5
Important Questions to Ask Yourself Before You Invest..!
A.G.V. Srinath Vijay, Co-Founder.
https://gbvmfservices.in/, ARN-148604
Most people
begin investing by asking questions such as: Which investment gives the highest
returns? Which company offers the best fund? Which sector is growing right now?
These are common questions, but they are not the most important ones.
A successful
investor first asks questions of themselves, not of the market.
The success
of an investment does not depend only on choosing the right scheme. It depends
on whether that investment suits your financial goals, time horizon, risk
tolerance, and overall financial situation. Before investing, you should
honestly answer a few fundamental questions.
1. How many years am I going
to keep this investment?
This is the
most basic and important investment question.
Money that
will be needed within the next three years may not be suitable for long-term
growth-oriented investments such as stocks or equity mutual funds. Similarly,
money that will be needed after fifteen or twenty years may not grow enough if
it is kept only in short-term options such as liquid funds, debt funds, or
fixed deposits, because inflation can reduce its real value over time.
For example,
if you are investing for your child’s higher education fifteen years from now,
equity mutual funds may be an appropriate option. But if you need money within
two years for a home down payment, safety and stability should be the priority.
In that case, short-term fixed deposits or debt-oriented investments are
generally more suitable.
2. Will I continue investing
if the stock market falls by 20%?
Market ups
and downs are normal in equity investments.
However,
many investors stop investing or sell their investments when the market falls.
This is one of the biggest obstacles to long-term wealth creation.
Ask yourself
honestly: If my investment falls from ₹10 lakh to ₹8 lakh, will I remain calm
and continue investing?
If the
answer is no, your ability to tolerate risk may be lower than you think. In
that case, you should reconsider your portfolio allocation and choose
investments that better match your comfort level.
3. Do I have a separate
emergency fund?
Having an
emergency fund is essential before you start investing.
Unexpected
events such as job loss, medical expenses, family emergencies, or major repairs
should not force you to withdraw your investments at the wrong time.
As a general
rule, it is advisable to keep three to six months of household expenses in a
place that is easily accessible, such as a savings account or a liquid mutual
fund. An emergency fund allows you to continue your investments even during
difficult periods or market downturns.
4. What is the purpose of
this investment?
“I want to
make money” is not a financial goal. It is only a general desire.
Your
investment should have a clear purpose.
For example,
you may be investing for:
·
Your
child’s higher education
·
Marriage
expenses
·
Buying
a home
·
Retirement
·
Additional
income
·
Long-term
wealth creation
When the
purpose is clearly defined, it becomes much easier to decide how much to invest
every month, how long to invest, and which investment option is appropriate.
5. How much of my total
portfolio is invested in this scheme?
A good
investment is not a reason to put all your money into one place.
No
investment provides complete protection by itself.
If your
total investment portfolio is ₹20 lakh and ₹15 lakh is invested in a single
scheme, you are taking a significant concentration risk. Diversifying across
different funds, asset classes, and investment time horizons helps reduce risk
and improve long-term stability.
Key Questions to Ask Before
Investing
|
Question |
Why
it is important |
|
How many years will I keep this investment? |
Helps determine the right investment option. |
|
Will I continue investing if the market falls by 20%? |
Helps assess your risk tolerance. |
|
Do I have a separate emergency fund? |
Prevents the need to stop or withdraw investments
prematurely. |
|
What is the purpose of this investment? |
Clarifies financial goals such as education,
retirement, a home, or wealth creation. |
|
How much of my total portfolio is invested in this
scheme? |
Helps avoid excessive concentration in a single
investment. |
Test Your Mindset Before You
Invest
Profitable Investing Begins
with the Right Questions
Earning high
returns is important, but avoiding major losses caused by poor decisions is
even more important.
The first
step is to ask yourself honest questions.
Instead of
asking whether a scheme is good, ask whether it is suitable for you. Evaluate
your investment time horizon, financial goals, risk tolerance, emergency fund,
and overall portfolio structure before investing.
When your
investments are aligned with these factors, you are more likely to stay
invested through market ups and downs and build wealth over the long term.
Spend a few
minutes answering these questions before making any investment decision. Those
few minutes can make a meaningful difference to your financial life for many
years to come.
For More details and Investing
A.G.V.
Srinath Vijay, Co-Founder.
https://gbvmfservices.in/, ARN-148604
He is a
Qualified Personal Finance Professional (QPFP). His father is also a mutual
fund distributor. Hailing from Pollachi, he currently provides financial
services to approximately 2,500 individuals.
Read articles written by Mr. A.G.V.
Srinath Vijay in Nanayam Vikatan, a leading personal
financial management magazine https://bit.ly/4uj1I1Y
Phone -
9080705714
Email - srivj.sv@gmail.com
Address: 33, SV Towers, New Scheme Road,
Pollachi
- 642 001
Tamil
Nadu
Office
Time: Monday – Saturday: 10:00 AM – 06:30 PM
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme
related documents carefully. The past performance of the mutual funds is not
necessarily indicative of future performance of the schemes.
