:: SEBI Investor | Investments: Factors to Consider Before Investing (2024)
When you invest wisely, your money has the potential to grow faster than money kept in savings bank account. Remember that investing involves potential risks, and there are no guaranteed returns. Therefore, you should equip yourself with the necessary knowledge and information before you start investing.
One should consider various factors to make informed and responsible investment decisions:
Your Goals – Define your financial goals and objectives for investing. Are you investing to purchase a home, planning to build a corpus for child’s higher studies, investing for retirement ?
Your future finances are linked to how your investments perform so it's important you know the key information before you invest. Make sure you know things like the level of risk you're taking, the factors that might affect how your investment performs and how easy it is to get your money out when you need to.
Always get a fair idea of what a particular investor is looking for and make your introduction detailed enough, especially considering the points they would want you to cover. Investors put their money into a business for the ultimate reason – they want to make a profit out of it.
The three most important criteria to consider when investing are return on investment, risk, and liquidity. Return on investment: Investors should assess the potential return or profit they can earn from their investment.
1 is never lose money. Rule No. 2 is never forget Rule No. 1.” The Oracle of Omaha's advice stresses the importance of avoiding loss in your portfolio.
This sort of five percent rule is a yardstick to help investors with diversification and risk management. Using this strategy, no more than 1/20th of an investor's portfolio would be tied to any single security. This protects against material losses should that single company perform poorly or become insolvent.
The Golden Rule states that over the economic cycle, the Government will borrow only to invest and not to fund current spending. In layman's terms this means that on average over the ups and downs of an economic cycle the government should only borrow to pay for investment that benefits future generations.
The other determinants of investment include expectations, the level of economic activity, the stock of capital, the capacity utilization rate, the cost of capital goods, other factor costs, technological change, and public policy.
Introduction: My name is The Hon. Margery Christiansen, I am a bright, adorable, precious, inexpensive, gorgeous, comfortable, happy person who loves writing and wants to share my knowledge and understanding with you.
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