Make Your Money Grow: How to get wealthy with smart investment
January 19, 2021 12:48 PM
Once you have identified investment instruments based on your income, age, risk-taking abilities, and time in hand, you should consider the following factors before you actually invest in the preferred options.
Before investing in any investment instrument, it is very important to understand how the instrument works, risks associated with it, its flexibility etc.
There is no magical formula that applies to wealth creation. Instead, wealth creation is all about smart play i.e. how smartly you invest your money. To multiply your hard-earned money and create a sizeable portfolio, you need to be cautious, analyse the available options and opt for financial tools that will give good returns in the long run even if inflation hits the market.
Moreover, while investing, it is very important to look out for some important factors like return on investment at a convenient risk attached to it, liquidity, and flexibility for switching. Once you have identified investment instruments based on your income, age, risk-taking abilities, and time in hand, you should consider the following factors before you actually invest in the preferred options.
The predominant factor to consider before investing is your target or financial goals. So, set your target and make sure that the investment you make is aligned with your target. The target can be an international vacation, buying a house, family planning, retirement, paying for your wedding, buying a car etc. However, make sure that your goals are realistic, as well as, you have a realistic timeline to achieve them. Never pressurise yourself with the unnecessary burden of achieving your financial goals within a short period.
2. Risk Reduction through Diversification
When you look forward to growing your savings, you need to accept the risk associated with it too. Diversification not only helps you to minimize the risk but also increase returns from the portfolio. So, it is always considered wise to diversify your portfolio across multiple asset classes to ensure a balanced investment plan instead of being over dependent on a single investment as it could prove disastrous if the markets doesn’t work your way. You can choose to invest money in multiple asset classes like mutual funds, fixed deposits, gold, equities, real estate etc.
3. Understand your Investments
Before investing in any investment instrument, it is very important to understand how the instrument works, risks associated with it, its flexibility etc. Sit with your financial advisor, take his expert opinion and pull as much information as you can to make the best investment decision as it ultimately helps you to stay intact with it, despite fluctuations that may come during your investment journey.
4. Give Time to your Investments
Stay intact with your investment and give it some time to grow. One of the key financial planning tactics is – the longer you stay invested, the better would be the benefit of compounding. Compounding helps in accumulating a big corpus with a reasonably smaller portion of savings. Also, long-term investments beat the risk of market volatility.
5. Start Early and be Disciplined
A basic principle of investing is to start as early as possible and be disciplined while you pursue your investment journey. An early start helps the investment to compound in multiple folds. Additionally, you can maximise returns by regularly reinvesting the return earned on your investment and gain benefit from its compounding power. If you start early, even a small but regular investment can grow much bigger later in life.
There is indeed no good time to talk about investing. Ultimately, you have to be disciplined enough to spend less and look for options to grow your money, the best way for which is to invest smartly. The key to growing your money is to start investing as early as possible and continue it for a long period. Keeping aside the uncertainty of absolute financial meltdown, this plan will make your portfolio strong and increase your wealth consistently.
So, hold onto your hard-earned money, act wisely and smartly and use your money to acquire things that promise the potential for profitable returns.
Now is the best time! So, don’t wait and make your money grow.
(By Palka Chopra, Senior Vice President, Master Capital Services)