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Choosing the Correct Investment

 

‘A minute to learn, lifetime to master’ applies well for investments. Before embarking on a journey to be an investor, it is worth taking few days to research and comprehend on the chosen scheme and its fundamentals.

Rushing into it without understanding one’s own requirements and goals may backfire and fail the whole purpose of an investment.

The three factors to be considered before choosing an investment are the time at one’s disposal, risk capacity and returns.

The first two are the deciding factors in determining the final output, returns.  Understanding these three factors helps in identifying the correct investment. While choosing an investment, follow the following tips.

  • Invest in savings account or FD liquid fund if the time span is short. Savings provide 3 percent interest while FD provide 6 percent interest.
  • Invest in debt or debentures which provide give 9 percent interest if you have a time span of 1 or 2 years.
  • Choose equity or gold if you have more than 7 years at your disposal.

In savings or FD or debts or debentures, the fluctuations as well as growth will be less. Whereas in equity or gold, the returns depend on the market growth though there is every chance of getting higher returns.

So, it is important to understand one’s own risk capacity and time span which becomes the deciding factor in ensuring returns. Lower the risk, lesser will be the returns. If one need higher returns, he or she must have the capacity to take more risks too.

There is nothing like the best product. It differs based on investor’s risk taking capacity, time span and the desired goal.

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