21st century is the time for advancement. People are earning more, spending more and also saving more. When we talk of savings, the best way to use it is by investing it. Young professionals and entrepreneurs, in their journey to achieve big at a faster pace, tend to save less and pile up multiple liabilities. They spend, enjoy and then realise. This results in people putting themselves in risky situations. Solution is simple. Invest, multiply and then spend.
7 simple steps you need to follow to create an impressive investment portfolio:
Don't hesitate to make mistakes
The first and foremost prerequisite to starting your investment journey is to understand that higher the returns, higher will be the underlying risk. To get higher returns and to avoid losses, it is required to be aware of how the instruments operate. For that, a practical exposure to good and bad situations are equally important. Hence, if you wish to gain profit, be prepared to accept few losses as well.
Stay updated with the market
Investment in shares, FDs, NSC, bonds etc. requires strong knowledge of movement of market sentiment. There are multiple things that you need to take care while analysing these instruments.
Performance of the economy - Depends on country in which the instrument is operating.
Performance of the industry - Depends on industry that the instrument belongs to, i.e. banking, automobiles, pharmaceuticals etc.
Performance of the company - Applicable to shares, bonds issued by companies.
Financial analysis - Analysis of balance sheet, financial ratios, profit & loss statement, cash flow statement etc.
Non-financial analysis - Promoters, Vision of the company, Market sentiment, investors' trust etc.
Staying updated with all the above areas is quite essential when it comes to keeping track of your future and existing investments.
Develop an investment strategy
Every investment consists of 2 major components: Plan and Timeframe. Once done, you can identify the right instruments to help you achieve your targets. To identify the instruments, you need to understand what type of investor are you. We categorise investors based on 2 parameters: Risk Appetite and Confidence. Identify yourself as per below classifications:
High Risk Appetite High Confidence - Adventurous
Low Risk Appetite High Confidence - Individualist
High Risk Appetite Low Confidence - Stable amateur
Low Risk Appetite Low Confidence - Caretaker
Balanced
Once you identify your category, it would be easy for you to plan your investments. Regardless of which category you belong to, a disciplined investment journey is something everyone must follow to achieve results.
Be aware of people around you
Honesty is the prime attribute of any investor. Keeping that in mind, remember that there are many out there ready to give false advices. To avoid, one needs to be really strong in terms of knowledge. Make a core group and plan investments together while keeping an eye on your personality profile. This would help you identify when to put in and when to take out your money.
Develop an investing path
Investing path is usually a combination of knowledge, timing and personality. There are some frequently used investing paths as below:
Diversity is the key to reduce risk: There are many who feel investing in a single asset might lead to heavy loss in case things turn bad.
Tracking your portfolio is the only way to identify the right time: There are others who believe risk can be avoided by staying of the changing market and its impact on your assets.
A balance approach is the key to stay in positive: There are few who are ready to suffer losses, at the expense of getting that knowledge. But they also ensure they stay positive by investing in performing assets.
Think long term
When it comes to trusting a company by buying its shares, it is important to know that fortunes do not change overnight. Hence, it is always required to have a minimum 5 year plan for big investments.
Learn Learn & Learn
The final and the only key to stay ahead of the market is to be able to predict it. The ability to do that comes from knowledge and experience. If both these attributes are updated on a regular basis, the probability of a successful investment portfolio is 99%. As it all depends on market and market is at times very volatile, we still have a 1% chance of failure.
These are our most important techniques by which you can develop an impressive and successful portfolio.
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FOLLOW THESE TESTED TECHNIQUES AND ACHIEVE AN IMPRESSIVE PORTFOLIO.
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