5 Things You Should Know Before You Start Investing

Things You Should Know Before You Start Investing

Investment is not a one-step process but an entire series of steps taken to reach the financial goal. It encompasses making various financial decisions and finding the right investment alternative while minimizing any associated risks. Investing is affected by a large number of factors, so it is crucial to keep in mind some financial aspects. Today we will talk about five things you should consider before you leap.

Know Your Investment Goals
Every person who is desirous of investing should have a stated purpose of investment. It could be anything like buying a house, new car, child education and marriage or planning retirement. You should know what you want to save your money for and especially how much you want to save. Your investment goals are a crucial factor to decide the investment alternatives.

Know Your Financial Condition
Any investor, whether she is a billionaire or a new associate in a law firm, has some financial limitations. It is necessary to know how much would you be able to invest in the said period of investment. The purpose of investing funds would be to generate sufficient returns to help you achieve your financial goals, whatever they are. So, it is necessary to know how much investment you would be able to support and where you can cut corners.

Know the Importance of Emergency Funds
One of the main reasons why investments fail is that people consider their investment as emergency funds. However, this is never the case. For example, when you start a fund for buying a new house, then that money is being kept aside for buying that new house only. Now, what people do is that whenever they face any financial emergency, they break these funds, thereby hampering the investment cycle. Such acts lead to lower accumulated wealth. These emergencies, as the name suggests sprung anytime and you have no control over them. So, it is always advisable to consider an emergency fund. It would safeguard you in case of any mishap.

Know Your Asset Allocation
There are various investment avenues available in the market. You can invest in precious metals like gold & silver, stocks, bonds, mutual funds, real estate or a combination of all of the above. You may or may not want to invest in all of them. Each of them has its risks, rewards and characteristics. Therefore, you should be well aware of the investment avenues you have selected. Knowing each kind of investment avenue helps you to create a diversified portfolio and enhances your chances to reach your financial goals.

Know Your Risk Appetite
When someone wants to invest his money, there are majorly only two things in his mind. First is the reward and second is the associated risk of investment into that avenue. Every person has a different risk appetite depending upon his age, financial situation, priorities, etc. You should identify the level of risk you are willing to take to achieve your financial goals. This factor is one of the main aspects when you choose your investment avenues. People who have a high-risk appetite go for equity funds; they are risky but give good returns to its investors. Debt mutual funds are safer but provide low returns and are suitable for people with low-risk appetite. Hybrid mutual funds are known to yield better returns than debt funds and are less risky than equity funds, so they are suitable for moderate risk-takers.

How to Save Money For a Child’s College Education

Save Money For a Child's College Education

Education is one the most powerful weapons in today’s competitive world. We live in an environment where change is constant. Education prepares us for coping with these changes around us. In simple words education is the quality of one’s life; how a person lives, talks and treats others around him/her.

A Good education is important for all of us. A proper education usually involves huge sums of school, college and tuition fees. Good education never comes free. Just like money is important for our day to day needs, similarly, money is very important for higher education. Not only knowledge, but values and moral habits too comes with our learning. For a rich and highly esteemed family, it is easy to spend money, but for an average middle-class family, it is important to maintain a proper system of their income and spending.

If you are a new parent, your child is young, it is beneficial to start saving for your child’s college education from today. This will not only reduce your burden in the future but will also be healthy for your expenditures. In many Indian families, it is often seen that the parents are not very highly educated but they want to make their children do well. But due to less income, they can’t afford the fees of the colleges. For such conditions, the loan facility is becoming common nowadays. Most Indian families face financial problems in regard to their child’s education, this problem is overcome due to loan facility, which is beneficial for the parents as well as children. However, the interest rates on such loans are very high which puts a big burden on the shoulders of the children and their families. 

If you are aiming to make your children study in a well-known institute, the best way is to start early savings. As early as you will start to save the better it will be. Ideally, you should start when your child is born. Even small savings each much can help a lot. Also, it is important to invest in assets and get a great return. Mutual funds are the best option for investing your money. Long-term investments are generally time-consuming but are worth your money and time. Proper investment and high returns are the essential steps towards your child’s dream. In between the savings and expenditures, don’t make it complicated that it leads to loss of your major part of income. We can help to formulate a plan by giving the best advice that will protect your income from the loss and will give you a better version of savings for your child’s college education.

According to the experts, if you have 12 to 15 years for your child’s college education, equity funds are the best option. Also, one of the effective ways to save for your child’s education and future is to create a savings account for your child and start depositing the amount regularly. It will be an easy and convenient way of saving for your child’s future. There are certain children’s education plans which guide you with what to do and how to save your money for educating your children.

Having a good and pre-planned child education policy can also be helpful for you and your children. Every parent wants a safe and secure future for their children. A bright future is not possible without the light of education and knowledge. Make your child’s education your first priority, control some not-so-important expenditures and put those in your child’s education savings.

Financial mentor like ourselves will give you a well-planned estimation providing you the best advice that will be helpful for you as well as beneficial for your future. Income, expenditure, and savings, balancing these three can make your present and future on track.

Education is a light that guides your future but doesn’t come without a cost. Making this cost worth spending, your aim should only be on acquiring education. At an early age, during school days children start to build their dreams. The fulfillment of these dreams depends upon his/her higher education so you can’t compromise regarding education. Your child’s dreams are precious, make them come true by saving accurately for your children’s college education because education needs no compromise so every parent needs to save for their children.