2016 was not a good year for investors because there was a huge fall in equity market due to demonetization. On the flip side, it had been a good year for those who parked their money in debt and gold investments. Many investment experts believe that this situation is likely to continue during 2017 as well. So, to reap profit out of investment, the first and the foremost tip would be to keep on investing to earn a fortune after a few years. It is not necessary that you should stop investing in equity and keep the money idle till the market situation revives, there are certain other things which you can do to be a prudent investor in 2017. Here are the 5 tips for better investment in 2017.
Invest in sectors that will perform better this year
Following a slump in market performance after the demonetization step taken by the prime minister, the investors should keep in mind to invest in sectors that are gearing up to recover after a huge hit, last year. According to Devan Choksey, investing in stocks of capital goods companies, metal, cement companies would help you to earn a decent amount this year. This is because of the several positive measures were taken in the Union budget to help improve rural and infrastructure industries in India. Investors can choose IT, Pharma companies and even FMCG that are expected to perform better, this year.
If you want to be a wise investor, calculate the inflation for at least 5 years to have an idea about how much you will get back as returns from investment. For example, you are going to lock in your investment for the coming 5 years, you should factor it for inflation to know the actual profit or the returns you are expecting to earn after that period of time. Then only you can assess whether you have made a wise or poor investment decision. After factoring you will come to understand how much percentage your money has grown. If it had grown in par with inflation, you are sure to earn a profit. Otherwise, you are likely to suffer a loss.
Know the tax implications on every investment
We all know that every kind of income is taxable in India. Don’t opt to invest in any of the options without figuring out the implications of tax upon them. Moreover, all the returns you get at the end of the holding period is not completely devoid of tax. You should understand the nature of investment first before going ahead with the decision of investing in a particular option.
Basically, there are two methods through which you can earn a profit in the market. The first option is to be an investor. The second one is to be a trader. The first category of people, trade sparingly in the market but keep the investments for a long time. On the contrary, the traders trade with their investments on a day to day basis. Understand the tax effect on investing for a long time or a short time because one pattern of investment that suits your co-investor or friend may not suit you.
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Know your portfolio in and out
Before finalizing on which one option to invest, have a clear understanding of your own portfolio. While deciding to invest in a particular plan, consider the pros and cons of such a decision. Ask yourself some questions to make sure that you have a foolproof plan to keep you safe during money crunch. The first question you have to ask is whether you have a diversified portfolio? Do all your options bring you profits? Are you getting a balanced return on investments? Are you happy with the returns before considering to choose a new option to park your money? If you get a clear answer to all these questions, it will help you to find an answer for your last question, whether you will invest additional money in existing options or in any other better options available in the market?
Have you come across people who say investing in stock or share market is extremely risky? This clearly indicates that these people are not yet prepared to take risks in their life. Their risk appetite is too low that they get upset when all their calculations go wrong. Can’t we find all the advertisements flashing on your TV screen with a statement ” All kinds of investments are subject to market risk? So, invest after reading the investment document and knowing something about the knack to earn a profit.
If you are a novice and can’t bear too many losses, think of relocating some of your funds in debt investments or gold investments to neutralize the effect of the sharp losses in equity markets. You should have patience in order to earn money in the market.
These are the five tips for better investment in 2017.