Real-estate etc. Investments are risky and, as a Beginner, nobody would care for your money more than you.
But, before investing, you need to remember some key points and educate yourself with financial intelligence.
Savings could be the best tool and can act as a starter kit when you are planning to Invest anywhere. It could be a fixed amount or percentage or whatever you think you can afford. With this, you could easily save up for your financial goals, be it short-term or long-term.
Researching could help you to know about your area of Interest. Likewise, if you know your area of interest, research a lot about the same. You could watch Youtube videos, hear experts on podcasts, read ebooks etc.
Acquaint yourself with financial terms, so that you don’t become a bait in the long run for someone who knows it better than you. Make yourself aware of what you are stepping into when you talk about investing or talk about money in general.
Areas Of Investments
You could start SIP and SWP or can also invest in retirement funds. It depends on your age, expenditure and various other factors. Get to know about all the factors and choose your area(s) of investment.
Allocations Of Funds
Expenses are inevitable. Manage your funds wisely. Allocate some funds as emergency funds such as medical and cushion money that are necessary. 20% of liquidity needs to be available after your investments and expenses.
Set a definite target for ROI. If you set it at 8%, don’t get emotionally attached with it even if it gets 12% or so. It would keep you sane and disciplined. Always follow your entry and exit strategies.
Avoid Unnecessary Liabilities
Don’t dump yourself into liabilities. Do not burden yourself with unnecessary aggressive loans. Invest what you can afford to lose. Also, use resources at the optimum level, so you spend cautiously.
Discipline in Investments
Discipline is needed for mitigation of risk and will help in longer-term targets. Look at your finances from a year’s perspective in terms of three critical metric terms. That is fixed expenses, debt expenses and investment expenses in relation to income.
Patience In Investments
Investing is not a “get rich quick” scheme, Have Patience. Slow and steady wins the race. An investor invests money for long-term i.e. he is not that much affected by the market when it goes down by a few points. Rather, an investor buys those dips and averages out the losses, wait for long-term and makes hefty profits.
Making, Controlling And Safeguarding
After all, this when you start making Money. Do not let your money or emotions control you when it comes to spending money. Financially Independent people do not care if their neighbour changes their car every year. It does not impress them if their friends just build a new pool and hold parties every weekend. Use it wisely and Keep embracing yourself with Financial Intelligence.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]