Investment: Mutual Fund

After investing a certain amount which has immediate requirement in safe deposits, investors can move up to some risky options available to us like mutual funds and stock market.

A mutual fund pools investments from many investors to buy securities.

Investing in mutual is riskier than fixed and recurring bank and post office deposits, EPF and PPF.

They are subject to market risk. Investors who have no knowledge to invest in stock market directly, can invest in mutual funds. The selection of right funds is essential to create wealth in long term. 

Investment: Fixed and recurring deposits

The amount saved for six or more months should not be kept in saving account.

We should convert it to fixed deposits. It is easy to break the deposits as and when there is any emergency and the fund is required.

We have an option of sweep-in and sweep- out wherein the excess money is automatically converted to the fixed deposits. The last deposit is broken if there is any withdrawal.

Recurring deposits can be initiated where a fixed amount is deducted from the savings account and credited to recurring deposit account every month on a scheduled date for a certain period.

The principal amount along with interest is credited to the savings account on maturity of both fixed and recurring deposits.

Investment: How much should we save?

Now the question is: How much should we save?

Saving should be enough to cover your immediate expenses for a few months. One has to decide one's comfort level of immediate expenses. Some may feel comfortable with six months expenses amount while others may need more.

Investment: Save first

Investment should start with our income. We have to save first from our income. We know, Income - Expense = Saving.

Here we have a problem. After considering all the expenses, saving would be the second priority. 

If we change the formula to Income - Saving = Expenses, saving becomes the first task to do after we earn salary,  wages,  bonus and other incomes. 

So separating immediately some portion of our income as saving would compel us adjust our expenses to a certain limit.  

Set a target for saving say 5% or 10% to begin with and slowly increase the saving percentage every year or as required. 

Investment Types

Types of investment depends on the choice we make. Investment can be of the type suitable for us.

Investment ranges from least risk one to highly risk one. The choice of investment is highly depending on our basic character. How risky are we?  The simple answer to this question helps in the selection of the type of our investments.

Setting goals, terms of the goals and types of investment makes the complete planning in the matter of investment.

Investment Goals

Investment goals are as important as the investments. Investment without any goal is just like vagabond.

So there should be goals set for investments. Whether you are investing money, time or energy, there should be goals set to record the performance. If the performance is as expected, you are in the right direction and if the performance is below expectations, you need to change your goal.

Goals may be short term or long term or both. After you achieve your short term goal, set another one or extend it to a long term one. 

Investment

Investment is a part of our life and it will always be the part of this world. The present world is the outcome of some sort of investment we all do.

We all do some kind of investment. Some invest money,  some invest time and the rest invest energy. It may be the combination of any two of money, time and energy or all of them.

Investing is not enough. Success in investment is equally important. Not all would be successful in investments.

We should invest for the well-being of ourselves, the people we love and sometimes the people we do not know.