What care one should take while investing ?

Right investment at the right time can change your life, but if you choose the wrong option for an investment, it can ruin your life. So, it is very important to choose right option to invest. 

The most important thing when you choose an investment option, you must see if it is legal. Many institutions offer a high-rate of interest in FD, many will tell you multiply your money in a short period. Such schemes not allowed by RBI or SEBI. Ask them about RBI and SEBI approval. Definitely they will not have that. They will show you that their company registered in ROC and is a limited company or Pvt ltd company, but this is not an authenticated document to accept the deposits from customers. It needs RBI or SEBI permission. So, always choose legal option when you invest.

Then you should see “risk return profile”. How much risk you are taking and how much reward you can get. Always choose at least 1:4. If you are taking one rupee risk, then you should get four rupees profit. See also the probability of getting return. Suppose A investment option has 1:4 risk-reward ratio, but probability to get this return is 50%. And B investment option has 1:2 risk-reward ratio, but probability is 90%. Then I will choose B option because probability to get return is very high.

Third important point is liquidity. You must check liquidity of your investment option while investing. Suppose you have 15 lakh rupees to invest, which you want to convert in cash after 3 years for your daughter’s marriage. And if you invest this money in a real estate, they do not guarantee that your property will give you quick cash on time. Because real estate market has low liquidity. But if you invest this 15 lakhs in to stock market, debt market, gold, or in FD, you will get cash quickly. Because all these products have high liquidity.

So, at least see this three points before investing in any asset. If you like this blog please subscribe, comment on and tell us what you want to read in a next blog.