When it comes to managing our money, lack of knowledge about various investing opportunities available comes in our way to achieve returns that can atleast beat inflation. Ignorance to keep track of your money often allows leakages from your investment portfolio.
Being an informed investor is the most important way to protect your money and in fact grow it steadily. This is how one can make informed decisions to invest or not to invest:
- Fixed Deposits – While going for fixed deposits, make a survey of the deposit rates available with different banks than just going with the bank you hold a Savings Account with. It is compulsory for all the banks to host their deposit rates for different tenures on their websites and hence, it is only a 5-10 minutes task to explore rates offered by various banks. Just to illustrate, deposit rates of two banks were compared for a term of one year and they were offering 7.50% and 8.00% respectively. No special tips this time to suggest that one should invest the money with the bank offering higher rate. Also, another important point to note is that banks often offer higher interest rates on certain tenors to gain some competitive advantage. Don’t forget to take that advantage for yourself if your goals allow so.
- Public Issues of Securities – Capital market provides opportunities for investing in Initial Public Offers (IPOs) brought by unlisted companies and Follow-on Public Offers (FPOs) brought by already listed companies. One can check out the ‘Public Issues’ / ‘Offers’ tab on the websites of NSE/ BSE to check out the ongoing public issues. Further, to take an informed decision on investing in that particular issue, one must go through the prospectus of the issue which contains the information on risk factors to investing in the issue, financials and management of the company and terms of the issue. The prospectus can be downloaded from the website of the stock exchanges, lead managers to the issue or SEBI.
- Stock Market – While making an investment into shares of a particular company, it is imperative for the investor to know about the business and financial position of the company. Know what are the various risks associated with the company and how they affect the price. One can know more about the company by going across its annual report that is available on their websites too. Further, consider choosing those companies that suit your risk appetite. As a general rule, small-cap companies are considered riskiest with the risk factor going southwards as the individuals move towards large-cap companies.
- Mutual Funds – Historical returns are often considered as the decision making criteria for choosing future investments in mutual funds. However, it must be noted that past returns are not guaranteed for future periods. There are several websites like EasyMF, ValueResearchOnline which provide a comprehensive database on the mutual funds.
- Insurance Plans – With the emergence of internet, it has not become easier for you to check out the policy options available with different insurers. Apart from the insurance companies, there are several insurance information aggregating websites such as PolicyBazaar, InsurancePandit etc., which provide information on insurance plans and help you compare all the policies available in a particular category. The available information makes it easier to know the options available and make an informed decision when purchasing an insurance cover.
- Demat Account – One must always keep a track of the corporate actions made by the stocks you have invested in and ensure that dividends, bonus share credits etc. do reach the demat/ bank account.
- Savings Account – While Savings Account should not be considered as an investing vehicle, still it deserves as a special mention for you to be an informed investor. As simple as it may seem, always check your statements as and when you receive the same in your e-mail. They often pass on the realisation of any extra spends you may have incurred during the period. Investing starts with controlled spending and this particular habit can really help you with informed spends.
It’s always the right time to take a step forward towards being an informed investor or the money keeps slipping out of the hands.
I have already taken the first step. What about you?
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4 thoughts on “Be an Informed Investor!”
Hehe I haven’t taken any step yet :p except of knowing about everything :p
Fixed Deposits I think will soon be a thing of past.
I like the fact that you chose to include the savings accounts to this list because they are often the most neglected in the list despite bearing the direct impact of our all transactions.
Thank you for this informative list of investment options 🙂
@theerailivedin from The Era I Lived In
Going through all your posts now Simardeep. You have chosen a very practical and relevant theme and the result is excellent effort. I do hope many people take time to read and implement your tips. Cheers! 🙂