Life is not simple. It does not merely revolve around the maxim “Eat, pray and love”. For most of us, the world around us comprises of responsibilities and these are towards ourselves and our families. Each of us has been trained to believe, since we were kids, that money is very important. It is not the end but it is the means through which you can see your responsibilities being fulfilled and dreams coming true.
When it comes to Money we have to talk about investments & investors. This post is written by Vikas Agarwal – he is Director in our company & takes care after Fund Sketch Service – Goal Focused Investment Planning
Signs that you are a Good Investor
What would you rate yourself on a scale of 1-10 as an investor? We have given some indicators to help you assess your investment quotient –
- Assessment of your knowledge – How much do you know about investments? Are you some one comfortable dealing with shares, mutual funds and comparing products and selecting the better ones for your financial needs? If you are someone who can manage your investments on your own and keep yourself updated in this topic, you do not need any assistance. But if you are someone overwhelmed by financial instruments, calculations of returns and taxes and would be constantly paranoid about how an investment that you bought would do, then you should use the services of financial planners or investment adviser. If you are able to assess yourself realistically and take necessary steps, you are a good investor.
- Be aware of the financial instruments and investments you own – Do you know how much you own? Do you have an idea of your financial networth? If you are aware of the range of investments be it fixed deposits, mutual funds, insurance policies that you have or have documented it and have access to it easily, you are doing a good job. You should review your investments once a while so that you can assess if they fit your financial plan.
- Make a financial Plan and Review it Regularly – You are a good investor if you have made a financial plan, execute the financial plan and review it regularly. Just making a financial plan is not enough.
- Plan of Action during an emergency – What will you do in case of an emergency which requires finance –
- – Withdraw from your PPF prematurely or taking loan
- – Sell equity mutual funds
- – Use the money kept aside for emergencies as cash, in bank accounts and liquid mutual funds.
- => If the last option is your answer, you are a smart investor. The other options are actions which will upset your financial plan.
5. Rebalancing Portfolio and Asset Allocation – When did you last have a look at your portfolio? Depending on your stage (single, married, retired), risk profile and financial goals as a good investor you should
- – Check the asset allocation in your financial plan. It is important to have the right asset mix. For example, if you are in you are married and in your 40s, you should think about saving for retirement.
- – Review and rebalance your portfolio regularly
- – Have a mix of various types of assets so that returns are maximised and risk is minimized.
6. Invest not only in money – A good investor understands that money is not everything. He/She invests time and money in all aspects of life. You are a good investor if you Invest in increasing your knowledge in different aspects, spend quality time with family and loved ones, invest in learning and doing what you like. This will make sure that the quality of life is enriched. Must Read – Good is better than Perfect
7. Do you feel a uncertain about the investments that you made? – It is a sign of a good investor as it means you are thinking about it and will make an effort to be updated on what is happening to that investment. If for some reason, there are signs that the investment is not going to be worthwhile, you will try to take steps to mitigate losses. But if this brings lot of tension & if you have realised that most of the time you make wrong decisions – this is not a good sign.
If you are aware of your investment skills, you can take the necessary steps to achieve continuous financial growth. Hope the points mentioned above helps you in evaluating yourself as an investor. Do let us know what you think of yourself as an investor?