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Five things to keep in mind before investing

There are several areas of investment but the key to good investment lies on taking certain basic decisions.

Five things to keep in mind before investing

Zee Media Bureau

New Delhi: We all have often heard –invest today for a better tomorrow. There are several areas of investment but the key to good investment lies on taking certain basic decisions.

Here are five things you should keep in mind before investing.

EARLY INVESTMENT

Aristotle's phrase can be equated with an early start on investment as well. He said, it is well to be up before daybreak, for such habits contribute to health, wealth, and wisdom. If you start early, it will be a sure shot way to add to your wealth. By starting early here doesn't mean starting the day early. It means jumping into investment early.

INFLATION

While investing, always keep inflation in mind. Do calculate your returns in the coming 15 years and compare it with your expectations. Will the returns be at par with inflation? No matter how much you earn after 15 years, if inflation is not factored in, you will not benefit much.

COUNT THE TAX IMPLICATIONS    

Mindless investments are not good investments. The tax proposition is an important factor. Keep in mind, not all investments mature as tax-free. Wisely calculate that.

MODE OF INVESTMENT

Remember, every investor is different from the other. Don't simply ape your friend (oh he is invested “this amount” on “these portfolios” so I can also do it). Look at your own permutations and combinations and then go ahead. For example, Mutual funds and SIPs are good for everyone, but not all can take the risk of share market. Similarly, buying a property for investment could be good for your friend who already has a house but it might not be same for you if you are living in a rented accomodation.

ADD ON

It is a very simple funda. If you are investing in mutual funds or SIP, it is always advisable to keep adding on to your corpus. You can keep adding a little every year. If you do this in a disciplined way, you it will not add much burden on your wallet too.

Happy Investing!