5 Things To Consider When Starting To Invest

Investing can help you secure your future, multiply your wealth, provide a regular source of income and beat inflation. You can invest in business, real estate, gold, share market, fixed deposits, start-ups and many more. Value of the amount invested can fall as well as rise depending on various factors.

Factors to Consider When Starting to Invest

Personal Finance
Risk Taking Ability
Investment Strategy
Investment Period
Expected Return

Personal Finance

When you are starting to invest, you want to grow your wealth. Right !

But there is no guarantee that you’ll make money from investment. So, it is a must for you to manage personal finance such as income, spending, saving, investing, insurance and many more.

This helps you to understand your goals, have money set aside for emergencies, and improve your chance of success. You get a chance to make a plan for long term investment. And you won’t need to withdraw your investment just because you needed money to fulfil your basic needs or pay the electricity bill.

Risk Taking Ability

As said earlier there is no guarantee you’ll make money from investment. You should consider how much money you can endure to lose.

If you choose to take low risk, then you can invest in gold, fixed deposits. They come with low risk and lower returns than shares. Being an investor you should be able to analyze your risk bearing capacity so that you can plan your investment accordingly.

Investment Strategy

Have you built a set of principles to guide your investment decisions ? Have you categorized your investment into different classes so as to allocate the budget effectively.

If not, you should do it now. By investing your money into different sectors, you can minimize your risk and improve your chance of growing your wealth. It also helps you to take control of your emotions and makes you an intelligent investor.

Plan your investment as per your goal : short term or long term, amount of growth you want to achieve, risk bearing capacity and choose the investment field accordingly.

Investment Period

You should plan ahead how long you are going to stay invested. With this you can choose whether to invest in low risk or high risk categories. Because high risk investment comes with many ups and downs, you are less likely to grow your investment if you are a short term investor.

You should consider how you are going to meet your expenses in future so that you won’t have to sell what you have invested in when in loss

Expected Return

You can expect the return of your investment in the form of interest, dividends and capital gains. You should invest as per your goal in low risk or high risk and categorise your investment.

As your strategy is what determines your returns from investment, you should consider them carefully. For example – If you plan to make 7-10 % of your investment you can invest in fixed deposits whereas if you want 10-25% or more growth in your investment, stocks are the best option for you.

Conclusion

Investing is the best way to grow your money. You should consider factors like personal finance, risk bearing capacity, expected returns and time period before starting to invest.

Your activities are what determines your success in the field of investment. So you should continuously monitor what you have invested in, and seek advice from professionals. You should begin to research and study before investing in any categories.

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