This article was actually inspired by one small quote “Everything has a purpose, why your investment hasn’t” The word PURPOSE itself is very essential for every investor who wants to invest for his retirement or for any other goal. Today I want to share very basic steps of financial instruments.
My perception is to say you want to start small RD (recurring deposit) you must have purpose. Don’t rush and invest in any financial product, think twice and start slowly but whatever you invest you must have purpose. When any investors come to me and ask me I want to invest and say that where to invest now? I ask 4 simple but important questions to investors. There are 4 basic steps to follow before you go for any product. I call it SIMPLE theory because whenever you think investment in any financial instrument your mind will start to answer below 4 questions.
# Why you want to invest (Goal of Investment)?
# What RETURN you are expected?
# How much RISK you can obtain?
# TIME horizon of your Investment (tenure)?
It always helps to know why you are doing something. Think about why before you go for any investment plan. Are you hoping to build up your retirement fund? Do you want to accumulate amount to pay down payment on a home? First determine why you want to invest. Being able to point a specific reason for investing can help you set the right goals and can provide you with a way to stay motivated as you move forward. Second thing your return will be better than normal investment because you have best knowledge of risk involved in that investment. Third most important thing you ideally know when to exit from that investment because you know your time horizon.
You should plan your investment on the basis of these 4 small steps. Planning always help to me as an investor so recommended to all my blog reader.