While every individual works hard to earn in their youth, it is equally important to understand how to invest these earnings and reap benefits in the long run, especially after you retire. There are many different types of saving and investment options available in the market and it is crucial that every investor learn about these options and create an investment strategy that suits them the best.
Take a look at some of the principles that can help you build a long-term investment strategy:
- Plan your finances ahead of time
It’s a sound principle to practise budgeting and investing at the same time as they go hand in hand. Every individual should have an estimate of their short- and long-term expenses, recurring payments, etc, which will help in planning an investment strategy and deciding on how much money can be saved every month.
- Knowing the difference between saving and investing
Saving is a safer and more trusted route of planning finances, wherein the investor can bank on returns and safe recovery of their money. But the returns will not be very attractive.
Investing, on the other hand, is more about taking a little more risk and working towards earning handsome returns on your investment. Markets are volatile but if investor study and do their due diligence before investing in MFs or stocks then there is no limit to how much your investment can earn in the long run. It could even become a lump sum that can allow you to retire at ease. But, if you are not willing to take that risk, Fixed Deposits will get reasonable returns with absolutely no risk. You can use an FD Calculator online for free to know how much returns you can earn for your FD tenure.
- Diversify your investment and strategize accordingly
‘Don’t have all your eggs in one basket’ is a very common saying that is very apt when it comes to making investment decisions. For example, you can calculate how much returns you can earn from your FD in the next 10 to 15 years using an FD calculator. However, it is important to also make some investment in a Mutual Fund and some in equity i.e., purchase stocks, so that you can reap investment benefits from multiple avenues.
- Harness the power of compounding
Every investor needs to understand this golden rule of long-term investing i.e., the magic of compounding. The sooner you invest and the longer you stay invested, the more your returns will increase. Remember to always harness the power of compounding be it with Fixed Deposit returns, Mutual Fund, or stocks.
Additionally, there are always a few investment mantras that most investors follow to ensure that their investment earns good returns in the long run. Here are some quick tips you can follow to enforce a long-term investment strategy:
- Don’t worry about small losses or volatility in the markets
- Know when to cut your losses and revisit your investment strategy
- Never chase a hot tip or quick recommendation without doing sufficient research
- Weigh all your investment options and return on investments, like use an FD calculator to know how much you can earn with your FD in the long run.
Long-term investment strategy is an ideal way to plan finances and investments. Right from creating Fixed Deposit to investing in Mutual Funds and from purchasing gold to investing in stocks, there are multiple investing instruments that can help you earn handsome returns in the long run. Remember to weigh all your investment options and make an informed decision.