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4 great tips for safe investing
Personalfn.com | June 18, 2008 10:38 IST
When it comes to investing, it is commonly observed that investors tend to replicate the investment strategy followed by their colleagues, friends or relatives.
It is generally believed that an investment strategy that has worked for one will also work for others. However, this is the wrong approach, simply because 'one size does not fit all' while investing. Instead, investors need to build an investment portfolio that is right for them.
Building an investment portfolio requires the investor to put in a fair degree of thought and time. The need for the latter is only accentuated in light of the overwhelming choices available. In this article, we present a 4-step strategy that will help investors build an investment portfolio.
Identify the investment objective
How to achieve your investment objective?
Mutual funds are managed by professional fund managers and can be expected to do a better job at managing money than most investors. By investing through the mutual fund route, investors are left with time and energy to pursue their own work.
Of course, not all asset classes are available through the mutual fund route in the domestic context. But it's only a matter of time before that changes; for instance, regulations are already in place for the introduction of real estate funds, one of the big innovations in the mutual fund industry. Investors can already invest in debt, equities and gold through mutual funds.
Depending on your investment objectives you can select the mutual fund option most suited to you. Typically, for a long-term investment objective like retirement planning you can take risk and equity funds can prove beneficial. For short-term needs like saving for a car, debt funds are your best bet.
Select the fund house/AMC
Why is it necessary to invest in the right fund house? Because the fund house must first qualify as a viable investment proposition before its schemes can attain that position. While short-listing an AMC, look for the ones that are process-driven as opposed to individual-driven.
Processes are more enduring and serve investors well over the long-term. Individuals (read star fund managers) can be expected to perform only till the time they are associated with the fund house, once they leave they take the performance with them.
Select the scheme
A word of advice�
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