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HOW TO INVEST WISELY
- Investing can be one of the most complex concepts in personal finance
But it is one of the key cornerstones for financial independence and wealth building
On a high level, investing is the process of determining where you want to go on your financial journey and matching those goals to the right investments to help you get there. This includes understanding your relationship with risk and managing it over time.
Once you understand what you want, you just have to jump in. You can decide to invest on your own or with
the professional guidance of a financial planner.
1) Identity your goal - Identify whether you want to fulfill ling term goal like retirement, paying for house or college tuition fees or short term goals like vacation, vehicle etc
2) Select an investment type - After knowing how much do you want to save or invest its time for you to consider various types of investment
Either you want equity by investing in stock or giving debt in form of bond
3) Determine your risk level - While considering the type of investment you want to do one should always consider risk factor associated with it
If you are going to invest in stocks be ready for high risk and if you want to go for low risk investment then bonds and FDs are best option
4)Calculate how much money you want to invest -
As you decide which investment accounts you want to open, you should also consider the amount of money you’ll be investing in each account type.
5)Monitor and rebalance your portfolio over time
Once you’ve selected your investments, you’ll want to monitor and rebalance your portfolio a few times per year because the original investments that you selected will shift because of market fluctuations.