Why should you invest?
Investing is an essential component of financial planning to secure your financial future. Many people consider saving and investing to be synonymous. They are not. Saving is part of your income set aside for sudden emergencies. Investing, on the other hand, is putting your savings on work by investing in shares, bonds, units, property, and even term deposits.
Additionally, investing consistently makes you have to save money regularly, which over time encourages you to have good money management.
You earn money from your investments. Investing in stocks may bring you dividends, interest from bonds, or rent from leased property. This is known as income gain.
Your investment will appreciate over time, which you can sell at a profit. This is termed capital gain.
Once you have determined why to invest, the next question is where one should invest and what kind of return one can expect. When investing, one must select an asset class that matches one’s risk tolerance. For example, depending on their background and current position, one person may be willing to take high risk, while another may prefer to take moderate risk, and yet another may prefer zero risk.
Whichever way you go for….It is your shield against inflation and recession.
The first step to do this is to set your goals and evaluate your risk-bearing capacity. You may consult a financial planner or take a course for that as well.
How to begin investing?
One must build a diversified investment portfolio. It helps you grow multi-folds, reduces risks, and is safer rather than putting all your money in one place
To start in the stock market, you need a Demat account. This account opens your door to a lot of investment pathways.
Index funds: You must have heard of Sensex and Nifty 50. These are index funds. An index fund follows the performance of an underlying index. These funds are known to their benchmark index regardless of market conditions. Index funds offer diversified exposure at a low management cost.
Mutual Funds: A mutual fund is a professionally managed investment programme that joins together a group of people and invests their money in stocks, bonds e.t.c
Stock and Shares: Stocks or Shares are direct investments in listed companies. Stock is a broad phrase that refers to a stake in a company. A share, on the other hand, refers to ownership of a portion of a stock.
REITs: Do you want to invest in Real Estate but feel you’ll need a lot of money? Fortunately, you’re wrong. REITs ( Real Estate Investment trusts) are like mutual funds of real estate. You can own a certain part of projects. REITs are listed and traded on stock exchanges; Some of the big names are Mahindra Manulife Asia Pacific REITs FOF fund, Kotak International REIT FOF fund, SBI Infrastructure Fund, L&T Infrastructure Fund, and Tata Infrastructure Fund.
There are certain brokers which enable you to invest in foreign companies as well. One of them is Zerodha.
Another form of investment is Real Estate. If you’ve got a good cash flow or savings, you can go for investments in Real Estate.
From viewpoint of ROI, commercial Real estate is the best investment, though the residential sector is also in surge due to the urban shift. You can refer to The Heena Real Estate Club for more details on it or reach out to The Heena Realty Makers
Turn on notifications for our website to know more about investments and the corporate world.