Investing without any goal in mind can leave you nowhere. It does not give you the drive as to where and how much you need to invest in any fund, or even what is the type of fund you may want to opt for. Having a goal in mind gives you the pursuit you need to opt for safe, secure and guaranteed earnings.
The first step in the pursuit of investment is to pen down what your financial requirements are. Divide them on the basis of short term and long term goals. Once that is done, gather all the information about the various funds that are available depending upon your risk appetite. If you are not a risk averse person, then there is no point in taking decisions just to feel the edge, and then losing out on your funds in the end. Opting for a personal loan, home loan etc to finance your requirements will just simply add up to your financial burden.
If you have a good risk appetite, investing in mutual funds through the Systematic Investment Plan (SIPs) is what is advised. If not, investing in fixed return funds can be opted for. But that decision should be made depending on various factors like age, income, your job, the financial requirements you might be facing in future, number of dependents etc. The most basic of all investment mantras is to have a good balance of equities and debt allocation. If you are in the initial stage in your career, make sure that you expose at least 60% your finances towards equities and 20% towards debt. Since, you are in the beginning of your career obviously you have a long way to go, saving your funds rigorously in these early stages is what is required. Later, as you are nearing your retirement, your portfolio needs to be rebalanced in a way such that it constitutes more of debt and less of equity funds as it can safeguard your investments for your post retirement life.
Coming to the point where you need to term your goals, short term goals are better off if invested in ultra short term or short term funds. Short term goals like buying a laptop or even going on a vacation abroad can be listed down. Any goal that falls within 1 year time frame can be termed as short term goals.
Your long term goals, goals that exceed more than 3 years, can be invested in long term mutual funds. Consider investing in large cap funds. These funds basically look forward towards investing in large cap funds like the market index like NIFTY etc. This gives you the opportunity to gain good returns over a period of time. But, as an investor what you need to be clear off is that when there are slight falls in the market; do not panic. These slight changes are bound to be corrected over a period of time. That is why investing in such volatile funds are advised for your long term goals.
Apart from these plans which are generally formulated initially, what should also be kept in mind is that, once you are near to achieving your goal, say like about 2-3 years for your fund to attain your maturity, transfer it to a debt fund where it can be safe from the market’s shocks. This will protect your investments from losing any amount if there is a slump in the market. Investing in a debt fund, will not keep your funds idle till you require them and moreover, you can earn secured returns over them, depending on the type of debt fund you opt to invest in.