Some Golden Rules for Investing

ToFinancial goals of the family: It takes two to tango

Investing does not have to be complicated and it should not be exciting either. Putting your hard earned money to work in the financial market is all about helping you get what you want from life while making sure you can sleep easily at night. It is not about riding roller coasters. Investing is important to safeguard your financial future and keeping up the fight against rising inflation, but unfortunately, not everyone gets it right. Here’s a quick look at some of the golden rules of investing that will help you plan effectively, irrespective of whether you are investing Rs 1000 or Rs 1 crore.
Have a Plan: Before you put any cash to work, you must know what you are investing for. This will condition your target return, time horizon and appetite for risk and therefore the asset classes best suited for your aims.
Stay Away from Rumors: You may come across about market volatility; some from far-out voices, some from well-known and trusted sources, but what is important that you do not follow these rumors blindly. Do some thorough research on your own to get a better picture.
Respect the Market: Stunning rises and huge crashes show that markets are not efficient, but you must respect their views. When you buy or sell something you are saying that market is wrong, so you need to have a good reason why.
Invest in what you understand: While a well-constructed portfolio can produce a healthy return for investors, the converse is also true. It is easy to incur permanent losses by putting money into an asset that behaves in an unexpected way. Investors should always set aside time to try and understand what it is they want to hold.
Go Against the Herd: To get the best long-term returns, you will eventually need to sell what everyone is talking about and buy what is being ignored – providing the valuation is right and growth, risk and quality checks are met.
Keep Your Expectations Realistic: It is difficult to keep your expectations realistic, especially in a bull market run. If you are becoming rich overnight, investment is not likely to offer you any assistance.  Investing is a long-term process, so keep your expectations as close to reality as possible.
Track Investments Proactively: Investing is a journey and not a one-off process. If you are investing on your own, ensure to track your investments periodically. Monitor which of your financial instruments is performing well, which one needs a little tweaking, which one is nearing maturity and needs investment.
The most important rule about investing is to be alert, be informed and take the right decision at the right moment. Follow these simple and effective rules of investing and even before you realize, your funds will grow.

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