Rule Of Thumb For Smart Investing3 min readReading Time: 2 minutes
Investing, indeed, is a prominent key to financial freedom. And with mutual funds by your side, no goal now seems too far out of reach. But to get it right, investing in the right way is important. Adhere to a few thumb rules and it will help you keep up with your investments and enjoy wealth growth
Don’t wait for the right time. Start now.
If you sit and wait for the right opportunity, you may lose out on the precious returns that you could have earned in that time. Know that now is as good a time as any to invest in mutual funds. In fact, like a smart investor, you can start an SIP in your preferred mutual fund and watch as your wealth grows manifold. This way you can stay away from the stress of timing the market and also enjoy the benefit of compounding along with averaging out of the investing costs.
Know how much risk you can afford and invest accordingly
Mutual funds investments entail a certain amount of risk. So, before you invest in one, become aware of your own risk tolerance capacity and choose a fund that matches your risk profile. This way you will get an idea about the returns that your investments might generate as risks and rewards are always related to each other. At Paytm Money, a simple Risk Assessment Test will help you to identify your risk profile and invest in the right fund.
When feeling unsure, revisit your goals
Having well-defined financial goals enables you to calculate the amount that you wish to accumulate, and then work backward to know the SIPs that needs to go periodically. Once you get the requirements right, you can then move on to picking the appropriate fund to invest in. This way it would be easy for you to invest regularly and track your investments to know your progress. Even during tough times, you can revisit your goals to get the right direction and stay invested to reach them.
Look-up the definition of commitment
Irrespective of whether your goal is long term or short term, you need to stay invested for the entire horizon that you had planned for. It is found that investors who stick to their investment timelines are more likely to reach their goals than those who quit in between. The fluctuations that you may experience in the near term tend to smoothen out as time passes by. So, through the good days and bad days, stay committed to your SIPs to make the most out of your investments.
Diversify but don’t overdo it
When you diversify your portfolio, you need to ensure that you don’t invest in funds that hold similar securities. This way you can avoid the overlapping effects that would have otherwise adversely impacted your returns. Also, make sure that you invest in only a few funds that suit your goals & risk profile. In the end, you will have a portfolio that has all the necessary funds to accumulate adequate wealth for your goals.
Whether in life or investments, following a set of rules enable you to maximize your chances of success. Moreover, you tend to be less anxious and more confident about your investing choices. So, don’t wait any further, follow these rules and achieve each and every financial goal. At Paytm Money, we offer you only top-rated mutual funds. Explore these funds and more. Download the app if you still haven’t.