When planning your financial goals to have that additional security one must start as early as possible. Even if you’ve just started earning, the right way to start investing and build a savings is to start with monthly SIPs. The idea is to slowly scale up your investments as your pay rises and so do your responsibilities. Your monthly income or allowance should be rightly invested in financial instruments that will give you security as well as financial flexibility. Before selecting any financial product, first set your financial goals. Your goals should be realistic, measurable, clear and attainable.
Your monthly income or allowance should be rightly invested in financial instruments that will give you security as well as financial flexibility.
If you would like to accumulate sufficient corpus for a long-term goal, you may have to take calculated risks and invest in financial products which can beat inflation and give better tax-adjusted returns. As an investor your age and financial profile, the time-frame of investment (investment horizon), investment objectives, expected rate of return and type of investor are all factors that matter in your investment portfolio.
Once you’ve started building up your investments, you must have a consolidated investment portfolio ready with you that you can evaluate from time to time, at least once every quarter. If you are investing in stocks then you should keep an even more involved check.
While making investments consult an investment advisor if you are not familiar with the markets. Give them your requirements of financial planning and they will be able to suitably advise you on how to go about building a healthy portfolio. Take some courses on mutual funds, stock markets so you are better equipped with handling your money and also don’t ever feel shy to ask people in your known circles who are already familiar with this subject and are active investors themselves.
While making investments consult an investment advisor if you are not familiar with the markets.
Ones’ financial portfolio should have a mix of products depending on your personal situation. You should keep some corpus in liquid debt mutual funds, online FDs, etc. which can be accessed in case of an emergency. Another portion of your savings should be in balanced equity oriented mutual funds, SIPs and once you get a little more comfortable with your investments you can look at more aggressive options like Small Cap and Sector-specific Mutual Funds and Stocks in which you can park your money for a long-term to reap the growth benefits.
When looking at investing in mutual funds I suggest looking at funds which have a track record of three to five years rather than investing in a new fund offering. The statistics of a fund that has been launched before helps us in picking the right type of fund to invest in. Mutual funds are of varied types wherein sector-specific funds are of high risk and give great returns if they perform well followed by small cap, mid-cap and then large cap funds. Their return on investment also reduces accordingly as the risk reduces. For mutual funds, one should remain invested for at least 2 years before deciding on whether to continue or choose a better fund option. One can also look at ELSS funds which can help you with tax planning. Remember it is your hard-earned money so you must find the best mix in your portfolio which will enable your investments to grow in the most effective way.
Having said all this another very important component of your financial planning is having your insurance policies in place. A good life insurance policy and an effective health insurance policy should both be a priority in your portfolio. Further to this, we all must equip ourselves to the level that we should be able to read balance sheets well and also understand our tax returns. Last but not the least a very important part of your investments is that you must always assign a first holder or a nominee whether it be for your Bank Account, your Insurance Policy or your Mutual Fund Investment.