If you keep your savings in a bank account, it won’t give you returns that you need or want. Hence, to choose the best long term investment option to get higher returns has become a major concern of Indian people. In this article, you will discover the ways through which you can easily choose the best long term investment options in India.
Best long term investment options in India | Diversify your stocks
Diversification is always beneficial in the long & short terms. It is the process where you distribute your risk across different bonds, stocks, mutual funds & other instruments. This decreases your risk & you can benefit from higher returns in the long run. Remember one thumb rule. Don’t invest beyond 10% in a stock or other option from your portfolio. You can invest through diverse geographic areas to get the benefits of the same. You can diversify through various commodity funds, property funds & hedge funds. This prevents you from complete loss if any one sector underperforms.
Best long term investment options in India | Research well before investing
It’s a good practice to research & consult from different sources available before you invest. Also invest in companies whose strategies & products you are satisfied with. You can use sources like the internet, experienced professionals, certified financial planner (CFP), etc, to arrive at an appropriate decision. The past performance of a product cannot guarantee you of the same performance in future. However, you should also consider such factors while you make any decision. Also check for low management fees.
Best long term investment options in India | Carry on the star performers and sell off the under dogs
Always analyze your investments & evaluate their performance with current market index. If there are few stocks that perform well, it is apparent to sell them & claim profit. On the other side, if you look for a long term approach, then you should keep investments that grow your portfolio over the long term. Hence, when you get good returns, treasure & maintain those investments. Otherwise, sell those options which underperform in your portfolio. Also don’t get attached to a stock for mere emotional reasons. Sell the underdogs & move ahead with the stars.
Best long term investment options in India | Reinvest your dividends
An interesting fact to look upon is that a major influence for overall growth of many portfolios does not come from the appreciation of stocks. However, it is due to the reinvestment of dividends obtained. A three percent yield may seem small. However, it makes a lot of difference over a span of time. You should select a few investment products that have a good history of dividends. After you select you must utilize these to grow your portfolio.
Best long term investment options in India | Take the long view and always be contrarian
It is always recommended to sell off the worst performer stocks at the time the market is in boom. When the market shows an upward trend, buy more stocks. Always have a long term view set in your mind. If you want to prevent your funds from commission of agents then don’t make frequent trades. Don’t panic if the market underperforms occasionally. There is always a new opportunity that opens its gates. You just need to keep your eyes & ears open & carefully analyze before you make any decision.