A few smart investment ideas to maximize wealth

Published: Tuesday, May 15, 2012, 17:08 [IST]

Everyone in life aims to become rich, wealthy and improve their standard of living. If you have just started your career and planning for investment in various instruments, here are a few tips you should conider before investing.

Invest in fundamentally strong companies

Invest only in fundamentally strong companies, which will handle market fluctuation and perform well in the long run.
Also invest in strong stocks that are also liquid stocks.
Do not go for momentum or penny stocks.

Diversify your portfolio

Diversify your portfolio to hedge against risk.
Prioritize your financial commitments and allot funds according to that.
Always plan for long term investments, which will fetch you better returns.
Follow lifecycle investing.

Learn to sell

Most investors buy and hold on.
Set the profit target and sell.
However, don’t be impatient on short-term market fluctuation.

Cheap shares are necessarily not worth buying

There is famous saying that do not chase price, chase value.
The price may be low because the face value has been split.

Greed will make you easy prey

Do not invest emotionally, stay focused on your goal.
Make decision on logical basis not emotionally.
Be careful, many scamster are waiting.
Don’t get carried away by advertisements.
Also beware of the get-rich schemes being sold through SMS and emails.

Don’t get overwhelmed by sectoral frenzies

The present sectoral frenzy is around FMCG.
Remember, all companies in a sector are not good. Each sector will have some very good companies, some reasonably good companies and many bad companies.
Be also wary about companies that change their names to reflect the current sectoral fancy.