Keeping some money aside – be it for saving or investing – may feel important right now, given the pandemic we are in. Most people at the start of their career do not think about investing or saving immediately, and postpone it to a few years later, thinking they will have more money to spend and save then. According to experts, that’s a wrong approach as the cycle never ends. Hence, if you are planning now to put some money aside, start with something, even if it’s a small amount, which can accumulate into a big amount if given enough time. With investing early you have a big advantage, for instance, you can not only plan your investments but also give them enough time to grow into a corpus that meets your goals.
Hence, a good headstart can make all the difference. Along with that if you move from one goal to another with your accumulated savings, you will not be left with anything for your long-term goals. Therefore, it is important to not just save money, but finding the right balance and mix in investing. A tilt, however, small may be in degree, it changes the end result.
Before investing, it’s very imperative to start laying out clear goals and objectives and also understanding the current financial situation. Additionally, be mindful of the risk appetite and get the net worth done with assets and liabilities.
Archana Elapavuluri Co-Founder, CEO, Pickright Technologies, says, “In this new age of digitally native users, the meaning of the short term and long term is changed. Earlier anything less than 3 years was considered to be short term, and short-term investments are FDs, Bonds, Stocks, and a few types of mutual funds. But now the short term is also considered day trading, anywhere between intraday to 6 months is now considered short term. We are in the instant gratification era where everything has to happen now! Long term is now considered anything beyond 6 months.”
Having said so, try to think beyond a few months or a year. Hence, it is important to align your short-term goals with short-term investments and long-term goals with long-term investments. As a thumb rule, use debt investments for your goals which are within 3 years, and then rely on equity for goals beyond 5 years.
Experts suggest, among the few things that every investor should be aware of, is to not come under influencers, rumors, and gossip, despite whichever path they choose, be it short term or long term. There are people who spend months or years to come up with a fool-proof investment plan, which is a fool’s approach. There is no guarantee you will come up with the best plan and most importantly – you lose out on future returns. For a clearer path, take the help of financial experts, they look at the previous history and stats and then make informed decisions.
Elapavuluri says, “Choose fundamentally strong stocks and invest in sectors where technology is embraced. My thesis is to park a large portion of the money in long-term investing and trying out a smaller portion in short-term investing. Everyone needs to be financially literate and look out for the right entry and exit, whatever may be the investment strategy.”