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Start Early, Stay Invested and Diversify to Earn Maximum Returns on Your Investment

By Sonal Upadhyay - Jul 11,2019
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Everyone has life goals, such as buying a house, dream wedding, securing child dreams, worry-free retirement and so on. These goals require a substantial financial investment to convert into reality. A habit of saving early in life pays off later, when you can draw from your accumulated savings to fund your dreams. A small amount saved at regular intervals for long time will give you a lump sum corpus to fulfil your goals. As against this, if you have less time at hand, you cannot afford to bear losses that high risk investments entail. There’s also little time to recover those losses. Early investment provides you freedom to take higher investment risk and choose the best investment plan with high returns.

Why Start Early?

Starting early and staying invested for the long run will help you reap benefits from the power of compounding. So, if you start planning for your retirement kitty at the age of 40 years, you’re likely to save much less than what you will receive if you start at 25 years. One can earn an advantage through most ups and downs of the market over a long period.

How and Why Should I Diversify?

When you invest in Unit Linked Insurance Plans (ULIPs), to create a versatile portfolio, it is best to spread your investment and therefore, your risk, across different asset classes. Diversification hedges your risk against losses and is the most important component of reaching long-term financial goals while minimizing risk. If equity markets look significantly expensive or overvalued, one can switch from equity mutual funds to debt funds and switch back when equity markets correct substantially. If you feel that you don’t have the time or the know-how to actively monitor the fund movement and manage your portfolio, you can try using the systematic switching options available with many ULIPs on Finserv MARKETS.

It is very essential to identify your risk appetite for investment planning. Apart from an understanding of your long-term life goals, you also need to analyse your ability to handle volatility or unfavorable outcomes.

The asset allocation is based on your investment goals, investment period and risk appetite, and is the primary determinant of the portfolio’s return. While staying invested as per your allocation is imperative, it is also important to have a diverse set of assets for this to work to your advantage. There is no perfect mix that works for everybody, so one needs to make sure their allocation is suitable for their individual goals and risk appetite.

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