Investing your money can be a great way to ensure your financial future. I am sharing some good investment tips and rules for successful investing which I personally follow.
With the right Investment Option, you can be sure to have money for emergencies, for the education of your children, and for your retirement.
Most people who invest wisely by making the right investing decisions with their money, follow the same basic investment pattern, although they may define it by another name.
So, before going to get some best investing tips, you should learn about your self and your investing style. You should classify yourself in one of the below-defined types of investors before Investing in the Market.
Different Types of Investors
If you want to know which type of investor you are. here are the major three types of investors – conservative, moderate, and aggressive. Investors can be differentiated based on their levels of risk tolerance like high risk and low risk.
- Conservative investors – Conservative investors often invest in cash that means they invest their money in interest-bearing savings accounts, fixed deposits, mutual funds, Provident Funds and SIPs. These investments are very safe investments carrying a very low risk and grow over a long period of time. That is why these are called low-risk investments and investors choose these investment options called Conservative Investors.
- Moderate investors – Moderate Investors often invest in cash, bonds, and sometimes in the stock market. This type of investing usually carries low or moderate risks. Moderate investors often also invest in real estate and commodities assuming that it is a low-risk investment asset.
- Aggressive investors – Aggressive investors commonly do most of their investing in the stock market that carries higher risk. These types of investors also tend to invest in business ventures as well as a higher risk real estate because of a high return on investment.
Best Investment Tips to Become a Successful Investor
If someone making an investment then his or her main motive is to make money and gain some profit. Experienced investors usually study market trends before investing their money. However, inexperienced investors depend on advice from financial advisors and brokers to guide their investments go gain some profits.
While investing we should always keep in mind that Money always grows with time in the stock markets. Successful and profitable investment takes a lot of patience and constant monitoring of market fluctuations & trends. It is very important to adopt flexibility and diversification of funds to turn the investment in Profitable Investment.
Use these tips and key steps to choosing an investment that’s right for you.
- Invest Purposely
- Lean on Own Understanding
- Train Yourself
- Choose Broker/Advisor Wisely
- Think Long Term
- Be Flexible
- Diversify Your Investment
- Make a Simple Approach
- Be Disciplined
- Invest Smartly
It might be that you are the cynical type who chooses to believe that the basic rules could not possibly be as easy as they seem, in some areas, those seem so complex. It is true. However, these rules have withstood the test of time.
First of all, make sure that the money you choose to invest is indeed earmarked for the purpose of investing. If you take Investing as gambling then you should keep in mind that in any form of gambling, there is nothing to be gained and everything to be lost.
You should not put up money that you cannot afford to lose because the market is volatile and anytime can take a downturn.
Lean on Own Understanding
One rule that people generally refuse to apply in any area of their lives, including the world of investing, is they don’t rely on their own understanding. Most of the time, this is the result of people balking at entrusting another person with their money, believing that with a little understanding they can work the market themselves. This reasoning is fundamentally flawed.
In the first place, most people will not be able to begin to unravel the complicated graphs, pie charts, and statistics by which the investment world relates its information and it all happens due to lack of knowledge. In order to understand what the numbers mean, you will need to have some basic training before entering into Investing.
There may come a time after you have had some experience in the market that you will be able to make sound decisions on your own, but the initial get-your-feet-wet phase is not the time to attempt Investing on any asset.
Choose Broker/Advisor Wisely
Check the background of the advisor you choose and don’t believe them blindly, as there are a lot of brokers out there looking for a quick fleece. The best brokers will have years of experience, a variety of investment backgrounds, registered with SEBI and will probably cost you much less than you might think.
Think Long Term
Unless you invest millions of rupees initially, it will take time for your investments to mature and begin to accumulate substantial gains.
The best investments are proven over time, and thus it is best to place your funds in long term choices. The details of this are plain – it is best to forget about this money in terms of cash fall back, at least for a number of years generally called Long Term Investment.
Investors need to be flexible with their investments because investment strategies involve regular analysis and monitoring of the financial market. Beginner investors should seek help from financial advisors on their investment portfolios to get better returns.
While building an investment portfolio long-term planning and asset allocation are very important. Mutual funds, Equities, Bonds and other investment products provide a good ground for investment flexibility. The investment portfolio should be designed to help diversify your investments.
Diversify Your Investment
Diversification is an oft-flogged truism of the investment world and you should follow it.
A good portfolio will include cash and cash equivalents, growth investments (stocks), growth and income investments such as mutual funds, SIPs and Provident Fund. Diversification involves making different types of investments to gain higher returns. This risk-management technique of investing helps to diversify the investments in stocks, bonds, cash and deposits.
Diversification ensures that you do not have all your eggs in one basket because of any part of the market can experience a downturn anytime. It does not waive off the risk of loss totally, but it definitely creates more avenues for profit and minimize losses.
The investor can invest in a number of different companies to diversify his or her portfolio like foreign securities and mutual funds. Even if one company or asset declares a loss, the investor still has the other investments to fall back on.
Note that diversification doesn’t mean that only investing in several areas will save you but you should also make sure that no one area contains a disproportionate percentage of your funds.
Diversification is the best investing strategy to counter the risk involved in the total loss of investment.
Make a Simple Approach
It is safe for inexperienced investors to follow simple investing tips for investing money. Immature investors should not invest in companies and sectors that they are not very sure about and haven’t researched.
A simple approach to investment is to stake money in recognized companies/assets that offer high returns and show a consistent growth pattern over the years. It pays to conduct research on the company before making an investment decision.
Market trends fluctuate due to a number of reasons. An investor’s judgment should not be based on momentary instability of the market. It is not advisable to make a change in the adopted strategy midway of an investment call. However, regular analysis and timely reviews of the market help to keep abreast of important information on the stock market.
Investors need to be well informed and alerted all the time about current financial market trends and fluctuations. Investors are advised to be methodical when following an investment strategy. It is equally important to understand and monitor the economics and trend of a company or asset in which investment has been made. The investor should be updated regularly on business, political, financial and the Stock Market related news to learn the political implications that may affect the company in the future.
Investments carry the element of risk and therefore investors are advised to investigate the asset before investing. Making a smart investment and diversifying investments can give higher returns on investment. Disciplined investing and long term investing goals are to be exercised while investing.