Where to Invest: A Guide to Choosing the Right Investment | HDFC Sky

Описание: There are multiple investment options for retail investors like us, such as stocks, bonds (fixed income securities), cash & cash equivalents (fixed/recurring/savings deposits), commodities (assets such as gold, oil, etc.), real estate, and alternate investments such as derivatives (futures & options) etc.

Each investment category has varying degrees of risk associated with it.
Rules to keep in mind before investing
To make prudent investment plan over the long term, you can follow certain basic principles such as:

1. Rule of 100:
This rule lets you choose where to invest based on your age. Rule of 100 suggests the allocation toward risk assets (such as equity) in a portfolio should be 100 minus your current age. So, if your age is 30 years, you should ideally allocate 100 – 30 = 70% of your portfolio in risk assets such as the stock market. The rest of the money can be distributed in fixed income securities such as FD, PPF etc.
As we age, the risk appetite reduces, with lower years of active work remaining. At this point, the allocation should shift toward fixed income securities. So, at age 60, your investment in risk assets will be only 40% (i.e., 100 - 60). This means you will invest a higher proportion of your savings in low risk or fixed income assets.

2. Rule of 72:
The rule of 72 helps understand how long it takes for your money to double. Simply divide 72 by the rate of interest you are getting on an instrument and that’s how many years it takes for your money to double, compounded.

3. Maintain cash to cover expenses over 6 to 9 months:
It is also advisable to not invest all the money. It is important to keep cash handy to manage any emergencies or sudden unforeseen expenses. This can be done by tracking expenses across past months and keeping cash reserves to cover such expenses for at least 6 – 9 months.

4. Diversify:
“Never put all your eggs in one basket” is a common saying across the investment community. You must never invest all your money in one asset class or instrument. Diversification will ensure that at least some of your money is safe even if one asset class fails.

5. Refrain from taking debt to invest:
Borrowing to invest/trade is not ideal. The interest payment on the loan can burn a hole in your pocket, particularly if your investment doesn’t work out.

6. Patience:
No investment provides results immediately. It takes time for the market to increase in value. The key to surviving the ups and downs of the markets is to stay patient and invest for the long term. Start today, start small and stay invested!


0:00 Introduction to way's of investing
0:16 5 Investment options
0:40 Investment strategies
2:40 Other points to remember


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