Zebu blog

Tag: personal finance

  • What is a Contingency Fund and How Important Is It?

    A savings account designated expressly for unforeseen costs or crises is known as a contingency fund. It is a crucial component of personal finance that may offer stability and comfort in the face of unforeseen catastrophes.

    Typically, it’s advised to save 3-6 months’ worth of income in a contingency fund. This is because it takes time to change jobs or for a company to recover from a loss. In the case of a job loss, unanticipated medical costs, or other emergency, having 3-6 months of income set up will help you stay afloat financially.

    Having a contingency fund can assist avoid the need to incur debt to pay for unforeseen expenditures, which is one of its main advantages. For instance, if you lose your job and don’t have a backup plan, you could have to charge unforeseen costs to your credit card, which might result in high-interest debt. The money in your contingency reserve, on the other hand, may be used to pay for unforeseen costs without putting you in debt.

    The peace of mind it may bring is another advantage of having a contingency fund. The anxiety that comes with unforeseen catastrophes might be lessened by knowing that you have a financial safety net.

    There are several approaches to creating a contingency fund. One strategy is to save a specific sum of money each pay period by depositing it into a savings account. Setting up automatic transfers from your checking account to your savings account is an additional option. Making ensuring the money is simple to get to in case of an emergency is crucial.

    Keeping a contingency fund distinct from other savings or investment accounts is also crucial to remember. This will make it more likely that the funds will be accessible when needed and won’t be spent for non-emergency costs.

    In conclusion, having a contingency fund is crucial for maintaining financial security and peace of mind in the event of unforeseen circumstances. A contingency reserve of three to six months’ worth of income is often advised to cover unforeseen costs or crises. Creating a contingency fund might provide you peace of mind and help you avoid going into debt. It’s crucial to set aside some cash from each paycheck and put it into a savings account, or set

    Make sure the money is available in case of an emergency and set up automatic transfers from your checking account to your savings account. To ensure that the money is not spent for non-emergency costs and is available when required, it is also crucial to maintain the contingency fund distinct from other savings or investment accounts. Making a contingency fund a priority in your overall financial plan is essential because it can be the difference between a slight inconvenience and a serious financial problem.

  • Differences Between Saving and Investing, and When to Choose Each

    Although they are not the same, saving and investing are both significant components of personal finance. Savings accounts and other low-risk accounts are considered to be savings, but investing is the process of placing money into stocks, bonds, mutual funds, real estate, or other assets with the intention of making a profit.

    Here are some significant distinctions between saving and investing, as well as situations in which picking one over the other would be wise:

    Saving often entails less risk than investing does. Savings accounts and other low-risk accounts are covered by FDIC insurance, which guarantees that depositors will receive their money back even if the bank goes out of business. Contrarily, investing may involve greater risk. For instance, it is possible to lose money in the stock market, and real estate can also be a risky investment.

    Return vs. Preservation: In general, investing has a better potential return than saving. For instance, investing in the stock market might yield returns that are far more than the interest you would receive on a savings account. The objective of saving, however, is often to maintain the value of your money rather than to generate a high rate of return.

    Savings are often better suited for short-term objectives like emergency funds or down payments for homes, while investing is better suited for long-term objectives like retirement. It’s vital to be ready for the volatility that comes with investing since it may be a terrific way to expand your money over time.

    Savings accounts have greater liquidity than investments do. A savings account allows you to access your money far more quickly and conveniently than an investment does. This implies that investing the remaining funds while keeping a portion in a savings account for unforeseen costs is a smart option.

    Taxation: While certain investment forms, such as equities and mutual funds, may provide tax advantages, interest collected on a savings account is taxed as income. Short-term profits are taxed more heavily than long-term gains, for instance.

    In conclusion, both investing and saving are crucial facets of personal finance, but they accomplish distinct goals. While investing is a wonderful method to grow your money over time and get ready for long-term objectives, saving is a smart way to maintain the value of your money and be ready for short-term goals. It’s critical to comprehend how the two vary and to employ the tactic that is best for your particular circumstance. When deciding whether to save or invest, it’s crucial to constantly take your personal risk tolerance and financial goals into account.

