The current market is performing really well. All the new investors who started their investment during the lockdown period are really in a good position. There are many things that a fresh investor should need to know before investing.
A small story
Today I met a young IT guy who just started his investment in April 2020. We were just having some conversation over mutual funds. The guy is new and doesn’t have much knowledge about mutual funds. Based on suggestions in some random app, he invested some 5-6 Lac rupees and was in profit of 20%. For the next 30 to 40 minutes, we discussed different kinds of asset classes. He was putting his points on how to manage finances and I was listening.
In the end, while he was leaving he said, “Life Insurance is shit I don’t like it.” I was surprised by his statement as we didn’t even discuss Life insurance or anything related to it. I immediately asked him why was he saying so? In his explanation, he told me about some YouTube videos on financial planning which suggested that Life Insurance is not good. This made me realize that I should share my views for dos and don’ts for fresh investors.
This was one simple representation of how people take their financial decisions based on some short term profits or any social media-based financial advisor. Sometimes they can lead you to profit, but not always. Now one question arises that Why are people are confused and become over judgemental about various investment options? Here are some valuable thoughts for those who are new to the field of investment(fresh investors).
5 Useful Investment Tips for Beginners
1. No policy or investment is a direct profit or loss
Every asset class in the market or every financial product has its own value. Every plan is made for different types of investors and has different types of outcomes.
2. Everything on social media is not always trustworthy
Social media influencers over Facebook, Instagram, and Youtube may have diverse opinions for different financial products. The investment tips may be genuine, based on analysis, or may be targeted to divert the audience toward a certain plan or policy.
3. Analyse facts and figures before making decisions
If you come to know about any biasing of the product whether it is good or bad for you, it is your firm duty to analyze on your own. You can also contact a financial expert that can guide you with genuine advice, who can guide you with genuine terms and conditions, benefits, losses, and all other prospects for your investment decision.
4. Invest your money when you are satisfied with your analysis
After a thorough inspection or after discussing with a trusted financial advisor, if you find any investment plan, life insurance or anything, satisfying your needs and suitable for your future prospects, then invest money in it.
5. Devote time and effort to financial decisions
It is always better to take time to analyze and put effort into the analysis before heading to a final decision.
Now you have a fair idea that the above post is not in favor of any life insurance plan or share market. I have met a lot of individuals who have a very negative opinion about the stock market. But this is the thought to consider, every asset class has its own value.
I want to leave a message to all the fresh investors out there.
First, understand your need and evaluate your short term long term risk measurement protections. Your needs should be fulfilled by the various products. All financial products are meant to solve problems in society. For example, any insurance whether it is life insurance or health insurance, or motor insurance, they are meant to protect us against financial losses. Products like fixed deposits, mutual funds, market shares, properties, gold, etc. are meant to make wealth. Don’t get confused or influenced by any cheesy video or advertisement. Talk to a reputed advisor. Ask as many questions as you want. If you are satisfied with the product and if you find it suitable then go for it.