How to start investing for a useful purpose?

Investing had become the need of every person in today’s fast moving life and ever-rising costs. The matter raises how to start investing for a useful purpose.

How to start investing for a useful purpose

One should have a clear purpose and reasons for investing. It is a very important if one wants to invest successfully. Investing just because everyone other person is investing, then you will be unsuccessful.

Bodybuilders go to the gym, as they have a purpose to have a muscular body or want to develop six pack abs. If one has no purpose, then investing can be difficult, tedious and even dangerous.

Investing for a useful purpose

If you have a goal then one can track his own progress. If one is going out of course then it can be corrected. Or if moving slow, then it can speed up. Here are two purpose.

  1. Retirement investment

It is not possible to predict, what will be the cost of living few years or decades from now. How much amount, one will need to maintain the present lifestyle in future. It is this uncertainty and future rate of inflation that makes us plan for the retirement.

In these uncertain times, the investment made today will come handy after retirement. Present investments will help one to make a solid path once one’s working years come to an end.

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If you have a number of years in your hand, your investments will have more years to grow. Remember you have to fight inflation too. You have not only to defeat inflation by just a few percentage points. But have to get a good lead over it, as your money will not be worth as it is of today.

Risk-taking capacity decreases as one gets older. That is in future you will be making investments in only those instruments which carry less risk. Instruments which carry less risk, returns are likewise less. Another side of the coin is if you start young you can take greater risk for greater gains.

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Younger you start investments, earlier you learn about in’s and out’s of investments. Financial consultants are difficult to choose and are costly. So it is best that you manage investments yourself whenever possible.

If you are investing for retirement then it is a long-term investment. You will have to see for quality investment, which you buy and hold for long term. This will be your capital.

Your investment portfolio will be a mix of stocks, mutual funds, precious metals. And also FD, bonds, debentures, PPF and saving in a bank account. The proportions of mix change over time as you grow older. Moving from high-risk investments towards low-risk investments.

  1. Setting up small financial goals

Financial goals can be of short-term too, like buying a computer or high-end TV. The medium-term like going for a holiday abroad. Or buying a new car, alteration /modification at home, changing complete furniture, etc.

Investments can be also made to enhance your employment income. And help you buy those things that you want. Since investment changes with investor’s desired goal. It is not like retirement investments. It is a mix of the long and short-term.

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Like, if your aim is to buy high-end TV you will need short-term investment. But if you plan to buy a home than long-term investments will be needed.

Investment strategy should be in the line of your goal. That is if you wish to buy a high-end TV, in a year’s time than your investment strategy will be different. And if you wish to buy a new car or go for a trip abroad then your investment strategy will be different.

The most important thing is to set your goals first. Plan how much budget you will need. Once your goal and time frame is set. Other purposes like celebrating birthdays in a posh manner. Or other expenses which seem more important at that instant time can be cut down or decreased.

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It is exciting and challenging to achieve financial goals. You will be more motivated to learn about investments which give you better returns.

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