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Investment is a phenomenon the simpler you make it, the easier and smoother it is for you. Here are 9 very simple investment strategies that will stay with you for a lifetime.
It is important to know the company you are investing in, the sector, the industry. This helps you plan the investment risks better. Investment with ignorance is no less than gambling at Vegas, you either become rich overnight or get lighter on your pocket. Planned approach is the need of the hour. Invest in something you understand
Early Start is the best start The idea behind investment is very simple – longer the investment period, stronger the returns. In a longer investment horizon, you will give your investment the best possible chance to compound and grow. However, the major trait you need to practice is patience.
Ensure you make Tax Savings Investments There are many mutual fund investments exempt from tax along with ELSS schemes. Park a share of your funds here and not only get tax benefits, but also gain from the equity element in these asset classes. There are other tax savings investment classes such as PPFs that you can explore.
Get strict with your cash-flow management It is your hard-earned money that you are investing. So, get strict with the way you manage the funds, how you use the returns, whether you reinvest them or use them to improve your portfolio. Cash flow management is a very important call that you need to take.
Forget emotions, become objective-oriented You need to practice the art of keeping emotions only inside a cinema hall or while watching your favourite sports teams perform. There is no place for emotions in investment. All decisions you take must be objective-oriented based on expected returns from investment.
Convert unnecessary spending into investing Identify what a necessity is for you. Understanding the difference between a want and a necessity is the cornerstone of a succesful investment strategy. So, simply understand what you cannot avoid at all and what you can. Invest the amount you have saved this way and multiply your returns.
Have a well-defined diversification strategy Spread your investment across various asset classes. Do not just invest all your money in one asset class. This way you will spread your investment risk more effectively.
Make equity a cornerstone of your investment strategy An excellent investment option, equity provides you with the best possible returns over a longer time horizon. Therefore, making equity a cornerstone of your investment strategy will pay. However, you need to analyse the company that you are investing in, it industry, sector, etc to be a well-informed investor. SIPs are a great way to move towards equity. Other methods include IPOs, OFS, and obviously buying stocks from the market.
Make fine-tuning, not complete overhaul Over time, your investment strategy simply needs fine-tuning to get more out of your funds invested. Do not make the mistake of regular overhauling; it would lead to compounding losses and loss of capital.
Investment is a simple process. The simpler you keep it, the better the results. However, there is a lot of planning that you need to do such as understanding your risk appetite. Moreover, you need to plan your investment based on a financial plan. If you are finding it difficult to do all of this on your own, go in for a professional expert. They will help you with a financial plan, diversification strategy, daily investment tips, ready research reports, and much more to make you derive the most out of the funds invested.