Things you should know before you invest

Investment is a decision that all of us have been or would be confronted with at one or the other point of time.

Let us look at what all should be considered while making an investment:

Risk appetite

First define you risk appetite. What is the quantum of risk that you are ready to take? i.e. what is the size or the percentage of the portfolio that you would like to devote to risky investments like equity/stocks? Always remember that higher the risks, higher are the returns. But a balance must be reached keeping in mind your personal requirements.

Once the portfolio percentiles have been finalized search for the types of investment modes that you want to get into.

Research

Always research before investing. A well researched investment is more likely to give you the expected returns than the one that has been invested based on tips and recommendations.

Liquidity

Check out the liquidity of the investment that you want to put your money into. Very low liquidity carries the risk of not being allowed to materialize your investments before the agreed period. In such a scenario you don’t get to use your money when in dire circumstances.

Safety and stability

What is the safety quotient of the investment? Check out for the ratings from the premier agencies and regulators. The corporate governance rating is also a good indicator. Also watch out the dividend history / market price movements of the investment tool.