To achieve your long-term financial objectives, you should place your money in places where you can potentially earn more. Mostly, a savings account is a good place to keep your money. However, placing money in a saving account is ideal only when you’ve short-term goals. If you are planning for retirement and want to fund the education of your children, investing in the right manner is necessary.
Investing refers to the act of assigning resources and converting them into assets with the hope of garnering profits. The investment types range from savings accounts and term deposits to shares on the stock market and property. Before investing in the best investment platforms in India, you should consider the following ten factors.
1. Return on Investment (ROI)
ROI is the primary USP of investing in various platforms. It is the benefit that you will get after deducting the cost of the investment. The ROI can be in dividends, interests, or capital appreciation. Usually, ROI is expressed as the total after-tax income.
2. Try to understand your finances
Before you start investing, it is crucial to possess a thorough knowledge of your finances. You need to sit down and analyse the present financial situation. By assessing the finances, you will know how much fund is available for investment. It will also assist you in implementing the best decisions on when to commence investing.
3. What are your investment objectives?
Usually, most investment decisions involve buying or selling. You need to recognise what your objectives are in the preliminary phase. For instance, do you want to invest on a long-term basis or a short-term basis?
Are you investing for the sole purpose of ensuring rapid growth of money? Do you want to preserve your capital and guard its value? It is necessary to consider all these questions. The answers to these questions will offer you with clear insights into your financial objectives.
4. Comprehend the investment market properly
Investment experts always recommend budding investors not to invest in anything that they don’t understand. After all, you are investing your hard-earned money. And the success of your investment portfolios depends a lot on your understanding.
To be precise, the investment market is ever-evolving. You should stay compliant with the latest trends and forces of the market to stay protected from loss. Maximising profits from investment platforms would be much easier when you understand the forces better.
5. Be aware of your investment timeframe
Once you are clear about your investment objectives, plan thoroughly by when you want to achieve these objectives. The timeframe of the goal will let you comprehend whether it’s a short-term or long-term goal. For instance, if you’re a financial goal that you want to achieve in the next two years, it is a short-term goal.
On the contrary, if you want to achieve a financial goal in the next five to six years, it is a long-term goal. Once you are aware of the timeframe, it will help you determine where you should invest your money. Knowing about the timeframe will also allow you to stay focused on the objectives.
6. Be aware of your asset allocation
In the world of investment, different assets perform at varied times. Therefore, if you’ve various asset classes in your portfolio, it will ensure that the investments are risk-free. Maintaining a versatile number of assets is the key to successful investment. For instance, if one asset is not performing properly, the other asset will cover your losses. And how much you want to allocate to each asset typically depends on your risk tolerance.
7. Things to know about risk tolerance
As an investor, it is essential that you’re aware of your risk tolerance. Investing in any type of platform comes with a set of risks. For instance, mutual funds offer a higher ROI than fixed deposits. However, as they are linked to the market, they tend to be riskier. And taking more risks than usual may affect your prospects adversely. Therefore, you should never invest where the risks are higher.
8. Things to know about liquidity
Cash is always considered as a liquid asset. This is because it’s easily accessible and can be used to purchase almost anything. Liquidity refers to the time period in which an investment can be converted into cash. Many shares on the stock market are liquid as they facilitate the easy transaction.
9. Taxation on investments
Tax is a compulsory fee that citizens must pay to their respective governments. Always remember that different investments come with varied sorts of taxes. To secure a high net after-tax return, you should be aware of the taxation on investments. It is crucial to be on the lookout for good after-tax income from investment platforms.
10. The rate of inflation
Inflation refers to the continuous rise in the prices of general goods and services. In inflation, there is a steady decrease in the value of money. When there is a rise in the inflation rate, the purchasing power of users decreases. During inflation, you should invest in platforms that offer a higher ROI than the inflation rate.
So, as you can see, numerous factors are involved before investing in a certain platform. You should also know about the best investment platforms in India to get the maximum ROI. You can now take a wise investment decision with these factors in mind.