  • The Importance of Long-Term Mutual Fund Investing

    Particularly when it comes to long-term savings and retirement planning, investing in mutual funds may be a great instrument for reaching financial objectives. A form of investment instrument known as a mutual fund pools the funds of several participants to buy a diverse portfolio of stocks, bonds, and other assets. The expert management given by mutual fund managers may assist guarantee that the portfolio of the fund is well-diversified and managed in a way that is in line with the fund’s investment objectives. This diversity can help reduce risk.

    The potential for long-term development is one of the biggest advantages of investing in mutual funds, though. The importance of long-term mutual fund investing can be seen in the following ways:

    Compounding Interest: By making long-term investments, you may benefit from the strength of compound interest. The interest earned on the initial investment as well as the interest earned on prior interest is known as compound interest. The more time compounding has to work, the longer the investment is kept, leading to bigger returns over time.

    Volatility: Short-term trading can be dangerous and the stock market can be unpredictable. Long-term investors may withstand market swings and resist the urge to sell when the market is down by sticking with their investments. By doing this, the investor can benefit from market recoveries and prevent investments from being sold at a loss.

    Diversification: As was already noted, mutual funds offer asset diversification, which reduces risk. Mutual funds can lessen the effect of any one investment on the whole portfolio by investing in a number of other securities. By diversifying, an investor may guarantee that their portfolio is well-balanced and isn’t unduly exposed to any one industry or market.

    Professional Management: Professional fund managers who have the knowledge and skills to make investment choices on behalf of the fund’s investors oversee the management of mutual funds. This might make sure that the portfolio is well-diversified and managed in a way that is consistent with the investment goals of the fund.

    Tax Benefits: Some mutual funds offer tax benefits that may aid investors with their tax obligations. For instance, some mutual fund categories, such those that invest in municipal bonds, can be qualified for tax-free dividends.

    Mutual funds can entail some risk, like with any form of investment, so it’s vital to do your homework and fully understand the fund before you invest. When selecting a mutual fund, it’s also crucial to take into account your individual risk tolerance and investing objectives.

    Finally, investing in long-term mutual funds can be a useful strategy for reaching financial objectives, especially when it comes to long-term savings and retirement planning. Compound interest’s potency, the capacity to withstand market volatility, diversification, expert management, and tax advantages may all help an investment expand over time. When selecting mutual funds, it is crucial to conduct research, take into account your personal risk tolerance, and have clear investing objectives in mind so that you can make an educated choice that is consistent with your investment plan.

  • How can investing in mutual funds help in retirement planning?

    Financial planning must include retirement planning in order to guarantee a pleasant and long-lasting lifestyle when one’s working years are done. It is essential to have a strategy in place to maintain financial stability and self-sufficiency because of the increase in life expectancies and rising medical expenditures.

    Investing in mutual funds is one of the best methods to accomplish this. A form of investment instrument known as a mutual fund pools the funds of several participants to buy a diverse portfolio of stocks, bonds, and other assets.

    Investing in mutual funds can help with retirement planning for the following reasons:

    Potential for long-term growth: Investors may see long-term growth with mutual funds. This is due to the fact that mutual funds invest in a diverse portfolio of stocks, bonds, and other securities, which over time may generate a consistent flow of income.

    Asset diversification: Mutual funds offer a diverse portfolio of assets, which reduces risk. Mutual funds can lessen the effect of any one investment on the whole portfolio by investing in a number of other securities.

    Professional management: Professional fund managers who have the knowledge and skills to make investment choices on behalf of the fund’s investors oversee the management of mutual funds. This might make sure that the portfolio is well-diversified and managed in a way that is consistent with the investment goals of the fund.

    Automatic contributions are available with many mutual funds, which can make it simple to consistently save for retirement. This may be a practical approach to accumulate savings over time without having to give it much thought.

    Tax benefits: Some mutual funds offer tax benefits that may aid investors with their tax obligations. For instance, some mutual fund categories, such those that invest in municipal bonds, can be qualified for tax-free dividends.

