Investments are financial products that provide the opportunity to create wealth for future. The following are the investment lessons for 2019.
- Invest for long-term
Long term investments offer several advantages. Long term investments are held for 3 years or more, but these kinds of investments need commitment even if you face financial crunches in between. Long term investments give superior returns whenever it matures. These kinds of investments are suited perfectly for your child, as you can plan financially for his/her future – education, marriage and lifestyle.
There are several long term investment options available and you must choose one carefully depending on your financial goals and the risk factors attached to the investment plans in India. It’s called ‘Long term’ for a reason, you invest and forget about the money till the time it matures.
- Seriously consider NPS
More than 30% of the respondents to an online survey conducted said they didn’t invest in the NPS because of the tax treatment of the corpus. When they retire, NPS investors have to use 40% of the corpus to buy an annuity and can withdraw the remaining 60% of the corpus.
- Keep an eye on retirement
If you save for your retirement from your first job, you need less money to invest. It is called the power of compounding. Also it is one of the most common mistakes that people make ignoring your retirement goals.
It is important to get some sense of how retirement affects your budget. Ultimately, you want to make sure that you keep an eye on your expenses and retirement budget in order to have a better understanding of what your retirement income will cover, and to help identify certain areas of expenditures where you’ll need additional income to cover.
- Harvest capital gains from Mutual Funds
The reintroduction of tax on long term capital gains from stocks and equity funds has not depressed the small investor’s appetite. After an initial hiccup and some panic selling, markets resumed their upward march. The monthly SIP inflows into mutual funds rose 20% in 2018 as investors realized that the potential gains from equity funds could be higher than the 10% tax on gains beyond Rs 1 lakh. Indeed, the 10% tax will not make a big dent in the overall returns. In fact, small investors with SIPs of Rs 5,000-10,000 may not come under the ambit of the tax immediately.
- Manage your money
Being good with money is about more than just making ends meet. How you spend your money impacts your credit score and the amount of debt you end up carrying. When you’re faced with a spending decision, especially a large purchase decision, don’t just assume you can afford something. Confirm that you can actually afford it and that you haven’t already committed those funds to another expense.
That means using your budget and the balance in your checking and savings accounts to decide whether you can afford a purchase. Remember that just because the money is there doesn’t mean you can make the buy. You have to also consider the bills and expenses you’ll have to pay before your next payday.
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