Here is the basic but, utmost important investing intelligence for any investor when dealing with different investment products. This points greatly help you to assess yourself whether you are considering the angles while investing to these instruments.
Stock Investing
Stock investing generally recommended to investors who have good knowledge and experience on how to select proper businesses to invest. Any business that selected by an investor should have enough durable competitive advantage to its product. In other words, it should have a monopolistic business and left no room for its competitors in the market. The best example in front of you is Coca Cola.
You should select a company that has efficient management with high priority to its investors and there money. A company, that should not have a history of accounting scandals or any pending law suits against its.
Its financial status should be very strong with zero or very few debts and follower of good accounting practices. It should have consistent Return on Equity growth and considerably low cost to sale. It should have sound cash flow as well as practice of buying back shares to add value to investor’s wealth but, not issuing new shares time to time.
Always prefer to invest on stock with a long term focus and if you not have adequate knowledge in invest in direct equities, it is better, select an Index fund.
Mutual fund investing
Your selected mutual fund should have an excellent fund manager who should not have a character of a stock trader. Churning portfolio frequently will result huge lose to investors. A good fund manager should have excellent fund management history with adequate experience and skills by providing enormous profit to unit holders.
As an investor, you should read the key information memorandum as known as KIM to understand all about your fund.
An investor should understand various types of mutual funds and capable to select right mix depends on his various goals and risk taking capacity.
You should be well aware with the associated costs with the fund such as entry load and exit load.
Always use Systematic Investment Plan (SIP) to invest in mutual funds than single investments.
Insurance products
As an investor, you need to acquire enough knowledge on insurance products. There are various products like money back plan, traditional policies like endowment plans.
Investor can also find the product called Unit Linked Insurance Plan (ULIP), which providing insurance as well as the investment exposure to an investor.
Selection of traditional policies never gives worth to an investor because of its inability to beat inflation.Selecting ULIPs required to acquire very good knowledge to this complex product first to avoid errors and possible misguidance from profit lacked financial advisers. You should know the costs, Premium Allocation Charges, Policy Administration Charges, Fund Management Charges as well as the performance of the funds against its benchmark prior to selecting a product to subscribe.
ULIP is a plan suitable only for investors who have long term investment focus. It is not at all suitable for short term investors because of the huge costs associated with the product. You should take care to not cheat by the financial advisor while selecting such products.
Here is a perfect questionnaire for investor to read before selecting a ULIP product. There are various worthy insurances a person highly required to select as the part of your financial plan.
Fixed Deposits
There are fixed deposit opportunities for investors with banks and non banking finance companies or NBFC’s. Before selecting the establishment to do a fixed deposit, it is better to have a compare study to know the interest rates to get the highest one for you deposits.
It is a best practice of selecting an account that provides compounded interest rates than flat rates that all the banks providing. Never forget to keep all the documents safely and monitor your money at least once in a year to escape from account frauds.
Gold Investment
Before start investing in gold, an investor should aware about the possible ways to invest in gold. He can invest through purchasing physical gold as ornaments, coins, biscuits. He also can invest in the form of exchange traded gold funds.
Purchasing Gold Exchange Traded Funds (ETF) eliminate the requirement of storing gold safely and the lose from any depreciations as well as working charges.
If you purchase the physical gold, time is the ultimate factor. Always prefer to have gold when the prices are low.Always prefer to buy gold that follow quality standards. You need to buy from a trusted agency or from bank and ensure you have received required certificates showing the quality and purity of gold.
Bond Investment
Always deal with the registered agent or directly to the company to buy bonds. You should carefully read the terms and conditions to avoid any future problems. It is a best practice to understand all about bonds before investing your money to bonds.
Checking the reliability by understanding the credit rating to the particular bond instruments will enable you to invest your money to the safer bond instruments.I hope I have covered all the most available investment instruments in the market and those presently most of the people like to choose more. You can comment here if you feel I have missed any important points with any part above.
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