There are some good and must practices required using your ordinary brain to succeed. Whatever and wherever the investment instruments to be, stocks, mutual funds, debt instruments, whatever it is, there are some guidelines each individual should follow and have some best practices as part of life. Below are some but not limited to, to help you to identify and follow:
Objective and risk profile: These are the two major factors an investor should point before start investing. Each instrument and its investing styles are vary upon your risk profile and objectives. To buy a home, if an investor select an instrument that provide reasonable returns in very short term what is the use? Instead, he should identify his time focus and identify a product suitable to that time to provide required profits to complete his objective.
Misleading Myths: Each investment instruments have associated with some common myths. In the world of direct equity investment the major myth is, some one required enough money, may be millions, to enter to the market. This is just a myth. In the mutual fund world, NAV is matter to make any investments. This is another myth. One who are not aware of the myths associated with each investment instruments or world will easily believe these and mislead himself to the wrong way. So identify and avoid myths. Practice, experience as well as approaching wise and experienced professionals will help you to understand and avoid such obstacles from your road.
Acquiring required knowledge on investment instruments: As an investor it is your right to know about the product through possible ways. Al most all the instruments has its own offer documents or information memorandum specifies about the product, its vision, investment style, risk and possible profit or lose. While selecting any product, an investor should ask collect, read and understand all about the product to have better ideas to compare with his objective and risk profile. Blind investment without any information on the product or through recommendation from somebody will never give you profit instead lose. Understand, investment is not a minute or hour process. An investor should take enough time to study, compare and analysis the product to identify whether it is suitable to his requirements or not by considering all the possible factors and points mentioned on the documents.
Place or contacts to start the investments: This is another major area an investor should be conscious. Always deal with those who have licensed or approved to make such investments. Avoid agents and self exposing investment gurus as well as any kind of incentives or gift offers from people with hidden and selfish intention to make profit from your order. Don’t be a dummy in there hand. You are dealing with your hard earned money and think and act wisely.
Rules and regulations on each products: Each investment instrument should have rules and regulations for investors on that product. Rules and regulations associated with each investment instruments are not for putting the investors in trouble. But, it is for the betterment of investors. These rules and regulations are not preparing by any individuals who sell or deal with the product. But, it is preparing by higher authorities, who giving approval to sell the product in their country, by considering the products nature and its profit possibilities to get better returns to investors. Understanding the same will lead an investor through proper path with his investment on that products to get maximum profits.
Research and investment product study requirements: This word doesn’t mean for a scientist. Investment is not a single minute process or action just like entering and getting down from a car or bus. Proper study and research on each factors that support hour investment decisions to the product should done by an investor himself or herself. Proper study reveals the suitability of the investment, profit possibility etc. For example, a direct stock investor should study on the company its products, services, management capability, past returns, profit rations, debt ratios etc to identify the suitability of investment and holding the stock for his intended term. To do this research, he collects all the past and present general reports, account statements and other supporting documents and information’s. Like this, study on each instruments before buying is a must and one should do himself by using all the available resources, this can be approaching a professional, experience from an existing investor, comparison with peers etc..
Document handling and tracking: This is an another major part and investor should be conscious. He should keep copies of all related documents, application forms, cheque, information’s, receipts whatever he is getting on the investments. This will make him able to track any errors, doubts or deal with any complaints in the future. Keep all the documents separately and safely.
Contact information and steps: An investor should have necessary contact information and would be aware about the process of approaching with his complaints about any issues in the future on any products. Proper information and requirements will make him able to not waste time and get proper result at the earliest.
Monitoring investments: A well and wise investor should be always conscious to monitor his investment time to time upon the investment product nature. Well monitored portfolio will help investor to identify the losers to avoid and better instruments to add to his portfolio. Understand, investment is not a use and through method. Once committed, you would commit till the end to get maximum profit. So keeping track of your investment through proper monitoring is a must for a wise investor.
Avoiding all misleading informations: A wise investor should not trust or act as per rumors or any kind of misleading informations that is frequently available in the market. Only deal with professionals and experts, doing self research and gaining confidence on his knowledge will help to tackle such situations. Investing by hearing from public or rumor, as per research reports from various analysts, recommendations or tips from self acted financial gurus will never help investor to grow with his money. So be very conscious on these.
Above are the must required guidelines and practices I have mentioned for an investor. These are practicing by most successful investors and these are the part of their investment life. Remember, you are the only one deciding your destiny. In such case, why should you follow somebody else? Be a wise investor. Have discipline and practice in your life. You can win.
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