By Lakhwinder Kaur Dhillon
disciplined iNTELLIGENT Investments aid in generating wealth and meeting future economic specifications without the need of falling into a debt trap. The investment approach should begin as quickly as 1 begins earning. A big quantity of goods and avenues such as stocks, unit-hyperlink insurance coverage plans, bonds, fixed deposit, recurring deposit, public provident funds, mutual funds, National Pension System are out there for investment. However, if we appear at the investment dynamics in India, investment is straight linked with tax savings only and there is no set objective or purpose defined for generating investment and this is accurate for a incredibly big section of individuals.
Look beyond tax savings
Tax saving is important, and it is an significant parameter, but it is not the only parameter for thinking of any investment avenue or item. Investment provides economic freedom. The most significant aspect to obtain this economic freedom is to know exactly where you are investing, why you are investing, how significantly you are investing and how it is going to safe your future economic specifications.
The future specifications may perhaps be connected to shopping for a auto, shopping for a property, arranging for kids’ greater education, foreign holiday, retirement arranging, meeting health-related emergencies, and so forth. The purpose of investment should really be properly-imprinted in the thoughts of the investor in terms of each quick-term and extended-term specifications. The purpose may perhaps be distinctive for distinctive men and women based upon security of the investment, future development, or normal revenue specifications.
Keep it basic
It is incredibly important to retain one’s investment basic. The item or avenue exactly where the investment is created should really be simple to fully grasp. Complicated goods or avenues occasionally appear incredibly eye-catching but a lot of a time you may perhaps finish up losing your dollars. The investor should really be properly-informed about the nature of the investment, the added benefits that are supplied and how the investment is beneficial in reaching the set economic purpose.
The most important element to be deemed prior to arranging any investment is to fully grasp the danger appetite, present net worth of an person and the time frame inside which the dollars is necessary. Exact future specifications for every single purpose should be ascertained and with consideration of inflation and the time frame. Traditional goods like fixed deposits, recurring deposit, government bonds, and so forth., assure security in investment with regular returns and gives tax added benefits.
When these goods are compared with the modern day investment goods in term of returns, a lot of an investor is tempted to invest in the latter to earn greater returns but at instances drop dollars due to lack of understanding and know-how about these revolutionary modern day goods.
Advancement in technologies has played a important function in enhancing the know-how of men and women in terms of goods, avenues, and the anticipated returns from an investment. At the exact same time, agents and brokers occasionally misguide investors. Therefore, it is significant to be properly-informed about the terms and circumstances prior to generating any investment.
The regulatory bodies have taken many initiatives for educating and safeguarding investors but eventually, it is the duty of an investor to study all the connected documents very carefully prior to generating any investment. Never invest in any item or avenue exactly where there is lack of clarity, in particular when it comes to the stock industry or derivative industry.
The writer is assistant professor, Department of Accounts & Finance, Amity Business School, Amity University