Life changed in March 2020. The pandemic forced people to move their day-to-day businesses from their homes. All working professionals were expected to continue working from their homes. Life, in general, was confined to homes as lockdowns became commonplace throughout the year. But There was another side-effect of the pandemic. Many found out that the income earned from full-time employment was not enough. To stay afloat, some people started investing in the market.
Investing money not only helps you to take your savings a step further but also offers your savings a decent chance of beating inflation. However, it is important to remember that investing is best leveraged when done not only in a disciplined manner but also in a systematic manner. If you’re wondering how that’s done, here’s all you need to know about planning your investments, especially this year:
- You need to List down your financial goals:
Before opting for an investment plan, you firstly need to determine your financial goals and after determining note down your financial goals. Whether you’re aiming to just grow your wealth, get out of debt, plan an education abroad, buy a home, have enough capital to start a business or have any other goal, write down what you want to achieve.
- Please study your finances:
After recognising the financial goals, you need to study your present financial situation to fully understand where you are. By studying the current state of your finances, you can map out the distance that lies between your present and the future that you wish to create. To know how much you can invest and reach the goals that you’ve set down for yourself, it is important to consider your financial situation.
- Consider the timelines for your financial goals:
After determining what your financial goals are and ascertaining the capital you need to have at hand to achieve those goals, you need to think about how long you want to or can invest to achieve your goals. In this, process, please remember to be realistic. For example, you want to buy a home in the next two years. Therefore, while investing, you must consider the money and time that you can devote to achieving this goal.
- Think about your risk appetite:
Investment tools that come with higher risks offer you a chance at higher returns. While risks will be a part of a well-balanced portfolio, they vary in their intensity as per your choice. You as an investor get to choose how much of a risk you want to take. Therefore, determining how much risk you can take is a good way to establish your financial limitations and scope before you make investment decisions, based on risk. For example, you are thinking of opting for an equity fund. But it is important to note that equity mutual funds come with a lot of risks. Your risk appetite is low when you have a debt, a financial obligation, approaching your retirement or are currently unemployed. Also, the risk you can take increases with things like a higher income and lower financial obligations.
- Mitigate the risks through diversification:
While investing, please remember to spread your investments across different assets. Spreading your investment across different assets helps you to mitigate risks. Moreover, this avoids limiting your capital’s growth to a single or few investment instruments. Diversification is possible through not only a mutual fund investment but also types of mutual funds.
While investing in the market you will find numerous investment options such as mutual funds. Investing a part of your income in the market will help you to earn extra income, something which is sorely needed these days.
Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
