Investment means putting your money into financial schemes, shares or property with the expectation of making a profit. There are some most common questions come to our mind before investing money. These are:
1. Should I invest or not?
First thing to decide is whether to invest or not as we need funds to invest. If we have surplus funds that is not required to fulfil our daily, monthly or yearly requirements then only we can invest.
2. How much should I invest?
Next thing is how much to invest. For example: if we have Rs.200000 then we need to decide whether the whole amount to be invested or a portion of it. It is better to have a risk distribution policy. One can invest Rs. 100000 in fixed return policies and remaining amount into equity funds so that the risk can be minimised and profits can be secured.
3. Where can I invest?
It can be property, gold, fixed deposit schemes, insurance policies, stocks, mutual funds, government securities, derivatives, futures, options etc. One must be very careful before taking the decision. What is the requirement of the person whether his motive is profit making or securing his money with steady returns etc are some of the basic things that decide where to invest?
4. When can I invest?
What is the right time to invest? The prevailing conditions of market should be kept in mind. Market is stable or up moving or in a recession phase. For example in recession period one can invest in property as the rates of property and interest rates both come down.
5. For how long can I invest?
The duration of investment can be from six months to six years depends on the personal requirements and the nature of investment.
6. What factors should I keep in mind while investing?
The factors are investor’s financial status, duration of investment, amount to be invested, scheme in which to invest, market conditions and profitability. He must take advice of a professional who can evaluate the various options available in the market for allocation if the amount is bigger.
7. What if I lose?
How risk bearing capacity you have i.e. how much loss you can bear is really very important to understand. In stock and mutual funds profit and loss depend upon the market conditions. One should read the offer document carefully before investing.