Sunday, 22 April 2012

Know how to invest your hard-earned money

Investment is a process of making money with your own money. It may  regular income, interest or growth of money you invested in. But each investor must know how to invest your money. Before investing, you have to decide why you invest money. You must have a goal for each of your investment. IF you do not have a goal you cannot invest your money effectively.

I have seen many people invest a good part of their money in various insurance schemes. When I ask them why, their answer is that for tax saving, or by the advice of their insurance agent. They are also making money, but for somebody else’s, not for them. It’s for insurance agents or for insurance company. Yes we need insurance, but how much, for what, which insurance schemes are helpful.

I know one of my friends who have joined for an insurance scheme with a sum assured of Rs. 100000 and for twenty years. With much difficulty he has paid annual premiums every year and when the policy matured after twenty years, the money value is very less and the Rs. 100000 and the bonus he got is nothing when compare with his annual premium he paid.  He had to go for any pure term life insurance plan which gives high sum assured with lowest annual premium. Such term life insurance was enough to cover his life for about a huge sum assured and the remaining money could invest in any good investment plan. Even bank fixed deposits also good for secure the time value of money.

Some investors are investing their money only in a particular investment scheme. This is also not good. If the scheme fails, all their life saving will be gone forever. So diversify your investments in least their investment schemes such as bank fixed deposits, government securities and mutual funds or any other good investment schemes as per your investment goals and risk appetite.

You should aware about your risk bearing capacity. Good investment sites allow you to analyze your financial status and risk bearing capacity. Find it out with more than one such financial websites and compare the results and reach a decision yourself. Develop an investment strategy as per the result which you have obtained. Go with it and watch your investments for a while and if it is not satisfactory, change your style of investment.

An intelligent investor must watch the financial market and market tendency with keen attention. You can accept advises, but the last decisions should  yours. I f you need money in a near future you should not go for stock market or mutual funds which need a long period to earn a good return. Just go for bank deposits such as recurring deposit and fixed deposit.

Take intelligent decision to invest your money and you must know the investment is not your prime aim; you must spend your necessary expenditures and the remaining money you can invest. But you should not overspend. Keep a discipline in your earnings and spending. Use plastic money and credit cards wisely and you should not allow the credit card companies to eat out your hard-earned money. Spend wisely and pay back your credit card bills in time.

Invest in tax saving investments wisely. You must aware that invest in lower-income tax saving investment is not good. In such a situation pay tax and invest the remaining money in any good investment scheme which may rewards good income or growth of money.

Real estate investments are good investments to accumulate wealth. It gives your rental income and appreciation of your investments. But you should be more careful when you buy any such immovable properties. Verify all documents by a legal expert and do not consider the fee paid to such legal expert is a loss.

So invest your hard-earned money wisely and earn a good profit from it. You must not invest in strange investment schemes which may lead you to a definite loss. Get help of an investment adviser or expert who can give you right investment advice.

Know how to invest your hard-earned money


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