“Investment is purchasing something with the hope that it will generate income or appreciate in the future.”
Investing money is one of the primary keys of a prosperous future. The lure of increasing the numbers in your account is something that entices you at every single point of life. However, investments only reap high-benefits if you are patient, disciplined and have a proper understanding of the market.
With the advancement of the internet, online investments have become the new hype today. Investing money in online investment plans is not only hassle-free but convenient as well. You can quickly check your investments on your smartphone and invest money with just a tap.
It may sound easy, but many investors are still not able to grasp the online investment process. Thus, they fail to reap the benefits that online investment plans provide. Why? Because these investors are unaware of the rules that can help in gaining all the benefits on offer.
In this article, we have written down four such unsaid rules that can help you in utilizing online investment plans properly.
1. Know About the Product You Are Buying
No investment can serve the desired purpose if the investor has no idea how the product works. Majority of the people see market-linked instruments as tax investments and buy them solely for tax exemption. The only agenda is to reap tax benefits through these market-linked instruments.
However, whether its Mutual Funds or ULIPs, before you invest in any product, ensure that you understand it thoroughly. For instance, many people are unaware of the fact that not all mutual funds provide tax benefits, except ELSS funds. So, before buying a product, see if it fulfils the future needs.
2. Study Its Performance
Before purchasing, invest some of your time to learn about the product. Study the reviews of the product, its current performance and that in the last 5 years. Moreover, try consulting people who regularly invest in the product you are planning to buy.
You can also consult financial advisors online; these experts can provide you with helpful insights. This will help you in determining if the product will give you value for money. Thus, helping you make an informed decision.
Diversification is the most crucial part of your investment portfolio. It helps you in reducing the risks of your investments. There is a certain risk-value attached to every investment instrument available in the market. If the product is providing higher returns, the risk ratio will also be high. Similarly, if the product offers moderate returns, the risk ratio will be low.
One of the favourite market instruments that can help you easily diversify your investment portfolio is a ULIP plan. Under this, you can choose different funds (equity, balance or debt), according to your risk appetite. Moreover, when you purchase a ULIP plan from leading insurers like Max Life Insurance, you get unlimited free switches between funds. So, if a fund is performing well, you can direct your money towards that fund without paying anything extra.
4. Never Forget the Magic of Compounding
One of the most amazing benefits of investing your money is you can enjoy the magic of compounding. Let’s just say that with compounding you can turn an investment worth Rs. 1000 into Rs. 10,000. Though the process is determined by the returns you get from the investment, it is found that the longer you keep your money invested, the higher benefits you can receive.
Long gone are the days when every time you wanted to invest, you required an investment broker for help. Online investment options have made things quick and easy. You just need your laptop or smartphone and learn everything about investing online. You can even take the help of experts and start investing. Remember, every penny invested in turn saves you an extra day of work.