Failing to plan is planning to fail. It is utmost important to plan your investments properly so that you create wealth over a period of time & make that wealth/money work for you. Once it is done properly you can fulfil all of your goals of child education, marriage, home & retirement at the right time & in the right way.
Hence it is imperative to avoid making few investment mistakes which can hurt your hard-earned money over a period of time & at the same time can hurt you goal planning too.
Nishant Baraya in this video explains the mistakes that you must never commit in your life:-
1.Mixing Investment & Insurance- Insurance & Investments are absolutely separate goals. You must never mix them. You should take insurance through a term plan which is extremely cost-efficient & investments through mutual funds, capital markets etc.
2. Ignoring Risk- You must never ignore risk while investing. In fact, you should always manage risk properly because this will lead to managing returns too. So you need to understand that to make X % returns how many risks you are ready to take. Risk in the investment world is defined as the standard deviation. The more it is, the riskier the portfolio is. You must always aspire for high risk-adjusted returns.
3. Investing in Opinions- You must never invest on opinions on the capital markets. On one can predict where the market will go & how it will behave like. People at the best can only research & come up with future predictions which may go right & may not go right too. Hence one should always invest with objectives & strategies, not with opinions.
Objectives can be like making 12% net returns with a moderately aggressive portfolio. A right strategy can be to cover up all the sides of markets with investment in all asset classes at an appropriate time.
4. Investing in Tips- Information in this new arena is in abundance. Various sources come up with Tips of stocks/mutual funds etc to make quick money. You must never invest on any tip blindly. Always research & understand the instrument & then invest for the long term. Remember, you will always make money in the long term & loose money in short term gambling.
5. Not following proper Asset allocation- You must never keep all the eggs in one basket. All assets like Equity, fixed income, cash, a commodity like gold etc are important in any investment portfolio hence you must have a right mix of them. Equity can give you long term capital appreciation, fixed income can give you safety & cushioning to the portfolio, Gold & other commodities can hedge your portfolio at turbulent times. Hence there is the significant importance of these asset classes in your portfolio.
So you must not commit these investment mistakes so that you create a corpus to fulfil your goals.
Happy Investing!
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