The world moves around the money. Everybody wants economic freedom and security. India comes at top position when we talk about savings, but we are not as good investers as we save. One can use or waste money easily. Arrangement and management of money is not the easy task. The investment of money is most important and difficult part. Even economist also fail sometimes when it comes to making maximum profits from money.
There are mainly three ways to use money:
1. Invest.
2. Use or
3. Waste.
Money has two kinds of value:
1. Present value i.e. current purchasing power and
2. Time value of money means interest earning capacity.
The first one is considered when it comes to make expenditure and the second is related to investment.
Here are some useful guidelines to invest money:
There are many options to make investment naming bank FDs, post office savings, mutual funds, insurance policies etc. The best way to choose between them is to have a fix goal to invest. This can be own home, car, child career, marriage, travellings, business, pension planning for retirement or a combination of them.
1. Never invest money by taking on loan.
2. First, calculate the amount needed for unavoidable expenditures, then retain some part as liquid money in cash or savings bank account and invest the excess money.
3. Invest for at least 12 months or more.
4. Maintain diversification while investing 60% investment should be safe and having low returns and 40% should be risky and high returnable. It may be 25%:25%:50% as Riskful, Medium risk and secured according to age and needs.
5. Don’t put all your money in one kind of investment. Make a basket of mixed investment instruments which is called portfolio.
6. One part of investment should have liquidity like SIP (Systematic Investment Plan) and other should be non liquid like Pension plan.
7. Don’t sale when market is down, rather it is time to invest, don’t purchase when there is high market.
8. Keep notice on previous returns, current economical position and future plans and potential of sector in which you are going to invest. The company having enough wealth and good policies mostly gives benefits.
9. Compare within available options according to risk,returns and your requirements.
10. Gain knowledge from various available mediums because knowledge is power.
11. Small savings becomes big at the time of need so don’t think that small is useless.
12. Popular may not be always best for everyone.
Note: These are general tips for guidance. It is advisable to take advise of profession and expert before investing.
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