    It’s crucial to keep in mind that there is some risk associated with investing in mutual funds, so do your homework and fully comprehend the fund before you do. When selecting a mutual fund, it’s also crucial to take into account your individual risk tolerance and investing objectives.

    When preparing for retirement, it’s crucial to invest for the long term and concentrate on asset diversification to lower risk. A well-diversified mutual fund portfolio can help assure a comfortable living in retirement by generating a consistent stream of income over time.

    As a result of its potential for asset development and diversification, expert management, automated contributions, and tax benefits, investing in mutual funds can be a useful tool for retirement planning. When selecting mutual funds, it’s crucial to conduct your homework, take into account your personal risk tolerance, and have financial goals in mind so that you can make an informed choice that works with your retirement plan.

  • PAN and Aadhaar Linking by March 31st, 2023 – How To Do it

    As investors in the Indian stock market, it is important to be aware of the latest regulations and guidelines set by the National Stock Exchange of India (NSE). In a recent advisory, the NSE has advised all investors to link their Permanent Address Number (PAN) with their Aadhaar number by March 31, 2023. This is to ensure that transactions in the stock market are seamless and uninterrupted.

    In 2017, the Indian government announced that it would be mandatory to link PAN with Aadhaar for all transactions in the stock market. The deadline for linking PAN with Aadhaar has been extended several times in the past, but the expectation of an extension this time around is low.

    PAN is the primary identification number for transactions in the stock market, making it crucial for investors to ensure that their PAN card is linked with their Aadhaar number. Failure to link the two before the deadline of March 31, 2023, may result in the suspension of your trading account. The NSE has warned that if an investor has not linked their PAN card with Aadhaar by the end of March, they will not be able to make new deals or even close open positions.

    To link your Aadhaar card with PAN, follow these simple steps:

    • Visit incometax.gov.in
    • Login or register yourself
    • Click on ‘Link Aadhaar’
    • Fill in the necessary details and submit

    The Income Tax Department will start the process of linking your PAN and Aadhaar.

    In case you want to manually link your PAN with Aadhaar, you can visit a PAN service center and fill out the Annexure-I form. You will also need to provide a copy of your PAN card and Aadhaar card and pay a fee of Rs 110 for any corrections to PAN data, or Rs 50 for updating Aadhaar details. Biometric authentication may be required if there is a significant discrepancy between PAN and Aadhaar data.

    To check if your PAN and Aadhaar are already linked, you can visit the income tax e-filing website www.incometaxindiaefiling.gov.in and log in to your account. If the two are linked, your Aadhaar number will be partially displayed in your profile. You can also send an SMS to NSDL e-Governance Infrastructure Limited or UTI Infrastructure Technology and Services Limited, which are PAN service providers, to link your PAN and Aadhaar. Simply text a keyword to 567678 or 56161 in the format UIDPAN>12 digit Aadhaar>10 digit PAN> to link the two.

    It is important for investors to take this advisory seriously and link their PAN with Aadhaar by March 31, 2023, to avoid any disruptions to their trading activities.

    <b>Click Here:</b> <a href=”https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar”>Link PAN with Aadhar</a>

  • Rules Investing Rules That Every New Investor Should Know

    If you are a new investor, you can give yourself a pat on the back for getting started. Rest assured that if you invest wisely, you can provide your family with the ideal lifestyle. At first, getting started on this path might seem hard, but millions of people have made money from the markets by following a few simple but important tips.

    Along with the 5 golden rules of investing, another important aspect of investing is the technology we use. Hence, Zebu, one of the biggest share broker company offer the lowest brokerage for intraday trading and the best trading accounts for our customer.


    These five golden rules will be your guide when it comes to investing:

    Compound your returns

    Learn about the power of compounding. The key to your future wealth lies in the power that you haven’t used yet: the power of your investment growing over time. The earlier you start investing, the longer your money will make money for you. At the end of the day, it can be better to invest a small amount regularly over a long period of time than to invest a large amount for a short time. To get the most out of your equity investment, you need to stay invested through the market’s boom and bust cycles.

