By Irshad Mushtaq
Thorough research and a rational approach are essentials when investing in the equity market. Historical performance, comparison returns with Nifty, tax implications, GST charges on brokerage or investments, investment conditions, hidden charges, exit loads, lock-in periods, post-investment services, transparency, and trusted service providers must all be considered. It leads to more returns on right shopping matters in investment.
1. Historical Performance
– Review the past 1-3 years of historical returns for any product or stock.
– Compare these returns against benchmarks like Nifty 50 or Sensex to gauge performance.
2. Tax Considerations
-Understand the GST applicable on transaction services.
– Consider other taxes like Short-Term Capital Gains Tax (STCG) and Long-Term Capital Gains Tax (LTCG).
3. Investment Conditions
– Check for any withdrawal limitations.
– Investigate if there’s a lock-in period and its terms.
– Review if there are any morality charges (common in insurance-linked products).
– Be aware of hidden fees, such as management or transaction fees.
4. Flexibility and Exit Strategy
– Ensure flexibility in exiting the investment without hefty penalties.
– Consider liquidity aspects – how easily you can convert the investment into cash.
5. Objective Decision-Making
– Treat investment decisions like a business transaction, devoid of emotions.
– Prioritize data-driven insights and rational analysis over gut feelings.
6. Compound Interest Impact
– Understand the potential growth via compound interest.
– Example:
| Interest Rate | 5 Lakhs After 20 Years |
| ————- | ———————- |
| 8% | 23 Lakhs |
| 12% | 48 Lakhs |
| 15% | 81 Lakhs |
| 18% | 1 Crore 36 Lakhs |
7. Research and Guidance
– Perform comprehensive research on chosen investments.
– Seek guidance from trusted financial advisors.
8. Post-Investment Services
– Evaluate the post-investment services offered by the platform or advisor.
– Ensure consistent, reliable post-investment support.
Conclusion
Investment is a careful blend of patience, research, and rational decision-making. By considering these factors, you safeguard your hard-earned money and potentially maximize your returns. Always aim for an informed approach rather than emotional decision-making to secure the best outcomes.
- Learn from the insights of writer, investor, entrepreneur and founder of MI Securities! Connect for valuable financial advice at [email protected]
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