Investment is an asset acquired with the aim of generating enormous wealth for the future or in case of emergency. In simple words, we invest our money with the aim that in future the value of money will appreciate. Appreciation refers to an increase in the value of an asset over time. The value of 100 bucks today is not the same in the future.
When an Individual purchase an asset (Tangible asset or Intangible asset) with the intent to create wealth and use it in future is termed as an investment.
Concepts you should know before doing any Investment
All the investors should know these important investment concepts. These concepts will help to take the decisions wisely.
- Evaluating Investment Performance
- Asset Allocation
- Portfolio Diversification
- Portfolio Rebalancing
- Investment Risks
Evaluating Investment Performance
While you doing your investments, it is necessary to measure them time to time. The measures you choose will depend on the estimation from your investment and also depends upon the type of Investment.
Asset allocation is essential and very much important. Every individual should allocate their investments in different categories such as SGBs (Sovereign Gold Bonds), Mutual Funds (Large Cap, Small Cap, Sector-wise, Debt or other), Index fund, Stocks, Fixed Deposit, Recurring Deposits, Real estate, etc.
Firstly an individual has to make their goal and the time which he/she can give for the investment. Then as per the goal, need and time person should allocate their investments. Every investment has a different level of Risk.
Diversification is the process of a varying its range of products or field of operation. In investments diversifications is necessary where you can diversify both within and among different asset options.
As per the performance of the Market. you may find that your asset allocation no longer provides the balance of Growth and return that you want. In that case you may rebalancing your portfolio.
Every asset class has a different level of Risk. For example in Debt funds the risk investor takes is way less than the persons who invests in the Equity. But when there is high risk there is great chance to get higher returns.
HIGH RISK HIGH PROFIT
So firstly do your risk assessment that you are what type of investor (Aggressive, Moderate, Low risk). Then according to your risk profile diversify your investments in different classes at different levels of percentage. Diversification and Rebalancing to achieve a higher rate of return.
So, now let’s talk about different kind of Investments in 2021
Top 10 Important Investments
- Side Hustle
- Paying your debt
- Mutual Funds/Index Fund
- Stock Market
- Health Insurance
- Term Insurance
- Sovereign Gold Bonds
- Liquid Fund (Emergency Fund)
Do something extra with your normal life. Side hustle refers to any type of employment undertaken in addition with your regular job. It is not necessary to do 2nd Job. You can start something by own.