Invest In Equities If Your Investment Is Meant For The Long Term!

By BankBazaar | May 21, 2012

Investing in equities surely has some risk involved. Risk is mainly generated through market irregularities that are bound to even out in the long run. Therefore you do not risk much on a long term basis. The best mechanism to invest in equities is by using the Systematic Investment Plan (SIPs). A good fund selection that involves mutual funds provides the required exposure towards equities. It is important that you increase you risk appetite since it is only by increasing your risk appetite that your investments can enjoy the much required growth in order to accumulate a good fortune. Most investors decide to bank on their investors to pay off their debts like a previously borrowed home loan etc. But what needs to be kept in mind is that if you are a borrower of a home loan and are willing to liquidate your assets to prepay the loan to ease a considerable burden off your finances, it is important that you assess you’re the tax adjusted interest payout on your loan and match it with your fund from which you are planning to finance your loan repayment. In order to determine the returns of any investment and to fully benefit from it, you need to be patient till it reaches its point of robustness; where the fund has enjoyed its bit of experience of staying in the market and has experienced various market cycles. No matter how great a fund is, in the short run it may provide negative returns. Even if the decision is required to be made prior to the fund selection, it is important that you analyze the past performance of the fund although not rely on them completely. The performance of a fund is just one such factor to determine the overall returns of the particular fund. Once you have decided the kind of funds you may want your portfolio to consist of, the next step is to decide how much of your income is to be allocated only towards investing in these assets. Most people think that one can benefit from good returns only if they invest a 4-5 digits worth of investment. Although that statement holds true, it is not necessary that it should be adopted by all. Each investor is different from the other. The financial goals and requirements will differ from each working class of people. So if you earn around Rs20000 per month, you’re financial requirements will be different from the one who earns Rs 10000. Therefore an investment should be drawn based on the individual’s income and their respective financial requirements that need to be completed. For low-mid income investors, it is better that they invest in Recurring Deposits (RDs), utilize FDs and from the amount that is generated from such funds can be invested in equities through the Mutual Fund using the SIP route. Investors who are planning for their retirement, 10 years down the lane, can opt for investing their funds in the National Pension System (NPS). However there are certain guidelines you need to know before actually going ahead and investing in them. The NPS has just recently been introduced and have not complied with the investor’s expectations yet. But industry experts sight good growth in its returns in just a few years down the lane. Once you start investing in this asset, you will notice that your 50% of your funds are invested in equities and as you approach your retirement, the equity exposure reduces gradually over a period of time. As said earlier although the exposure towards equities can be risky, it can enable you to bet on high returns in the long run as market unevenness is bound to get stable over a period of time.

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