It is not easy being a successful investor, especially in a country like India. The reason being, that a bigger market means more volatility. There are too many variables which even the most seasoned players can make completely wrong predictions about.
Moreover, the general public is completely ignorant when it comes to finance. A major aspect of this stems from the mystery shrouding investments, and the reluctance of masses to try their hands at investing.
Let’s list out factors that the common investor needs to look out for, in the coming year in the Indian market:
1. Anything that promises great returns at no risk to your investment whatsoever is a trap. There is no investment vehicle that guarantees exponential returns at no risk. Usually, it is the work of scammers trying to cash in on market hype.
2. If you are being promised a quick investment plan to double or even triple your money, do not invest. These schemes are usually bubbles, and as all bubbles do, they eventually burst. Cryptocurrency is one such bubble that can burst anytime and take down everyone who has heavily invested in it. With most governments in the world steering clear of them, it is safe to say, they are not a safe investment!
3. The underlying tech is called Blockchain and it does have some real-world applications that could be beneficial, but cryptocurrency is not one of them.
4. Always be careful if your investment is consistently returning high yields even though the market is suffering. Ponzi schemes are the only way your investment will be unaffected by changing markets, and as we know they are illegal.
5. You should always have one eye on the exit and be keen to make your money back. Unless, you have invested in tools such as mutual funds or fixed deposits which are time-bound but secure. Fixed deposits, especially in the 2018 budget, are a rather good investment to get into. With high FD interest rates and quickly accessible tools such as the FD calculator, companies like Bajaj Finance are making waves.
6. It cannot be overstated how important research is to any kind of investment. Knowing the exact details of the scheme and where your return is being generated from is crucial. Has the asset historically been profitable or is it just suddenly yielding high returns? You must ask yourself such questions before making the decision to invest in any investment vehicle.
7. Make sure you know exactly what you are getting into. There is no shortage of scammers in the market and they are all selling the perfect product. Anything that is being marketed as a one-shot investment is probably not that. Before you sign any investment agreement, it is always advisable to have a lawyer read the minute details of the terms.
8. If you are deciding to invest, you need to make sure you understand your financial goals and align your investments as per your goals. Investments such as FD (Fixed Deposits) are safe for the same reason, as banks are bound by regulatory bodies and have assured schemes that guarantee returns.
These seven tips are more than enough to get you going in the right direction. Investing your hard-earned money can be a daunting task, especially if you don’t know anything about finance. All the complicated jargons and more than enough traps set to fool the novice investor, keep them at bay. But, now you know which cons to look out for when trying to be a pro investor, make sure you steer clear from any schemes that seem to make fake promises for high returns.