Too many investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More options? You are not sure where to invest and how much to invest?
Here is an easy way to help you decide where to put your money.
Divide your investments into three buckets
- Safety
- Long term
- Fancy
Bucket one as you can see is for investments where the emphasis is on the safety of your capital and stable returns. It could be money you need in the next few months or in the next 2-3 years. You cannot afford to lose any of it and hence, invest only where you are comfortable that your original investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More value will be safeguarded for the period you remain invested.
Bucket two is for those financial goals that you have in the future and you know you need to start preparing for from now itself. Your current income can be very useful towards future goals. These investments are typically in growth assetsGrowth assets as against fixed return assets are those which grow your capital or principle investment. The most common forms of growth assets are equity stocks and property. Investing in equity stocks means you buy a portion of the underlying... More like equity and real estate, value can fluctuate in the next few months of a year or two but accumulates over the long term period of 7-10 years.
Bucket three is for all those exciting investments you don’t really understand. Cryptocurrencies, NFTs, unlisted equity, start-up investing – along with the safe investments you also want some spunk – that’s your fancy investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More bucket. But remember not to put more than 5% – at most 8%-10% in this bucket – so that you can make money if it goes right but you don’t lose too much if things come crashing down!
Also read:
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Money Diary – What should you do when markets correct?
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