Many people shy away from investing because they don’t understand the process. However, if you break it down to its fundamentals, investing can be a great way to build wealth and achieve your financial goals.
You’ll have to do a bit of homework first – Plan your investments with top professionals, identify your short- and long-term goals and determine how much time you’re willing to invest. But most importantly, you’ll need to define your risk tolerance. This will help you choose the right mix of investments — stocks, bonds and mutual funds — for your investment portfolio. It’s also important to understand how different economic factors may affect your investment returns.
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For example, inflation can reduce the real value of your investment returns. Similarly, stock market fluctuations can lead to dramatic profits or losses. By diversifying your portfolio across different asset classes and avoiding risky investments, you can improve your chances of long-term success.
Moreover, proper investment planning will help you save on taxes. By investing in instruments that offer tax* benefits such as National Pension Scheme (NPS), term life insurance plans, endowment plans and ELSS mutual funds, you can increase your savings while reducing the overall tax burden.