Seven Mantras To Investing
To build your wealth you need to find out which asset classes will help you grow your wealth in order to achieve your goals. Once you have invested in the right asset classes be it debt or equity, based on your goals, you could also pay-off your debt.
To increase your financial worth it is important to invest in a portfolio which is a good mix of several asset classes. Some asset classes can be aggressive or very volatile, but not investing your money at all could derail you from your financial goals. It always is from the deep blue sea and the dare devil, so here are a few precautions or mantras you should check out before venturing to the markets.
Mantra 1: Choose Fundamentally Strong Stocks
It’s essential to know what company you are about to invest in, a bit of reading up or research will help keep your financial plans intact. Each stock has its own fundamentals and momentum, avoiding the current impetus or penny stocks will rescue your capital from risky investments. Looking for companies with strong fundamentals which will be able to withstand the market pressure can be a good bet for your long-term investments
Mantra 2: Read The Offer Document Cautiously
As boring as the black and white pages look, it is equally important to understand what it says, as they say, the devil always lies in the details. Specially the sections on risk factors, litigation, promoters, company history, projects and objects of the issue and key financial data, is important to understand, before you invest your capital. A broker will not always advice keeping your interest in mind, for his commission on a certain investment could turn out to be risky for your goals. A due diligence is crucial before gambling your money on a risky bet.
Mantra 3: Follow Lifecycle Investing
This is necessary especially when you are investing for the long-term. If you have just begun working or have a long way towards retirement you should invest in equity to get more returns. But as you near retirement, gradually moving your investment towards debt should help you de-risk the accumulated corpus. Once you are nearing your retirement you can invest in balanced funds, which balance out the potential risk to protect your capital. Balanced funds are known to give good returns, so if you are not done with investing and can take some risk, balanced funds is your best bet.
Mantra 4: Advertisements Could Mislead
Now if you have invested in a particular stock and you hear information on it, it’s crucial not to panic or get mislead by different advertisements. Advertisements will make you feel good about the product they are selling and may mislead you to investing by promising you more returns on small investments. You should refrain from getting swayed by these schemes or attractive headlines, appealing visuals and catchy messages. Panic has equal potential to bring down your investment to zero.
Mantra 5: Learn To Sell
Knowing when to exit from an investment will help you bring down capital risk, aimlessly holding on to your investment doesn’t help as profit is profit only when it’s in your bank account and not on your brokers excel sheet. Being greedy and aiming at maximising the market profit or trying to time the market is a perfect recipe for disaster. Setting a profit target and selling when the time is right will be beneficial to you as even market experts haven’t been able to time the market to maximise profits.
Mantra 6: Be Aware Of Fixed Guaranteed Returns Schemes
If an investor is offering you a return greater than the banks lending rate you should not immediately invest all your capital. All these guaranteed-return-schemes could lead you in to a trap and you must avoid all such promises for such schemes come with a catch 22 situation where in certain cases companies offer nearly 50% in the first day.
Mantra 7: Don’t Allow Greed To Make You An Easy PreyRemember scamsters have a field day once they tap on to your greed as most scams are designed to rob of investors and small investors. Finding yourself in claws of such investors can be easy and tricky at the same time. Understand each scheme carefully before you put in your corpus.