    Financial goals

    Know what you want to achieve with your investments. Always keep in mind that your portfolio must help you reach your life goals. If you make a plan with your financial advisor, your investments can help you reach your life goals, like saving for your kids’ college, buying a house or car, or saving for retirement. Many people make the mistake of investing on their own, which they later regret when their investments don’t meet their goals.

    Know your risk limits

    Accept the risk you’re willing to take. The risk of investing in the markets varies from one instrument to the next. For example, investing in fixed deposits is less risky than investing in mutual funds. Over time, though, many mutual funds do give better returns than fixed deposits.
    Before you buy a market instrument, you should think about what you want, what you need, and how much risk you can handle. Consider investing in a mutual fund or the shares of a company only if a trustworthy stock market expert tells you to do so.

    Keep your emotions in check

    Learn not to let your emotions get in the way. People often get too emotionally attached to their portfolios and give up on good sense and objectivity. Most likely, your portfolio will go up and down in the short term. During a bull market, it will make you happy when the price goes up, but it shouldn’t make you lose your nerve when the price goes down. As an investor, you need to develop the discipline to stick with your investments over the long term and not sell them off when things get hard. When investing in the markets, it’s always a good idea to be smart about your investments and listen to stock market experts you can trust.

    Appoint a Financial Advisor

    In the last few decades, the study of behavioural economics has shown that people often invest in a sloppy way. People they know often have an effect on what they decide to invest in. On the other hand, people fall for irrational cognitive biases. When it comes to the stock market, good advice from a reputable stock market advisor can be your best guide. You won’t sell your investments out of fear if you have well-researched market reports and good investment advice.

    Conclusion

    Overall, a disciplined approach to investing and a calm, patient attitude during market lows can help you not only survive the worst of the market lows but also profit from them. In the same way that you take your car to a mechanic to get it fixed, you can go to a financial advisor to help you get your portfolio in order. Getting help from a good financial advisor can make a big difference in how much money you and your family have.

    Zebu, one of the biggest share broker company offer the lowest brokerage for intraday trading and the best trading accounts for our customer. Get in touch with us to know more.

  • How Exactly Does Inflation Affect The Market?

    Most of the time, we think of inflation as a bad thing for stock markets. It’s not hard to figure out why. When inflation is high, the cost of living goes up and people have less money to spend. When inflation goes up, people earn less in real terms, and when inflation is taken into account, this means that their returns are lower. Second, when inflation goes up, interest rates go up, which also raises the cost of equity. There are also times when the effect of inflation on the stock market is seen as a good thing. So, what does inflation mean for the Indian stock market? Does inflation have anything to do with investments? When inflation goes up, do people tend to invest more or less? Most importantly, how does inflation affect the indices of the stock market, especially the Nifty and the Sensex?

     Let’s look in more depth at each of these points. As one of the biggest share broker companies Zebu has a huge team working to make your trading and investment journey as seamless as possible in our efforts to do that we offer the best trading accounts with lowest brokerage for every trade you make.

    1. How inflation affects the amount of money investors can spend What does it mean for prices to go up? Inflation is when the prices of goods and services go up over and over again. In India, the CPI inflation and the WPI inflation are used to measure both retail inflation and producer inflation. Usually, the CPI is a better way to measure consumer inflation because it is more accurate and has more to do with buying power. As inflation goes up, the value of the money you will get in the future goes down. That’s what the “present value” of money means. When inflation is 5%, your Rs.100 receivable from a year from now is worth Rs.95 today. When inflation is 10%, your Rs.100 receivable from a year from now is only worth Rs.90 today. With the same amount of money, you can buy less when your purchasing power goes down. This is usually bad for consumer-driven stocks like FMCG and consumer durables because people’s ability to pay goes down. This means that these companies will have to lower prices and make less money.

    2. Inflation affects interest rates, which in turn affects prices. What happens to bonds and stocks when the inflation rate goes up? Let’s start with bonds. When the rate of inflation goes up, so do interest rates or bond yields. We’ve seen this happen in the last six months, when inflation expectations have gone up and bond yields have gone up sharply by 125 basis points. So that the Yield To Maturity or total rate of return of these bonds stays about the same, when bond yields go up, bond prices will go down. When the price of a bond goes down, people who own bonds, like banks and people with mutual funds, lose money. This is why banks tend to lose money when interest rates go up.

