Things You Should Keep In Mind While Investing
After deciding the correct asset allocation it is time to start investing. However, there are a few things that should be kept in mind while investing. They are:
i. Beware of So-Called Experts!
Some people can develop a tendency to invest by listening to others, including the “so-called” experts on television, newspaper, magazines, neighbours, friends and relatives. It may happen that the stocks which these so-called experts are suggesting may be suitable for the experts themselves but not for others. This can happen because financial net worth, risk taking capacity and time plays a key role in investing.
Say a stock which looks a very poor investment in the short run could be a very good investment for the long term. Hence, the right path would be either to give your money in the expert's hand or start with your own research. All novice investors may face gains or losses initially.However, with experience,they can build their own strategies and can soon develop the acumen to make their own informed investment decisions.
ii. Regular and Disciplined Investing is Important!
The most convenient way to accumulate wealth is by investing regularly and in a disciplined manner. This can be done with any of the asset classes mentioned previously. For example, when investing in the debt market, you can opt for a recurring deposit, or while investing in equity stocks, you can choose an SIP (systematic investment plan).
The asset class that grows your wealth the most over a long period of time is equity. Very often while investing, investors try to get the perfect entry and exit point of the market. This is known as timing the market, which is considered to be very difficult, even if not impossible. Instead of timing the market, try to let your investments spend time in the market.