April- as we know is the month of new financial beginnings for the Indian market. From companies to individuals, all start a fresh with their finances. So, this is the right time to understand investments and how to go about it.
Investing can be a daunting task if you are new in the game or planning to invest when the markets are at its low. But this should not scare you. If you are looking at investing for a long term, the right amount of research and due diligence can help you sail through safely.
But before you take the plunge you need to know these things;
- Understand yourself: To invest, one should first understand oneself and ones need to invest. What are you looking for in the investment and if you understand the markets or not? You can invest in 2 ways.
- Self- If you understand the markets a bit and wish to learn and grow on your own, you can start investing by your own.
- Appoint a financial planner – If you don’t understand the jargons and the varied kinds of investing options in the market, but are clear on what your final goal is, you can hire a financial planner, who will look after all your financial needs by using his expertise in the field and investing as per your requirement.
2. Risk Appetite: Understand your risk appetite before you start investing. If you are a young adult, time is by your side and hence you can invest in more risky options like Stocks, Future and Derivatives (detailed on “Various Investing options” coming up in next blog) while a senior citizen who is seeking fixed returns at a certain interval can opt for Bonds and Debt instruments which are a safer bet.
3. Choose your term: Once you are aware about your risk appetite, decide on the tenure you wish to be invested for. Are you saving for retirement, or for your children’s higher education? In that case you need to remain invested for a longer time. If you are looking for a quick and easy money, short term investment is for you.
4. Budget and Target: Everything can be a cake walk if you budget yourself well. Set a budget to invest every month. The bigger the chunk the better for your future. Once your budget is set, set a target of “X” amount of money that you plan to make in “Y” period of time. If you need a huge amount for your retirement, save more from early days. If your target is defined, your vision will be clearer.
5. Start Investing: As a famous Chinese proverb goes, “The best time to invest was 20 years back, the next best time is Now”. So, it’s never too late to start investing. Don’t fret if the markets are down, they will come up one day. There are ups and there are downs, but if you plan to stay invested for a long term, you need not worry about minor fluctuations in the market.
So now that you have understood the basic steps before you start investing, stay tuned for my next blog where I will be talking about “Various Investing Options” which will talk about where all you can invest according to your risk appetite and time in hand. So stay tuned.
This blog is a part of Blogchatter’s A2z #blogchatterA2Zchallenge .