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5 things to do before you open an investment account

An investment account is a facility offered by fund houses, wealth management firms and advisory groups. This shows all your investments in one screen.

Investing is one of the main topics of conversations among your colleagues. And you can’t wait to start investing and have an investment account for yourself. You dream of seeing your investment account run into lakhs and crores and always in green.

investment account

An investment account is a facility offered by fund houses, wealth management firms and advisory groups. This shows all your investments in one screen. However, the kind of investments will vary from organisation to organisation. For. E.g., in Kotak’s Investment Account, you can view all your investments in different fund houses and check how it is performing. Through the investment account, customers can set up a systematic investment plan, systematic transfer plan and invest additional amounts towards their investment. In short, it gives a consolidated view of the entire portfolio.

Planning is required before you start anything. As you can’t expect to crack CAT with no preparation, the same is the way with investment.

Here are some of the things that you should keep in mind or be prepared before you open an investment account.

1.Have an emergency fund

What is the first thing that it is done before a tall skyscraper is built? A strong foundation is built in the ground. It takes some time and once it is built, a tall skyscraper can be easily built. If the foundation is not strong, then the building will crumble. Similar is the case of investing too, you need to have a strong foundation.

One of the pillars of such a strong foundation is having an emergency fund. The emergency fund supports your investments. This helps you to tide over unforeseen circumstances.

Whether it is a job loss or car break down or you are faced with any other such emergency, you can easily redeem money from your investment account. Ideally, you should have at least 6 months of expenses in your emergency fund.

2. Figure your goals

We have heard the story about Arjuna and the bird’s eyes since we were little kids. Focusing on the bird’s eye is very important in investment. There is probably a no better test of your discipline than investing.

Having clear financial goals will help you to stay on track and ignore the noise. You may have not thought about financial goals, but some financial goals are basic and will apply to everyone. One such goal is retirement.

Other goals will include marriage, child’s education, etc. So even if you are yet not aware of your goals, some of these simple goals are good to start with. Maybe you don’t want to get married or have kids, and you may want to set up a million-dollar business, then you can start investing with that goal in mind.

Whatever is your goal, whether to open your business, travel the world or buy a house, just focus on the financial goals.

3. Gain knowledge about the different options:

There are different investment options: mutual funds, direct equities, real estate, gold, etc. But not everything will be right for you. It is important to find out the investment option that will work for you. You can only know what it is right for you after you consider the features of the different investment asset classes. There are several online tests as well that you can take to check your risk-taking capacity. Also, you need to make sure that the options are in line with your financial goals.

4.Take help

Finance and investing is not everyone’s cup of tea. Especially, you are starting. If investing looks mumble jumble to you, take the help of a financial advisor. The financial advisor will help you to decide to right on the financial products. They will help you to formulate a financial plan and hand-hold you during tough times.

5.Develop emotional intelligence

Investing does not need a lot of IQ or technical knowledge. The main thing that needs to be built is the emotional quotient. Because investing at the end of the day, is just a mind game. There will be times when you will be torn between your heart and mind. And, it is during this time that you have to be emotionally intelligent and listen to your head.

So, these are the five top things that you need to keep in mind before you open an investment account. Proper investment can help you achieve your financial goals and create wealth. But lack of proper planning can also derail your finances. Hence, it is important to keep these few things in mind before investing.



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