Investing Carefully

Every day you hear about exciting offers to make money. We often get to read or hear; Earn Rupees one lac per month, just work for one hour a day. Or invest Rupees fifty thousand today and become a crorepati in years!  Is it so easy to make money? While I kept questioning myself about these statements, an amazing lady walks into my office.  She wanted me to invest in a scheme which would give returns as astronomical as 60- 70%. She wanted me to believe it was the best thing that I had ever seen or known.  She was talking of investing in one of the ponzi schemes. I kept looking at her and wondering, how easy it was to lure people who do not understand the difference between putting your money to work and putting your money in the drain.  Her confidence would make you shell out any amount she asked for.  In the same place if a client is approached by a financial advisor he is challenged and counter questioned for the returns. Now it is human nature to listen to the one who offers more!! It is strange that though we keep reading of the failure of such schemes day in and day out, yet we are vulnerable of making mistakes over and over again. It becomes difficult to know, where to invest and where not to invest.

 The first and foremost point when you are investing your money is to remember that it is your money and nobody else’s. It is you who will gain or lose.

Care Kit for Investing Right:

  1. Protection of capital: It is very important to have this clear in mind that the capital you invest must be safe.  Make an effort to understand the past experience of the entity you are entrusting your funds to.
  2. Returns should be in the line with the economy: Nobody can give you more than what he has. This is simple. Look around and see what the returns you can expect are. Returns from different instruments differ.  Question yourself – when the normally accepted instruments are offering returns in the range  8-15 %,  should you get carried away when a person offers you a substantially higher return like 40%?  Be realistic in seeking returns and wake up to the perils of chasing supernormal returns.
  3. The instrument that you are investing.  Higher the risk, higher is the return. Are you capable of handling the risk? What portion of your income are you risking?  Is it the income you do not need ?  It is always good to put in some money in instruments that give you higher rate of return. Bear in mind – if you plant apple seeds you can get only apples, not mangoes. Do not compare returns of different instruments. Like returns from insurance cannot and will not be the same as returns from mutual funds. Do not waste your time in looking for insurance schemes that will give returns as good as equity schemes.
  4. Do not invest due to peer pressure. Though the basic needs of all humans are similar, there are marked differences from one individual to another with respect to their lifestyle, the no of dependents, inherited assets, liabilities, personal situation etc. What may be good for one, may not be good for the other.
  5. Ascertain if your investments take care of any of your goals. Align your investment to your financial goals. It is a futile exercise to keep investing in the dark without a clear goal.  If it does it is for you, if not, keep away.
  6. Be a long term investor. Time plays an important role in how your investments shape up. For everything there is a chosen time span. When you invest your money, they are the seeds to achieving the fruit. And this involves time. The best of investments can fail, if one fails to give it the time required.
  7. It is not enough to be aware but to act: That’s where the returns come from. When you actually invest. Don’t be the best intellect but be the best investor. Remember time and tide waits for no man. Your choice of investments determines how safe, secure and healthy your tomorrow will be.
  8. Ask yourself simple questions… Is your money safe, is it giving you return in the normal course…

Invest your money only after satisfying yourself about the veracity of the claims made about the returns. Invest according to your need. Look for good investment bets, but don’t be greedy!