In our series of blogs, we were discussing about the importance of child education, investment options for parents and identifying the time horizon.
In this blog we are going to analyse about the invest, what time horizon is required for growing your investment.
As an amateur investor, the very first question that comes in our mind is how much amount should I minimum invest?
As per financial investment thumb rule, minimum investment should be 10% of annual income. For example, if your earning is 1 lakh per month and the annual income is 12 lakhs, the minimum invest should be 1.2 Lakhs.
The major things to be taken into account before starting an investments are:
If you have any existing loan especially with higher rate of interest.
If you have sufficient emergency fund, if not monthly some amount need to be set aside in case of any emergency
Calculate your regular expenses per month
Before investing, one must always try to invest in a diversified pattern.
What is diversified pattern in investment?
A diversified investment is a portfolio of various asset that earns highest return for the least risk. For example a diversified investments can be
- Term insurance ( protect against uncertainty )
- Small savings like recurring deposit
- A regular monthly savings of Rs1000 to Rs15000 in 2 or 3 Mutual funds like sip (systematic investment plan) to maximise the profit.
Our major goal should always be to maximize our investment to beat the inflation. All the investments need enough time (minimum 7-10 years) to grow to meet our requirements.