Topic 2: How To Be A Smart Investor?
Have an investment objective in place:
All individuals have unique sets of needs like providing for children education/marriage, buying a car/house or traveling abroad, retirement planning etc. Individuals must prioritize their goals and develop portfolios dedicated for achieving the same.
Investors need to be aware of their risk profile while making any investment decision. Broadly speaking the ability to take on risk reduces as one ages. Thus, it should be understood that each individual has a unique risk profile and recognizing the same should be the first step. Hence, a risk-taking investor (e.g. young working professional with practically no liabilities)may invest in equities and equity mutual funds. On the other hand, risk-averse investors should hold a portfolio dominated by “fixed income” instruments like fixed deposits and debt mutual funds.
Don’t ignore asset allocation:
Asset Allocation is a crucial exercise to follow while investing. Investing a large portion of the portfolio in the same asset class can prove to be a risky proposition. Diversifying your investments across asset classes like equities, fixed income, gold and real estate among others is as important as investing itself. A well-diversified portfolio helps investors diversify their risk across various asset classes.
Track your investments:
Investing is an ongoing process; investors need to continuously monitor the performance of their investments. This keeps them updated and also gives them an understanding to make necessary alterations to their portfolio as and when needed. Remember monitoring of your investments makes you feel in control and goes a long way in making smart decisions.
Select the right investment advisor:
Most investment advisors are self-centric and do not keep investors interests’ as a priority while advising. Service of an unbiased and professional advisor (intermediary) is imperative. Good advice and a good advisor is half the battle won.
All individuals have unique sets of needs like providing for children education/marriage, buying a car/house or traveling abroad, retirement planning etc. Individuals must prioritize their goals and develop portfolios dedicated for achieving the same.
Investors need to be aware of their risk profile while making any investment decision. Broadly speaking the ability to take on risk reduces as one ages. Thus, it should be understood that each individual has a unique risk profile and recognizing the same should be the first step. Hence, a risk-taking investor (e.g. young working professional with practically no liabilities)may invest in equities and equity mutual funds. On the other hand, risk-averse investors should hold a portfolio dominated by “fixed income” instruments like fixed deposits and debt mutual funds.
Don’t ignore asset allocation:
Asset Allocation is a crucial exercise to follow while investing. Investing a large portion of the portfolio in the same asset class can prove to be a risky proposition. Diversifying your investments across asset classes like equities, fixed income, gold and real estate among others is as important as investing itself. A well-diversified portfolio helps investors diversify their risk across various asset classes.
Track your investments:
Investing is an ongoing process; investors need to continuously monitor the performance of their investments. This keeps them updated and also gives them an understanding to make necessary alterations to their portfolio as and when needed. Remember monitoring of your investments makes you feel in control and goes a long way in making smart decisions.
Select the right investment advisor:
Most investment advisors are self-centric and do not keep investors interests’ as a priority while advising. Service of an unbiased and professional advisor (intermediary) is imperative. Good advice and a good advisor is half the battle won.