    How about stocks? When both inflation and interest rates go up, the cost of capital goes up as well. The cost of capital is the sum of the costs of equity and debt. And when bond yields go up, the cost of running a business goes up. This means that the company’s future cash flows will be worth less. We know that future cash flows are taken into account when figuring out how much a stock is worth. When the rate of discounting goes up, it makes sense that the value of an equity will go down. In a strange way, higher inflation is good for stocks in the medium to long term. Even though inflation may be bad for bonds and stocks in theory, we can’t forget that it also has a good side. Usually, rising inflation means that GDP growth is getting better.


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    Even in the US and Japan, the big economic battle is all about getting inflation back to the 2% level. That is thought to be the level where growth will start to happen. In fact, if you look at the growth of the world and even India over the last 20 years, the GDP has never grown significantly when inflation was low. Even though ridiculously high inflation can make it hard to buy things, a certain level of inflation is needed to encourage businesses and producers. So the real problem is inflation which gets too high. At Zebu, we have a huge team working to make your trading and investment journey as seamless as possible in our efforts to do that, we offer the best trading accounts with lowest brokerage for every trade you make.

  • Types Of Low-Risk Investment Options

    When it comes to investment plans, the risk is the chance or likelihood that the asset will either perform worse than expected or lose all of its value.

    So, different investment plans can be roughly divided into three groups based on the amount of risk they involve, as shown below:

    Before we get into understanding low-risk investment options, we need to understand how the right tech can enhance your trading journey. With Zebu’s online trading platform you can perform your investments seamlessly. As one of India’s biggest share market broker, we offer the best trading accounts with great advantages for our customers.

    Investing with low risk
    Low-risk investment plans are, as the name suggests, those in which the risk is close to zero. In other words, investments with low risk tend to grow in value steadily and reliably, but they also tend to lose less money. Here is a list of the best ways to invest money that can be thought about.

    1. Sukanya Samriddhi Yojana

    The Sukanya Samriddhi Account is becoming more well-known as one of the best ways for Indian girls to save money. If you have a girl child, this programme is meant to make it easier for the girl child to become wealthy. You can get a Sukanya Samriddhi Yojana account at both commercial banks and post offices. Under Section 80C of the Income Tax Act of 1961, you can also save a lot of money on your taxes.

    2. Public Provident Fund (PPF)

    Public Provident Fund (PPF) is one of the best ways to invest in India because it offers so many benefits. If you get paid a salary, PPF can help you in many ways. The interest you earn on your PPF is not taxed, but you can get a tax break under Section 80C of the Income Tax Act of 1961.

    3. Post Office Income Plans for Every Month

    Most people think that the Post Office Monthly Income Scheme is one of the best ways to invest. It’s best for people who don’t like taking risks and want low-risk plans with good returns. Here, you need to know that the income from monthly income plans from the post office is fully taxed, but the monthly income plans do not have Tax Deduction at Source (TDS).

    4. Government Schemes For Senior Citizens (SCSS)
    The senior Citizen Savings Scheme (SCSS), which is run by the Indian government, is thought to be one of the best ways to invest in India for a number of reasons.

    First, the plan gives senior citizens a lot of financial security. The second thing is that the government decides every three months what the interest rate will be for this plan. You can open an SCSS account at any bank or post office that is owned by the government.

    5. Tax Saving Fixed Deposits

    Tax Saving FD’s are thought by many to be one of the best ways to invest in India because they can help you save a lot of money on taxes under Section 80 C and reduce your overall tax liability.

    6. Sovereign Gold Bonds

    Sovereign Gold Bonds (SGBs) are issued by the Reserve Bank of India and backed by the Indian government. SGBs are securities that are worth their value in units of gold and can be used instead of holding physical gold (grams). At the end of the term, you can get your money back. This makes SGBs one of the best ways to invest in India. To easily invest in SGBs with Zebu, please get in touch with us.

