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| 5 Wise Rules of Investing in the Stock Market |
'Trading Investments' is a sacred term for individuals. For many people, investment means earning from a kind of 'compulsory' savings and subsequently receiving lump sum money.
Investment rules, stock market
5 Wise Rules for Investing in the Stock Market
However, there is much more to it than investment. The investment comes in a wide range of financial planning. It requires a lot of thinking and groundwork. Here, we have kept some important guidelines in mind while planning your finances.
1. Do Your Homework
Before investing your money, make sure that you have done your homework well. It is 'normal' for sales pitches to be aggressive. Most sales executives are primarily interested in 'commission earned' or 'business garnered', which reflects their monthly goals. That is why only the 'best case scenario' is heard from agents/sales executives.
Many sales agents/consultants try to exploit a person's vulnerability and lack of knowledge when creating a sales pitch. For example, how can you convince so many people in the low-risk category to invest in high-risk ULIPs?
Or why term plans, despite the cheapest form of insurance, are still not bought by most individuals? Or why do mutual funds favor IPOs so much with investors when there is no fit in their portfolio?
One should understand one's own profile about income, risk appetite, and future plans and invest only after that. Individuals need to know what benefits different products offer and how they fit into their financial portfolio before investing in them.
You should hear advice from various quarters, but you should make the final decision alone after careful analysis. After all, it is your own hard-earned money.
2. Keep your eyes and ears open
Keep your eyes and ears open at all times for any investment opportunity coming your way. This opportunity may be through changing market scenarios or new product launches. Individuals should not give up on any occasion because they did not know that it existed.
Of course, this includes updating itself with the latest product trends, market conditions, and the changing economic landscape. In this way, you will not be at the mercy of the advisor/agent to provide complete investment-related information and solutions.
3. Involve Yourself
When purchasing any financial product, make sure that you involve yourself in important steps. For example, while taking life insurance, make sure that you personally fill all the details in the offer form. Insurance agents often, for themselves, fill in details such as, among other things, the insured's height and weight, his age, and medical history, based solely on his decision. He only asked the person to sign the end in the form.
Individuals who are not aware that it may dismiss claims at a later stage if discrepancies are found in the proposal form. The insurance company cannot be blamed for rejecting such a claim. This is a drawback on the part of the agent that you should have requested to fill the form, otherwise, fill it yourself after verifying your details.
All necessary medical tests should also be given diligently. As mentioned earlier, any 'false claims' may be rejected at a later date.
4. Inform your near and dear ones
As soon as you buy the policy, inform your near and dear ones. If your spouse and/or parents know that you have a life insurance cover in which he/she is a nominee, it would be better to contact the life insurance company for the claim.
Generally, life insurance should not be so pious that you do not keep the subject in the family. All concerned (and affected) parties should know what should be done in your absence.
5. Maintain a logbook
Always keep a logbook of your life insurance policies/investments. Individuals can make a variety of investments ranging from life insurance (endowment, term plans, ULIPs) to mutual funds and PPF / NSC. A logbook should contain details about the same.
Over an extended period of time, it becomes difficult to remember or track investment information such as maturity date, maturity value, and interest rate. This logbook will take care of that problem. Of course, it goes without saying that for a logbook to be truly effective and useful, it must be periodically updated to reflect investment and redemption.
This logbook should also include details of a person's home loan, personal loan, the outstanding balance on such loans, EMI and business liabilities (if a person runs a business).
The details of the logbook should also be shared with your dependents (spouse, children, parents). An important reason for copying In the case of an unfortunate event, the spouse knows their exact financial status. Furthermore, one would not want someone to come out properly one day and claim on family assets based on some 'notional' liability.
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