Are you looking for ways to grow your wealth and reach your financial goals? You need to first understand that there is no easy or quick option to make money through investments. You have to cultivate good habits over a period of time so that you can become a good investor.
Here are six habits that can work in your favor:
Create a Financial Plan
A financial plan is the foundation of the success of your investment. It helps you to define your investment goals, set realistic timelines to achieve them and decide on the best financial instruments to invest in. For example, if you want to buy a 3BHK house (goal) in Mumbai within five years (timeline), a hybrid mutual fund (financial instrument) could be a good option. You can even consider taking advice from stock brokers in Mumbai to draft a suitable financial plan.
Start Investing Early
There is often this misconception that the right age to invest should be in your 30s or 40s. It is always advisable to start as early as in your 20s, once you have a source of steady income. When you start early, it gives your money sufficient time to grow and generate wealth. You can build a significant corpus by the time you retire.
Diversify Your Investment Portfolio
Financial experts often say ‘don’t put all your eggs in one basket. This means that you should never invest your entire money in one financial instrument. Rather, you should diversify it across a mix of equity and debt instruments. This will help you maximize the returns and minimize the risks. You may want to consult a share market advisory company to understand portfolio diversification in detail.
Choose the Right Investment Option
The choice of investment depends on the following three factors:
Investment goal (buy a car, build a retirement corpus)
Investment horizon (short-term, medium-term, long-term)
Investment risk appetite (conservative, risk-taker)
Depending on these factors, you can choose from equity stocks, mutual funds, debt funds, fixed deposits, PPF, gold, etc.
Set Aside an Emergency Fund
An emergency can strike anytime, anywhere, and in any form. You need to have contingency money to face it. Just imagine that you have invested all your money with no immediate cash to spare. Don’t make this mistake as an investor. Always maintain an emergency fund equivalent to 3-6 months’ salary for a financial crisis.
You need to be a consistent investor if you want to get stable and rewarding returns. No matter how the markets are performing, you should invest at regular intervals to reap the benefits of rupee cost averaging and compounding interest factors.
Investing is no child’s play. You need to have adequate expertise and experience to ace your investing decisions, especially if you are putting your hard-earned money in stocks. The stocks are vulnerable to market fluctuations. Hence, it is advisable to take guidance from a registered and reliable broker. These days, you can also easily find an online investment broker to manage your investments from the comfort of your home or office.
The above-mentioned habits will go a long way in making you a disciplined and good investor.