LOLO is very happy. He has been saving money since a couple of years and now he actually has a lot of money. He is planning on investing his money so that he can enjoy the benefits and interest out of it. While he was confused as to where to invest, he asked a couple of his friends, relatives and did online research. These things confused him more. Today, finally he is happy and earning a good and heavy interest on his investment and he wants to highlight a few points in terms of dos and donts which and investor should take into consideration before investing his money. According to LOLO, the best investing practice lies in the following points:
- Stop taking advice from people: Ofcourse you should take advice from your peers and your well wishers. But it might not fetch the same results as it did for your peers. If LOLO would have copied his peer’s investment, he might have ended up goofing his investment. Rather, you should do your homework, research about different investment and then go ahead with best option.
- Do not invest money without having the complete knowledge about the same: LOLO asked his peers about the best possible investment since he wanted the best plan for high returns. His peers suggested him 3-4 plans. LOLO invested some of his capital into the plan without event knowing it. He did not even bother to know anything about the plan because he trusted his peer. Now when there will be an inflation, LOLO might loose some of his capital amount. If only he spent time in studying the plan thoroughly before investing, he would have avoided this mistake.
- Have a plan: You should always have a plan. You should be aware with your end goals. What are you expecting by the end of this investment. Your plans and goals should be in sync and well organised. Only then you can figure out as to which investment will be the best for you.
- Diversification: Diversification is a need. An individual must diversify across his investments in order to gain more profit out of it. As it is said by Mr. Warren Buffet: One must not put all the eggs in a single basket. He should always have 5-6 modes of income rather than having just one. This is necessary because if you have invested in one plan and if something goes south, you might tend to loose the capital amount. If you have a diversified plan, then even if one plan doesn’t work out, you will always a backup plan.
- Professional guidance: It is always a good practice to seek professional guidance if this is your first investment. If you are a first time investor, a professional can give you the best possible advice in terms of investment. LOLO was a first time investor and he seeked guidance by hiring a professional who gave him the best guidance in terms of risk and best interest rate.
To conclude with, these are the major dos and donts along with other things which needed to be considered when you are thinking about an investment or thinking about lending your hard earned money.