Your comprehensive guide to Mastering the art of Investment
Gone are those days when keeping your money stagnated in a savings account was your only path to wealth. Investment opportunities have risen up ten fold in the last decade and a half owing to the rapid rise in economies worldwide. “There has never been a better time than the current one to be a millionaire”, investors argue but it’s easier said than done.
Investing isn’t all about roller coasters and wave pools. A sound investment plan with a speculative approach goes a long way to making you wealthy too. Exciting and interesting are two adjectives that you should try avoiding before you invest in an asset that claims to be exactly that. Investments should be as dull and glum as the Kardashians themselves!
Here we explore the so called “Golden rules of Investment” to help you plan for your future better than the Mallya’s did.
1. Build a plan :
“Failing to plan is planning to fail”. The really successful investors will tell you that planning is perhaps the most important part of investing. And what they’d wish to tell you is that they invested early. Probably the only regret in their lives, investing early saves you from putting your bulk in an asset which in turn could be utilised for diversification. The more you wait for the sea to get calmer, the more your mind prepares itself for drowning. The sooner you start, the better your chances of becoming wealthy are.
2. Diversify :
As stated earlier, diversification is a key armor to possess against potential risks. Warren Buffet, the legendary investor pointed this out many times when asked about his secret to a lifetime of wealth. As an investor you must always hope for the worst, which is why putting small sums in different assets comes in handy. But over diversification too isn’t advisable. Find a middle ground by investing in assets that have paid dividends to former investors. P2P lending, mutual funds, equity, gold and real estate are the assets which are a favourite among investors.
3. Don’t be a dead fish :
Going with flow is rarely profitable and something that you should definitely avoid. Invest when others are cautious and be humble when others are greedy. Look out for moments like these during the year. Once you’ve identified that, check out what the crowd is after. There’ll you find your opportunity for success, a market that somehow went unnoticed. Join in then should the valuation, growth, risk and quality checks are met.
4. Risk appetite :
No investment in the immediate universe can claim to be 100% risk free. To appreciate profits, certain losses are necessary, although I’m not wishing that on you. Risks are inevitable so, it’s better to realistic than senseless. You shouldn’t put your money in an asset which scares the shit out of you just. In the curious world of investments, what’s safe is rarely profitable. Risk margins differ for different people and it is perfectly alright if you find stocks scary. There are similar assets like P2P lending which negates the dependence on the stocks completely leaving you free to purse investment.
5. Understanding investments :
Albert Einstein is considered the greatest and smartest human ever because of one simple fact, he could explain concepts in the simplest way possible. Investing in stocks, funds or borrowers that you cannot understand well enough is simply building a slide for your own downfall. Your funds should be distributed in assets that are so simple that it hardly takes a minute for you to explain it to a layman. Stick to what you know and try to excel at it.
6. Be regular :
Investment is a continuous process rather than a one time ticket to wealth. Keep investing small chunks of your cash regularly as it not only gets you returns but also keeps you updated on the current market scenario.
7. Keep reviewing :
The first draft is probably your shittest write up ever and only after reviewing you get it somewhat right. Investments reviews are even more important due to to the involvement of capital. Keeping a track of your returns helps you get an idea about what you’ve gained or lost helping you gain experience for future investments.
Peer-to-Peer lending has emerged as an alternative investment asset in the not so distant past, and it has been gaining momentum all this while. The non dependence on the stock market is a peculiar feature that has interested even the most knowledgeable investors. As low as 2000 INR can be invested with a return margin reaching as high as 35%. With technology as it’s cornerstone, Peer-to-Peer lending platforms like LenDenClub is what an investor always dreamt of!