Everyone has financial goals. And buying a house for the family comes somewhere at the top of the list for most Indians. This is a very important milestone when it comes to investment planning. However, the scope of real estate investment is more than that. In fact, investing in real estate offers an opportunity to make good financial returns. Here’s how:
1) Rent a house (or even a room)
Don’t know anything about real estate investing? Don’t worry. You can start small if you are a beginner. Do you have a spare room or an apartment at the moment? If so, you can take in tenants and earn a steady monthly income. This is a good way to earn returns on an asset instead of letting it sit idle. So, even if you earn around Rs 5,000-6,000 per month, it can become a substantial corpus by the end of a couple of years.
2) Buy, fix, sell
One of the best things about investing in real estate is that there are loads of opportunities. Look around your city. There can be a lot of underpriced homes. For example, imagine you find an old house that is in a good area in the city.
Here is what you need to do:
Many people call this as house-flipping.
You can also invest in real estate through Real Estate Investment Trusts (REITs). These are companies that own commercial real estate such as apartments, hotels and retail spaces. All REITs are listed with the stock exchange and investors can directly invest in properties. Buying commercial real estate can be extremely costly and out of the reach of regular investors. Through REITs, you can participate in ownership of commercial real estate without having to actually buying commercial real estate. As a result, investors with budgets as small as Rs 2 lakh can explore the real estate sector and make profits.
4) Real estate stocks
What if you don’t want to invest directly in real estate properties? Well, there is another way. You can invest in stocks that operate in the real estate sector. There are a lot of real estate companies such as DLF, Oberoi, Unitech that are listed in the stock market. By carefully researching these stocks, you can invest and earn good returns.
These days, there are lots of investment opportunities for investors in the real estate sector. India is a developing country and there is huge potential for real estate. And the best part is, you don’t actually have to buy a house to invest in real estate!
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
A lot of investors around the globe prefer mutual fund investments for wealth creation. This is because of the immense scope and ability of these funds. These funds range over a wide spectrum of variety. Based on your requirements, you can select funds for capital preservation, steady income or high returns in the future. And if you are a novice in investments, this is perhaps the best way to get introduced to financial markets.Here is how you can invest in mutual funds:1) Be KYC compliantIt is very easy to buy mutual funds. In fact, you can purchase funds online. But in order to do it properly, you need to have all the necessary documents in order. Ensure you are KYC compliant. If not, you can fill out the KYC individual form to become compliant. Here is a list of other documents you need to provide:a) The duly-filled application formb) Identity proof (PAN card, passport, voter’s ID or Aadhaar Card are applicable)c) Proof of address (passport, driving licence, ration card, insurance copy)d) Cheque for the investment amount (SIP or lump sum)e) Third-party declaration form (in case of minors) 2) Identify your investment goalsIt is important to have clear-cut investment goals. There are many different types of mutual funds available in the market and each fund has a specific goal. For example, if you wish to avail tax benefits, it is suitable to invest in Equity Linked Saving Schemes (ELSS). If your goal is to earn steady returns, it is best to invest in debt mutual funds. 3) Assess your risk profileEvery investor has a different risk appetite. For example, equity funds invest predominantly in the stock market. These funds have the potential to offer higher returns. But they also come with higher risk when compared to debt funds. Similarly, sectoral funds invest in a specific sector only. So, if a fund has invested in the IT sector, you could be exposed to high risk if the sector crashes. Investing in these kinds of funds without knowing your risk tolerance level can result in losses. 4) Select the right fundsOnce you know your list of investment goals and your risk tolerance level, investing becomes easier. There are different kinds of mutual funds. This includes: 5) Maintain an age appropriate portfolioAs you grow older, your goals and ambitions change. Similarly, your mutual fund portfolio must change too. At the beginning, it may be better to invest more in equity funds to earn higher returns. But as you near your retirement age, it is better to shift your investments to safer funds like debt funds or balanced funds. This way, you can preserve the capital during the sunset years of your life. You don’t want to lose a major chunk of your investment money at such as stage in life. 6) Invest through SIPsOne of the best features of mutual funds is the Systematic Investment Plan (SIP). As an investor, you don’t need to bother about rising and falling markets as long as you continue to invest regularly through SIPs. All you need to do is invest a specific sum of money on a regular basis. This can be monthly, quarterly or even annually. Based on your investment budget and goals, you can decide how much you want to invest. There are many funds that allow you to start a SIP with Rs 500. Over time, you can increase the amount you invest so that you can earn higher returns. ConclusionWith a strategic investment plan, you can invest steadily in mutual funds and earn an envious warchest to meet your future goals like buying a home or creating a retirement fund. And the best part is you can do it very comfortably. Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
Imagine that you and your friends have decided to go on a road trip from one end of the country to another. One option is to just wing it. Get into the car and see what happens next. Nine out of 10 times, this ends up in a disaster (the only time it is successful is in movies). On the other hand, you could plan the trip well in advance and have a blast! Get a map, ensure there is plenty of food and water, have a spare tyre in case the car breaks down. And music, don’t forget to have good music.Similarly, investing money can be seen as a lifelong journey. And to do it successfully, you need to have a good investment plan.In this article, let’s find out how you can make an investment plan so that you can earn good returns over the years.Anatomy of an investment plan:1) Establish your financial goalsWhat are the different financial goals you wish to achieve in the coming years? Write down all of your goals on a list of paper. Sam, a 25 year old engineer has the following goals: Everyone has different investment goals. And the first step to achieve these goals is to identify them and outline them as clearly as possible. 2) Analyse the different investment optionsThe great thing about investing is that there are lots of options to choose from. A lot of investors think that it is enough if you identify a good investment option and put your money in it. That’s the wrong approach. Your investment strategy should be goal-based. This way, you can find the right avenues to invest your money. For example, to create an emergency savings fund, investments in fixed deposits or short-term debt funds is a good option. For a long-term investment goal like retirement, investment in equity funds is more suitable because it has the potential to provide high returns. 3) Risk and return: Ensure there is a balanceWhen it comes to investments, there is always a degree of risk. Whether it is a savings bank account or the stock market, you cannot avoid risk. However, the degree of risk varies from one investment option to another. It is commonly said: higher the returns, higher the risk. So, it is very important to choose an investment option that matches your risk tolerance level and also helps you achieve your goals. For example, you may not want to invest in stocks because of the high risk involved. But that doesn’t mean you cannot invest in equities at all. Through mutual funds (balanced funds, index funds), you can invest in equities and minimize your risk. 4) DiversificationEveryone knows the saying: don’t put all your eggs in one basket. But when it comes to investing, it is important to put this saying into practice. Putting all your investments in a single option is dangerous. For example, imagine you put your entire investment amount in equities. The market may be performing exceedingly well. But if the market crashes all of a sudden, you could lose your entire money. Try to split your investments into different avenues such as stocks, bonds and savings accounts. Another way to diversify is to invest in index funds. 5) Evaluate your progressRemember that road trip you plan to take with your friends. Once you reach a certain stage, you may want to whip out the map (or Google maps on your phone) and see your progress. Are you on track or did your friend take a wrong turn and you are nowhere near your destination? Similarly, you need to check your investments once in a while to ensure they are performing as per your plan. As you grow older, your goals may change. At such times, you need to incorporate your new goals into your investment plan and create a strategy to achieve these new goals. This way, you can ensure that your investments are working for you in the right way. ConclusionA plan helps you put your goals into a tangible and actionable form. By creating an investment plan, you can clearly see how much you have progressed year after year. So the first step of investing is to create a plan. And the important part is to stick to it, unless there is no other option but to change it (refer point 5). Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
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