10 simple ways to make more returns than others

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There are so many tips that we often hear investment analysts often give to investors for investing. Here are a few simple tips that investors should follow to help them get superior returns in the long term. The key to investing continues to remain a strong disciplinary approach. 

Invest at regular intervals

An individual should make sure that he or she invests regularly, preferably every month. If you receive a bonus or special incentive as part of your income make sure you plough it back into saving instruments. Remember, if you have plans like building a home, you require substantial amounts and regularly investing would help. 

Start investing early in your career

The earlier you invest the more you can save. There's nothing like saving early, in fact, as soon as you start your career. Remember, compounding helps in earning higher returns, which is why investing early can help.

You can never guess market movement

What we mean by this is that it's difficult to determine the exact time to buy or sell. This is particularly true for those planning to invest in the stock markets. It's almost impossible, to get a precise timing. Stock markets fluctuate and there is no guarantee that you would be able to guess the exact time to buy or sell a stock.

Investing for the long haul pays

Whether it's shares or debt, investing for the long term helps you to make more money. In debt instruments the compounding helps gain superior returns over the long term, while in equities share values tend to rise over a longer period of time.

Check for real return

Taxes will eat into your returns, particularly interest income. Make sure you plan efficiently for taxes. You may need professional help in this regard.

If you get a 10% return, remember to factor the tax component, which means your real rate of return will be lower.

Do not put all eggs in one basket

Diversify your risk. Do not invest in just one asset class. Invest in a number of asset classes including, debt, equity, gold and real estate. This way you would have hedged your risk, should one class of asset fall. 

Risk ability changes with age

If you have reached an age closer to retirement, it's time to stay put in debt. At an early age you can take risk in equity investments to make money. So, view your age and risk accordingly.

Made money? Get out of an investment

If you have made money in a particular investment make sure you encash the profits. Sometimes, greed does not pay. This could be true for investments like gold, shares etc.

Wait for investments to stabilize

Though you should sell and make profits, never sell in a haste, whether it is equity, real estate or gold. For debt instruments it's a different story altogether.

Time will teach!

It's a good idea to learn from past mistakes. This would help in the long run to avoid tripping over the same stone again.

Read more about: savings, debt, equities
Story first published: Saturday, October 11, 2014, 8:40 [IST]
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