Does the idea of investing make you nervous? Does it feel like it’s something you should be doing better to attain your financial goals?
Whether you wish to start saving for your retirement or to attain some other financial goal, investing can seem daunting to the inexperienced. However, it doesn’t have to be too complicated.
In this post, we’ve compiled a list of investment tips from some financial gurus – both legends and upcoming, to help you understand the whole concept better, without feeling completely overwhelmed or out of your element.
1. Begin, or continue regularly investing with SIPs
“In a falling market, investors wait for a further fall and in a rising market, they wait for a correction. In both events, those who wait tend to miss out.”
- Balasubramanian CEO, Birla Sun Life Mutual Fund
Don’t be wary of financial planners who advise investors to continue investing in Mutual Funds. It is a widely accepted fact that investing regularly yields better results as compared to timing the market.
A SIP is a great tool that automates the investing process for investors in mutual funds. Your money gets invested as previously scheduled, ungoverned by greed or fear and regardless of whether the markets have gone up or down. You need not also be worried about the market drops and rises, as the automated entry through SIPs dilutes the risk over time and permits averaging of rupee cost. Take the HDFC Mutual Fund Online for example – it is one of the older fund houses in the country, and offers multiple schemes on which you can begin a SIP with a monthly contribution as low as Rs 500.
2. Invest in tax-free options such as VPF and PPF
“The Provident Fund interest rate is a market anomaly which is not likely to go away. Unlike bank deposits, it will not be cut beyond a point.”
Suresh Sadagopan Founder, Ladder7 Financial Services
In Post-demonetisation era, banks have significantly reduced deposit rates. A 5-year fixed deposit now delivers about 7% interest. However, there are other high-yielding avenues for fixed income investors. The Employees’ Provident Fund (EPF) and the Public Provident Fund (PPF) still offer attractive rates.
If your income belongs to the highest tax bracket, you should use the Voluntary Provident Fund (VPF) to increase the debt aspect of your portfolio.
3. Educate children and workers to go cashless
“Training children and workers on how to conduct cashless transactions will indirectly inculcate the habit of saving and proper money management in the long-term.”
Ninad K. Patil Certified Financial Planner
Acquainting yourself with emerging means of cashless transactions may not be enough. Educate your children and those who work for you (housemaid/servant, driver, milkman, watchman, etc) on how to go cashless. Let them begin with easy payment apps and e-wallets. Teach them about identity thefts and online frauds and how to avoid them.
4. Do your own research
“Know what you own, and know why you own it.”
Peter Lynch, Investment Guru
There are no end of people waiting to beguile you into ‘get-rich-quick’ schemes when it comes to stock market; you should stay clear of these and thoroughly understand where you’re putting your money. It’s common to make a couple of mistakes in the beginning, but it is critical in the world of investment to learn from your mistakes. Let a few trivial losses clear your mind and help focus on your investment techniques.
5. Buy and hold
“You can’t produce a baby in a month by getting nine women pregnant.”
Warren Buffet, Investment Guru
When it comes to investing, patience is key. Most legendary investors will tell you that time in the market is always better than timing the market. If you remove volatility and emotions from the investment process, it becomes clear that passive, long-term investing without impulsive attempts to time the market is a superior choice to secure profitable returns.
6. Switch home loan to MCLR
“Go for home loan providers who offer overdraft facility that can be used as an emergency fund.”
Ashish Bhave, Money & Life Freedom Coach
Home loan customers who pay a higher interest due to their loan linked to the base rate can decrease their EMI by shifting to the Marginal Cost of Lending Rate (MCLR). This is recommended if your existing and the new rate differ by more than 50-60 basis points. While you may have to still pay conversion fees, the lower EMI will help recovering its cost. You should especially consider doing this if you have a long outstanding tenure.
7. Identify distraught sellers in real estate
“Property is a big investment and very illiquid. Assess your needs before buying.”
Shilpi Johri Certified Financial Planner
Real estate was the worst impacted sector by demonetization, and it is still barely recovering. Prices were stagnant even before 8 November, 2016 and decreasing in markets across the country. If you have been planning to buy a property, wait and watch without any sense of urgency, and you may be able to acquire a great deal.
