Ingredients for Safe yet full of Spice Investment Portfolio

Consider these before Investing

Investing in whatever comes across first doesn’t just sound orthodox, but is kind of weird these days. You have some spare money, and you want to invest it before you end up spending it all- understandable, but simply buying an investment product without defining your purpose, understanding the circumstances and analyzing the consequences might end you up repenting, rather than reaping.

Investing isn’t any more about limited choices, fixed/assured returns and insulated capital markets. The markets have lots of complexities these days for a busy, yet layman to sit down and figure out. The investment options are more, risks diverse, interest rates variable, taxation convoluted; probably, what remains the same is the need for security!  So how do we secure our investment and choose a sound investment product? Here’s help-

Before you shake off your pocket to collect all you have and plant your new investment, take a look at these points:

How much Liquidity?

You invest with a purpose; most of the times, it is linked to security. So how do you manage your investment when you feel insecure? Liquidity, in point of fact, means the ability of your investment to turn to cash. The more liquid investments are easily accessible in times of need than non-liquid (or less liquid) investment. Equities, precious metals and mutual funds are relatively liquid investment options when compared to fixed deposits and real estate.

Nature of Returns

Your investment might grow at a good pace, but if your increasing needs and inflation rate is higher than your investment, you aren’t probably riding in the safe boat. So consider the rate of return and security before you choose an investment product. Investments that entail more risk than the opportunity, offer to make or lose money big time.

Safety: The First Priority?

Some investment options showcase sparkly returns; but wait, who assures them? Many financial companies established for not too long offer lucrative investment plans but often turn broke or fake very soon. It is important not to get trapped in the lattice.

Taxation

On your investments, you will be taxed at different levels such as Contribution, Accrual, and/or Withdrawal/Maturity. It is important to consider the clause for the hefty short-term capital gain tax you might get liable to pay if you earn returns on your investments within one financial year.

Recap

Essentially, you must understand to the core your reason for investment, return expectations, your risk appetite, investment tenure among many other factors. Every investor has distinctive needs, capacity and expectations vis-à-vis the investments. Draw a clear picture before jumping to conclusions; for investments are made literally for life. (not just forever, but for your life and the lives of your loved ones!)

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