Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
There is no right time for investment, as experts say. Almost anytime is right. But before starting an investment one must check certain things including the risk factor and the return from the specific investment. It is crucial to evaluate all the options before we finally decide the destination of our hard-earned money. Certainly, we do not want to lose it in the name of earning more from it. Eventually the investment pattern of a person depends upon the individual’s risk appetite and outlook towards life. Money9 chalks out five important things that one should keep in mind before making a new investment.
Portfolio allocation
Portfolio allotment is a very crucial part. Everybody needs to have an asset allocation plan in place across equity, debt and gold.
Asset allocation for every investor is different, unique and is based on the overall financial objective of the person and the individual’s risk appetite. As a beginner, it would be a good strategy to gradually increase allocation into equities. It is fine to have a higher allocation in the bank and debt instruments at the initial stage, feel experts.
Reaching the goal
Every investor should have a clear goal. The investment strategy should depend on the outcome of the investment – an investor can bear volatility in the short term for a long-term goal given it is able to meet the objective.
So before finalising the investment amount and the pattern one should make his/her goal clear and consult professionals to achieve it, said Saibal Biswas, a personal finance expert.
Doing research
Research is one of the key things that an investor must do. Without proper research, your capital is always at higher risk than is optimal.
Before making any investment try to know everything about the instrument as much as possible, told Biswas. Don’t invest into investments which you are not properly aware of, he added.
Risk factor
One very important thing is to gauge the risks involved. Risk taking capability depends upon an individual’s appetite. Check twice before making any new investment.
Always try to check the return of previous years and then invest in it. Research yourself or consult with professionals and then start investing, said Nilotpal Banerjee, another personal finance expert.
Retirement planning
For a young investor, retirement is often an ignored goal. But you should plan it from the very first day of your investment, and then only you will make a big and healthy corpus at the age of 60.
National Pension System is one of the appropriate options if you want to plan it long-term. A young investor can put 75% of the total money of NPS into equity and 25% in government and corporate bonds, said Arvind Agarwal, an Income Tax expert.
“The returns would be high and risk proposition is low as far in NPS,” added Agarwal.