To achieve long-term financial success, investors need to practice both proper asset allocation and diversification. An investment portfolio that is properly allocated and diversified can help investors manage risk by reducing its overall volatility.
Investing, as with anything in life, benefits from an early start. In investing, slow and steady is good. Early and often is better. When you start saving early, your money has more time to grow. Time allows you to take risks. Those who begin to invest late in life are often inherently more cautious with how they invest their money. Moreover, you beneﬁt from the power of compounding - your investment earns income and that income earns more income. So, the sooner you start, the better your chance.
Making an investment plan involves more than just choosing the right product to put money in. One has to consider the financial situation, risk appetite and investment goals. It’s also important to define the timeline and how much risk an investor is willing to take on in order to determine the optimal asset allocation.
Compound interest is one of the most important concepts to understand when managing your finances. It is the simplest yet the most powerful concept and has a multiplier effect on your investments. It helps your investments to grow at an exponential rate than arithmetic linear rate. Earning a slightly higher rate of return can make a massive difference to the amount of money you end up with.
Investing in mutual funds through Systematic Investment Plan (SIP) is an effective wealth building tool by contributing a fixed amount every month. But as your income grows, you are likely to have more money available to invest. A SIP Top Up allows you to increase the monthly investment amount periodically. SIP top ups can be specified as a percentage or a fixed amount every year. A small increase of Rs 500 would make a huge impact in your portfolio over the long term.
One of the major encounters that investors' are facing these days is wide fluctuations in the stock market. And the first reaction to this volatility is panic. There can be various events that can lead to such swings − pandemics, changes in government policies, geopolitical tensions, unfavorable economic data, etc.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.