INVESTMENT - A CORE DECISION MAKING PROCESS

Investment is an core decision making process. Decision of making investment in any instrument is very important from the point of view of both return and risk. Investment in an three way process, it means investor should follow the following steps before making any investment

STEP 1. THINK BEFORE YOU INVEST

Firstly, the investor must think in which instrument he wants to invest his hard earn money. If he is of conservative nature then he should opt for instruments which provide least risk. Generally instrument with least risk element provide less return, for example, investment in government bonds, bank fixed deposit etc, these instruments provide least risk which is generally known as safe investment option but these instrument provide interest ranging between 7% to 11 % p.a depend upon tenure of investment.

If he is of moderate nature then he should involve risk element in his portfolio, which provide more interest than of conservative nature investor, for this purpose, he may invest in SIP in diversified mutual funds which offer higher return

But if investor is of aggressive nature and ready to take risk, then he should invest in equity market which gives highest return as compared to the other two, but in this case the risk is highest, an investor may suffer heavy losses.

STEP 2. UNDERSTAND YOUR INVESTMENT INSTRUMENT

Secondly, investor must read all the investment documents carefully, he must aware of the return and risk attached to the investment

STEP 3. INVEST IN THE INSTRUMENT

At last, he should invest in the instrument after reading all the documents, and his portfolio needs.

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