How to Proceed with Long-term Investments?
Good returns on investments cannot be achieved in a day. It is a perfect blend of observing the investment schemes, experience of past profits and losses, implementing the right decision and gaining expertise over time. All these together ensure that you are able to reap the maximum benefits from your investments.
Table of Contents
Portfolio Development and Diversification
The main objective of developing a portfolio is to achieve the financial goals that you set for yourself. Developing a good portfolio from the beginning helps in maximizing the return on investments in the end. If you can strike the right balance between FD , mutual funds, equities and other investment vehicles in your portfolio, it will reflect in the returns they are able to collectively generate for you. Some companies even also illustrate future implications on your financial situation, cash flow needs and assets.
If you are new to the world of investments, it is important to take advice from a financial expert or a seasoned investor to plan your investments. Ask yourself the right questions like how much you want to invest, what is the purpose of investment and by when do you want returns on the invested amount? All these questions will be able to lay a solid foundation for your investment plan. Moreover, your current financial situation will be able to throw light on the balance you need to maintain between short and long-term investments.
Knowing the Market
If you want to invest your hard-earned money in long-term investment schemes, you have to be aware about the market trends, and the schemes that give maximum long-term returns. Be fully aware of theories such as portfolio optimization, diversification and market efficiency. Once you are fully updated about the market trends, decide a valid and suitable scheme that fulfills your requirements.
Determining the Strategy
It is important to determine the strategy for long-term investments according to your financial situation. For instance, if you are an amateur investor, you might not want to directly jump into high risk investments. Instead, you can tread the waters safely by investing small amounts in long-term investments with low risk.
Post that, once you have gained confidence in your investing abilities, you can diversify into stocks and equities with higher risks involved. You would also need to plan your liquidity requirements, so you can take care of your regular expenses.
Know the Right and the Wrong
Be fully aware of what is right and what is wrong for you as an investor, from the beginning. There may be schemes, which may appear to be highly lucrative, but may lead you to bear losses towards the end. Similarly, unscrupulous investment professionals whose interest may conflict with yours may pose as a threat for you. Hence, it is important to evade high-risk and losses in the beginning, because it may demotivate you to invest further.
The Right Way to Invest
Your knowledge about the market till now, personality and resources will help you determine the way you choose to invest. According to investors, go by either of the below mentioned ways:
- Diversify your portfolio/investments; avoid a single strategy.
- If you don’t want to diversify, choose one strategy/scheme, but don’t forget to keep a close watch.
Go for Long-Term Investment
Although, you may lose patience till the time you reach your desired amount, long-term investment has proven highly successful over the time. For instance, fixed deposits may take long to mature, but give great returns due to high FD Interest Rates. If you are investing 10 lakhs in cumulative fixed deposits for a tenor of 5 years, with Bajaj Finance fixed deposits, you can earn 4,59,153 Rs. as interest at 7.85% on maturity. So, learning to be a successful investor is a gradual process and the journey is a long one. There may be times when market may prove you wrong but taking it as a learning experience, will help you explore it further.