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| Think before |
The attraction of investing in shares in the stock market is the chance of making some quick money; good returns over the short term. Here are some tips on how to approach the market wisely, and make an informed decision:
- Do your research.
If you are a first time investor, make sure you research the market thoroughly. What is the stock market, and how does it work? What is the difference between securitiesand private trading? Basic knowledge of the stock market can save – and make – you money.
- Calculate your risk.
“Buy low, sell high” is much easier said than done; investing in the stock market can be risky, and it’s worth your while to carefully calculate the risk involved before you plan to invest.
- Choose the right company.
Basic knowledge of the stock market is only the first weapon in your arsenal. It is a good idea to do background research on the companies whose stock you’re planning to invest in as well. Knowledge is power, and it will pay off to be as informed as possible.
- Ignore market rumours.
You’ll never run out of sources for free advice, whether it’s from magazines, veteran investors, or self proclaimed “experts”. It’s a good idea to not accept these“sure thing” shortcuts; putting in the work to do your own research will definitely pay off in the long run.
- Don’t put all your eggs in one basket.
By diversifying your portfolio, you’re spreading out your assets and minimising your risk. To invest heavily in one company in an all-or-nothing bid can sometimes work in your favour, but can just as easily lead to you losing your hard earned money.
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| Think before: Tax Planning |
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- Evaluate your options
Know the options, risk associated and lock-in period associated with the tax saving investment option under Rs. 1 Lakh Limit (Section 80 C)
- Choose your objective
Know the capital gains tax treatment (short and long term) of the investment option
- Plan cautiously
Hurriedly investing lump sums as a quick tax saving scheme could have potentially adverse results. You also lose on one of the biggest benefits in investment: the power of compounding. Think carefully before investing; never rush in!
- Health is wealth
Invest in a health insurance scheme, if you don’t already have one. It’s a smart tax saving tool on a premium of upto Rs. 15,000 p.a., and gives health cover as well!
- Avoid rush hour tax planning
Don’t leave tax planning to the last minute. This may create a liquidity crunch. Plan your taxes well in advance, and invest at regular intervals rather than in a lumpsum.
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