Uploaded on Aug 17, 2022
PPT on Tips for Successful Long-Term Investing.
Tips for Successful Long-Term Investing
Tips for Successful Long-Term Investing INTRODUCTION • The strategies followed for long-term investing are different from the ones for short-term investing. Some asset classes deliver better risk-adjusted returns over the long than those usually doing well during the short term. • Long-term investment horizons also allow the investors to take greater risk as longer time horizons allow investors more time 2 Source: www.financialexpress.com ALIGN YOUR INVESTMENTS WITH CLEARLY SET FINANCIAL GOALS • Every long-term investment that you make should have a life goal associated with it. Doing so will give you a clear estimate of the size of your financial goals and the time required to achieve them. • A clearly set goal with a defined time horizon would let you to find out the monthly contribution required for creating the corpuses, set an asset allocation strategy for each of them and help in making security selection. 3 Source: www.financialexpress.com START INVESTING EARLY • Starting early inculcates financial discipline and assists you to benefit from the power of compounding. • Due to the power of compounding, the gains generated from your investment start to generate returns on their own, thereby yielding a bigger corpus over the long run with much lower investment contributions. 4 Source: www.financialexpress.com INVEST IN EQUITY FUNDS • The best instrument available to retail investors to benefit from equity is to invest in equity funds. • Equity funds offer their investors the key benefits of professional fund management, adequate diversification and investment convenience at a very low cost. 5 Source: www.financialexpress.com OPT FOR THE SIP MODE • Investors lacking the skill to time their investments should opt for the SIP route while investing in equity funds. • Taking the SIP route also helps in ensuring regular investment, averaging their investments during market corrections and instilling financial discipline among the investors. 6 Source: www.financialexpress.com AVOID COMPROMISING YOUR EMERGENCY FUND • While you continue investing for the long term, ensure you build an emergency fund big enough to meet your mandatory monthly expenses of at least 6 months. • These mandatory expenses should include your daily living expenses, utility bills, insurance premiums, tuition fees of your children, EMIs, rent, contribution to your crucial financial goals, etc. 7 Source: www.financialexpress.com REVIEW YOUR INVESTMENTS AT PERIODICAL INTERVALS • Regular review of your funds’ performances is as crucial as regular investing in equity mutual funds. After all, even star funds with excellent returns in the past can remain laggards for a long time in the future. • Thus, ensure to compare the returns generated by your existing funds over the past 1-year period with their benchmark indices and peer fund schemes at least once in a year. 8 Source: www.financialexpress.com FOCUS ON THE FUTURE AND KEEP A LONG-TERM PERSPECTIVE • Investing requires making informed decisions based on things that have yet to happen. Past data can indicate things to come, but it’s never guaranteed. • While large short-term profits can often entice market neophytes, long-term investing is essential to greater success. 9 Source: www.investopedia.com BE CONCERNED ABOUT TAXES BUT DON'T WORRY • Putting taxes above all else can cause investors to make misguided decisions. While tax implications are important, they are secondary to investing and securely growing your money. • While you should strive to minimize tax liability, achieving high returns is the primary goal. 10 Source: www.investopedia.com DON'T OVEREMPHASIZE THE P/E RATIO • Investors often place great importance on price-earnings ratios, but placing too much emphasis on a single metric is ill-advised. P/E ratios are best used in conjunction with other analytical processes. 11 Source: www.investopedia.com
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