Common Investment Mistakes And How To Correct Them

The basic idea of investment is to put your money into instruments which will keep its value up with the inflation. The reason people invest is because of this fundamental assumption that they are not going to work all their lives and need to have a source of income after they retire. The core idea of investment is to plan for a very long period of time. Hence, when you are planning your investment you ought to be extremely careful and diligent. However, there are many people who end up making wrong investment choices and realise it too late to make the mends. But those who have time on their side should ensure that they make the intelligent investment choices.

Never Think Of Insurance As Investment

Till date, many people have committed the blunder of looking at insurance as an investment instrument. It is not. The only objective of insurance is to safeguard your interest from the unforeseen events like illness, accidents and death. That's all you should use the insurance for and invest in the instruments which are meant for investment. Over the years, insurance companies have marketed insurance as a product of investment, and many people have fallen for this marketing gimmick. The problem with this practice not only hampers your investment prospects but also your insurance prospects. When an insurance company has an obligation to give regular returns on the premium paid by the insurer, it doesn't give handsome returns and totally fails to provide an insurance cover of a significant amount.

There is an insurance product called term insurance which is insurance in its true form. As in term insurance, there is no obligation of giving returns, it provides big insurance cover at a considerably less premium. Once you draw a distinction between insurance and investment, you will be able to make smarter investment choices.

Other Not So Good Investment Mediums

Just like insurance, there are various other investment mediums which have often lost the battle with the time. They take too long to give too fewer returns. Though they are safe, and even highly liquid, there are better alternatives available to give good upside to your hard-earned money.

Fixed Deposits - FD as we like to call it, has been around for ages. And along with the time, the rates of FD have consistently fallen. The bright side, however, is that it is extremely safe. At present, most of the banks provide roughly around 6.5% returns on fixed deposits. You can certainly allocate some part of your savings to FD to enjoy its safety and high liquidity but at such a low rate, you will not be able to accomplish the goal of wealth creation. Similarly, savings in the post has the same story to tell.

So What Are The Smart Investment Options?

Equity is the smartest investment option. When you start saving at a young age, you should have maximum equity exposure to get best returns on your money. Also, your risk appetite is higher at a young age. Equity investment can be done in 2 ways, directly and indirectly. Direct equity investment means stock investment. In this method, you have to build your portfolio with long-term investment stocks and strategies. You have to monitor your portfolio regularly. This method requires your high vigilance and diligence. Also, one needs to keep looking for best stocks to buy in India for long-term from time to time.

If you are a working professional and don't have time to dedicate for stocks investment you can either take the assistance of the