Everyone has a dream of making huge profits with their investment portfolio. While this may not be a realistic expectation all the time, it is definitely possible to get your portfolio to give you good returns in line with your requirements or better. However, this can be achieved only if you understand the basics of investing.
You need a lot of understanding before you invest. Learn more about:
Yourself – Understand your spending pattern, earning potential, future plans and typical requirements to plan how much you will need and when. Structure your investment towards these goals.
The investment vehicle – If you are keen on a particular investment vehicle, learn more about how it works, its historical performance, what makes it profitable and how, and why it is better than other options.
The market – Browse online and you will find hundreds of articles on what experts are saying about the markets. A broad understanding of which segments of the economy are expected to grow and why, will help you identify where to invest.
Now some general investing advice – keep these in mind as you start opting for different investments:
Never listen to only one person’s advice: Cross check every tip you get with a couple of other sources and see why it is recommended or otherwise. Also use common sense to make your decision.
Be selfish: Your needs come first when it comes to investing. What works for your neighbor may not work at all for you. When talking to investment advisors or consultants, focus on your needs and how the investment recommended will help you. After all, it is your money.
Manage your debts first: Get your debts under control before you begin investing. This does not mean you have to be completely debt free to invest. Make sure your debts are fully manageable and will not require you to pull out funds from your investment vehicles in order to repay.
Read fine print before investing: Understand fees and charges that will come with your financial transactions – be it bank accounts, mutual funds, broker commissions or any other kind of fee. Factor the charges in to compute the actual return that you get from an investment.
With a cautious approach and enough home work, you too can become a savvy investor and get your money to work for you.
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