How to Avoid Investment Miscalculations
The first thing an investor must think of is how long he could invest his hard earned money. If he could invest it for more than a year, equities will be good. If it is less than a year, don’t go for equities. Liquid Funds will do. Market has shown that equities do well in the long run. So, if you opt for long term deposit, equities are the best.
Whatever, your investments never forget to save some money for emergency. It is advisable to keep aside three month’s expense amount as emergency fund. In case, you are a family man six month’s expense amount should be deposited in liquid funds. Flexi Deposits, Liquid Mutual Funds are safe for such investments.
Most of the NRI’s hate insurance. If they insure, it is due to the compulsion of some insurance agent or for tax evasion. He seldom realizes that insurance is very cheap and is a security for his family on his untimely death. For instance, a male in his 20′s can get a long term (20 years and above) Pure Risk Cover of Sum Assured Rs.10 lakhs for only Rs.200 per Month. So don’t forget to get long term pure risk insurance coverage.
Whatever the investment, take the yearly profit. Don’t become greedy and add it to the principal for more returns. It will only increase the risk of losing everything. 18% to 24% can be expected from an equity investment for one year. It will save you from tension and panic selling. Keeping a regular check on your stocks and market trend will save you from unnecessary stress and impulse to panic selling.
Never give in to speculations. Once you become addicted to speculations, you tend to invest more. You will eventually start borrowing for speculative investments, which will ruin you for good in the end. Instead of going for high risk speculations believe in long term investments and safe and steady returns.
