Before choosing any option to invest, the returns from it are seen.
It is considered better for individual investors to invest using the 50:30:20 rule.
The liquidity of the option you choose for investment matters a lot.
new Delhi. People’s attitude towards investment has changed a lot in the last few years. Earlier it was limited only to working professionals living in cities and people who understood it. At the same time, it has become easy for most people at present. One reason for this is the availability of smartphones and cheap internet with a large section.
Now you have thousands of investment options available which present themselves by increasing each other. In such a situation, choosing one has also become a problem for those willing to invest. Although, the basics remain the same almost everywhere, but still there are some points which we need to keep in mind. Here we will talk on 5 such points.
How much will be the return on investment?
In India, prices have increased at an average rate of 7 per cent over a period of 40 years. This means that wherever you invest, your return should not be less than 7%. Before choosing any option to invest, the returns from it are seen. For most people in our country, government bonds and FDs ie Fixed Deposits have always been the preferred option. The reason for this is that they are considered very safe and the returns are also assured. On the other hand, for those who do not hesitate to take a little risk, the stock market is also a good option because it can give you more returns.
term of investment
Whenever you invest somewhere, the target should be fixed before that. Goal-based planning is considered a cornerstone of personal investing. Long-term goals, especially if you are starting early, allow you to take more risks with the aim of moving upward. This means that your portfolio will have more equity than debt. Medium-term goals can be more balanced when it comes to risky bets. Whereas for short term goals it is necessary that you invest in a safe manner.
Tax management as an investor is a very complex issue and this is the reason why those who invest as a hobby are advised to work with an experienced Chartered Accountant. At the same time, some people look for such options for investment which are tax free. However, these are generally limited to pension schemes, insurance and government sponsored savings schemes. If you invest in mutual funds and stocks etc. then it is easy for you to understand how the law recognizes it for tax purposes and can avail tax benefits from it.
It is considered better for individual investors to invest using the 50:30:20 rule. This means that you spend 50% of your income on needs, 30% on wants and 20% on investments. If you are new to investing then it is best for you to cap the maximum amount that you want to invest at 20% of your gross income. Due to this, in the event of recession in the market, your entire savings can be lost.
We should always be prepared for the fact that we may need money anytime. In such a situation, the liquidity of the option you choose for investment matters a lot because if it does not work when needed, then that money has no meaning. Short term investments are generally more flexible and a better investment option. Recurring deposits ie RDs and large-cap mutual funds are some examples where money can be withdrawn almost instantly.
FIRST PUBLISHED : December 24, 2022, 11:10 IST