With increasing volatility and frequent market fluctuations, making smart investments is not easy. When you look for information online, several inputs laden with economic jargon tend to perplex you furthermore.
If you have ever invested into something before, you know about the kind of mistakes you can make on the way to the perfect investment. The thing is, there is always some new way of making quick money that everyone is talking about, and usually that’s the investment that one should not make without doing their research.
Let’s take CFDs, for example. Trading CFDs looks promising on paper, but due to the nature of CFD trading, it’s often categorized as a sophisticated form of gambling by the trading community. It’s often recommended to consider less risky form of investment, such as property bonds – one of the most proven and consistent ways to invest your money in.
Instead of figuring out what to invest in, let’s examine five things that one should not invest in the coming year.
1. Not planning well
To earn returns, most people tend to invest in assets. However, lack of prior planning leaves investors with no clarity on their financial objectives or future. Having no plans to secure your future could be risky, especially with the market volatility increasing every day.
2. Playing it Safe!
When making an investment, the one thing you need is the courage to play the game. Instead of waiting a while to gather more funds so you can invest on a larger scale, you should be scouting out opportunities to invest within your budget. In fact, what better way is there to get the money you need to make big investments than making small investments first? There are ample of options to increase your nested savings such as fixed deposits. Some companies such as Bajaj Finance even provide an FD interest Rate calculator which makes your investment safe.
3. Not Planning Your Retirement
It is a cliché, yes, but it is still true that one must invest first and foremost in their own future. This tip is also true for every year, and not just 2018. People most rely on investment vehicles like EPFs and PPFs to secure their retirement, but the returns are too small to amount to anything. Invest smart, and invest early in mutual funds, Fixed Deposits, property, etc. to secure your retirement years.
4. Skip Insurance
Investing in insurance has become a common trend among people in the past few years. This is because they mistake the policy return to be a profit on investment. Clearly insurance is not an investment but a safeguard for your family for when you pass away. The ideal insurance returns about 12-16 times as much as your annual income, but people make the mistake of buying cheaper insurances as investment.
5. Not Diversifying
One of the worst things that you can do as an investor is not diversify your profile with different investment instruments. You should carefully examine how the market has been behaving in the recent past and also understand the reasons behind the ups and downs of the market. After due diligence, it is important to invest in various asset classes to ensure that risk is efficiently managed in your portfolio.
Mutual Funds: A Good Investment?
Mutual funds that are being invested in for quick trading are very dangerous to play with. They usually bet on small-cap stocks that have a low volume and, hence, few investors. Investing in them is closer to gambling than any other type of stocks as they give big returns but can also cost you all your money, depending on the market.
In order to make a safe bet, investing in a healthy mix of medium and large-cap stocks is the best option. In this coming year, there are plenty of mistakes you can make when investing, and these are just some of the big ones. Make sure you pay heed to warning signs and invest safely but surely!