Things to remember before Investing
Do we even need to invest ? That's what a lot of us don't understand. By refusing to invest in a sector that at least keeps pace with inflation, we are actually losing money. The purchasing power of money is decreasing, as is our true wealth. Investing has historically provided a way to outpace inflation and grow wealth.
But investing is not just a solution. Investing money without a proper discipline may even snatch what we have . So here's a list of few things we need to consider before jumping into the field.
(i) Investment Goals
Based on the time frame of our goal, it can be classified as long term goal. Goal based investing helps us draw a proper plan to meet our financial needs within a stipulated time frame.
(ii) Investments Time Frame
Having a defined time for our investment can help us prioritize our goals and helps us stay focused and disciplined.
(iii) Risk Tolerance
Investing without knowing our risk tolerance can give us sleepless nights. Discover the risk taking ability and invest such that we don't panic. Often greed over weighs the risk taking capacity and we end up taking a wrong position. Thus, one should know the risk bearing capacity and have a proper control over the emotion.
(iv) Asset Allocation
We should allocate the asset in different sectors to minimize the risk. Keeping all the eggs in a single basket can even take away our investments. An investment mix can be determined by knowing our investment objective. One can allocate assets in different sectors so as to minimize the risk.
(v) Product to Invest
After we find the product that can help meeting our investment goals, fits in the time horizon of investment, suitable as per our risk level we can invest in that particular asset.
Always remember, Emotion is the greatest weakness. Never take a decision based on emotion. Analyse twice before investing and make sure to consider all the above points. And always keep in mind, only those people succeed who act in discipline .
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