There are people who have habit of keeping bulk money idly for long time. Such people commonly falling to any of three major categories mentioned below. General nature of all these categories is, they have enough money in their hand but, they don’t need the same immediately. This article raising alarms on possible errors can may happen and the steps to avoid such costly errors.
First category of people might have received liquid cash after completion of any investments that they have made in the past with an intention of meeting any goals. But, they might have received the money earlier than when they really required. So they are keeping the money in their hand or ordinary savings account with a bank, till the time to utilize the same.Second category probably receiving huge money at the time of there retirement, from their provident fund or pension plan but, not have any immediate short term goals to meet. So they are also keeping the money in their hand or in a bank account with low interest rates.Third category might have bulk money lying to their account idly for long term.If you are the one falling to any of the above category, then this is the article for you to learn what you should avoid and what you required to do to receive possible profits.
Such situation always vulnerable by the possibility of misleading by approaching agents/brokers with sweet words or wrong promises once after they know you have bulk money in your hand. Be alert, if they are advising you to park any money that you kept to meet nearest goals, with any of the following instruments.
1. Direct stock investing or short term stock trading by hearing the word of an agent or broker – Equity investment generally fetch profit in a long term run. The nature of this product is not short term but to get handsome profit, you need to keep invested for at least 8+ years. Investing with stocks with short term focus or trading may give you huge lose but profit to broker.
2. Insurance, especially Unit Linked Insurance plan – The most dangerous candidate to avoid as a short term investment. This product have huge costs associated with it and if you invest on it with a short term focus, of course, you will be a clear loser by losing more than half or more of your invested amount immediately. As I mentioned in my previous post, Investing on any ULIP with less than 15 years focus, is just like putting your head into scissors. Remember, this is the most common product a crooked agent always trying to promote with sweet promises. Never fall to such promises. Or you will lose your hard earned money and any recovery from the same can only expect after 10 to 15 years or more.
3. Diversified mutual funds / Index funds / Exchange Traded Funds or any other funds associated with equity should be avoided. The reason is the same what I have mentioned in the point 1.
4. Real estate or Gold – Of course these are the best investment products to get huge profit. Sometime it fetches huge profits. But remember the world “long term” on before taking any decision to invest your money with real estate or gold. Yes, these are long term investment products than short term.
What do you will do then? Here is the option to park your money, if you required some profits for next some months.
1. Bank fixed deposit – Start a short term bank fixed deposit with your money. This will give you guarantee to your money as well as little more profit than what savings accounts assures.
2. Fixed Maturity Plan (FMP) mutual funds – FMP’s are the best option to park your money for short term. This is providing guarantee to your money as well as possibility of earning more than compare with a bank fixed deposit.
3. Guaranteed money market fund or Liquid funds – Such funds are safe because of investing with secured products and you can park money with them with short term focus. You are required to identify a good one by considering the performance and fund manager ability.
Now it is your time to think and act intelligently. The idea behind the above is, never invest your cash to any equity or equity related investments for short term. But, it should park with an instrument that provide guarantee to your money and ensuring the liquidity at the same moment you required the money. Never fall to false promises. No one can guarantee money or profit with any instruments that related to stock market.
If you feel I have missed any important point, please note the same here. If you not agree with any of the above points, please inform me through comments, then I will clarify the same.
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