An important aspect of living for a secured future is to have some great investments which will give flourish and manifold. However, due to lack of clear vision, one often falls prey to poor investments which sometimes even results in loses. With careful planning and research, one can improve their finances and grab some great deals. Here are some mistakes which investors should be careful of.
1. Not having a defined investment plan: Before you plan to invest, have clarity about your long term and short term goals, time required to realise them, and how much investment will be required. Allocate funds appropriately to your goals and begin investing accordingly.
2. Lack of emergency fund: Creating an emergency fund ensures that you are prepared for any unforeseen situation which may arise. It is advisable to define an emergency fund for up to a year keeping in mind all the expenses including the liabilities. This is applied for both salaried and self-employed individuals. With instant personal loan available now at a click of a button, one can access a small personal loan to meet any financial emergency. One can choose a comfortable personal loan EMI to repay the loan.
3. Timing the market: When it comes to the stock market, one should avoid timing it. Instead, by keeping one’s long term goals in mind, one should try to invest both time and money in the market. Opt for mutual funds schemes, SIP schemes etc and avoid any hasty decisions.
4. Don’t forget to study different aspects: Any amateur investor often tends to take into account a single aspect of the investment. He may make the mistake of investing in the same product considering its previous returns and not look for other prospective investment options. Take into account the economics, volatilities and present and future business prospects of the equity before opting for one. Having a well-drafted plan with an open mindset to invest in different sectors and schemes ensures good investment deals.
5. Accessing loans from the beginning of work: Early working years are the golden years to make investments whose compounded benefits can be reaped later on in life. Taking a loan early in life limits your savings as a considerable amount goes off as monthly instalment and leaves no or zero space for any savings.Opting for a loan to buy a property is a different scenario as it will give you an asset for a lifetime.
6. Avoid indulging excess in fixed income instruments: Have a diversified portfolio when it comes to investment. Invest in fixed income instruments but don’t go overboard with them. To bear the financial volatilities like inflation etc. it is better to inculcate a mix of investment instruments.
7. Be patient
Investment and patience go hand in hand if you wish to have excellent returns. Never take any hasty decision when it comes to investing your hard-earned money. The saying ‘Rome was not built in a day’ goes aptly to investments as well. To have good returns, one got to invest in their time and patience too. Keep your financial goals in mind when investing and also consider aspects like market volatility when opting for equity.
8. Don’t consider insurance as investments
It is important to understand the difference between insurance and investments. Both these things are completely different in their objective, approach and conduct. While investment takes into account your financial goals and multiplying your assets, insurance takes care of the financial aspect of emergency situations such as accidents or deaths.
To make the year 2020 a profitable one, ensure your investments are well thought off and take various market factors into consideration. Opting for high-risk investments is not a smart move especially if opting for long term financial goals. Short term risks may give you profits but can also result in taking a considerable amount in one go itself. Thus, it is time you buckle up and chart out your goals for the year and for the future and do funds allocation accordingly. Always remember that investments should be a part of your income and not the whole income. Proper finance management and portfolio management is evident in having bountiful investments.