    7. Life Insurance

    There are two types of life insurance that are low risk: savings and income plans and protection plans. There is no clear investment part to these life insurance plans, so they do not offer returns that are tied to the market. Instead, these life insurance plans give your family a strong financial safety net and good protection against life’s unknowns.

    8. Bonds

    Bonds are proof that you gave the issuer money at a certain interest rate. You could get interest payments on each bond on a regular basis, and in the end, you would get the face value back. You can also sell the bond before it runs out if you need the money. Bonds are thought to be one of the best ways to invest in India because they are fairly safe.

    Now that you understand more about low-risk investment opportunities, you need to understand how the right tools can help your Investment journey. With Zebu’s online trading platform you can perform your investments seamlessly. As one of India’s biggest share market broker, we offer the best trading accounts
    with great advantages for our customers.

  • Four Things To Consider Before Investing

    Starting your investment journey can be intimidating but is a necessity considering inflation and economic uncertainty. That is why you need a sound investment strategy to help you meet your financial objectives. At Zebu, it is our mission to help every Indian become financially independent and that is why we have platforms that will help you invest wisely. Please get in touch with us to know more.

    At Zebu, an online share broker company it is our mission to help everyone in India become financially independent, we offer the best online stock market trading platform with the best trading accounts.

    Here are four things to think about before choosing an investment strategy.

    Financial Objectives

    Your long-term and short-term financial goals should be the main thing you think about before you choose an investing strategy. Keeping track of such financial goals will help you make smart choices. Some examples of such goals are getting married, going back to school, travelling abroad, and buying a new smartphone.

    For instance, if you want to save up for a trip to your favourite foreign country, a post office deposit or a recurring deposit could be some of the best ways for you to invest. You can put money in either of these accounts at a post office near you.

    Budgeted, near-term cost

    When looking for a way to invest in India, one of the most important things to do first is to figure out how much you expect to spend in the future. These can be things like your child’s wedding, college, or buying a home.

    If you do this, you’ll have a better idea of how much money you need to invest now in order to get enough money back in the future to pay for any upcoming bills.

    Present Expenses

    When looking for the best way to invest, it’s important to start by looking at what you’re already spending. For example, if you don’t have any big expenses like rent, you will have more money to save or invest for the long term.

    But if you have financial obligations that make it hard for you to save much money, it would be better for you to invest in a financial plan that gives you a good return on your money.

    Financial Dependents

    Most people in India don’t think about how their dependents’ finances affect them when they buy an investment plan. Still, you have to do this because you need to have enough investments or savings to meet the financial needs of your dependents as well as your own.

    For example, if you only have two children who depend on you, you probably won’t need to invest as much as someone who also has to take care of their parents, siblings, and children.

    Investment options for short-term goals

    Plan for investment for one year

    If you like to invest for the short term, even three years can seem like a long time. But there are many 12-month investment plans that can also help you avoid market risks. Here are some good short-term investments you might want to think about:

    • Recurring Deposits
    • Fixed Maturity Plan
    • Post Office Deposits
    • Arbitrage Funds
    • Debt Fund
    • Fixed Deposits

    Plan for an Investment for 3 Years

    3-year investment plans are a common type of short-term investment plan. These plans are best for people who want to make a lot of money in a short amount of time. Here are some choices you might want to think about:

    • Liquid Funds
    • Fixed Maturity Plan
    • Recurring Deposits
    • Savings Account
    • Arbitrage Funds

    Plan for 5 Years of Investing

    Even though five years is a long time, in India a five-year investment plan is usually seen as a short-term investment with low market risk. But compared to other short-term investments, the returns on a 5-year investment plan are much higher. So, here are some choices for you to think about:

    • Savings Account
    • Liquid Funds
    • Post Office Time Deposit
    • Large Cap Mutual Fund

    As an online share broker company, it is our mission to help everyone in India become financially independent, we offer the best online stock market trading platform with the best trading accounts.

  • What Is Your Risk Profile?

    You must recall your first bike ride. That is the kind of encounter you will never forget. But, while you were enjoying the ride, there is always that one kid nearby who clearly wished he hadn’t had to go through the horrible experience.

    So, while you were ready to accept the risk of riding a bike, your friend would have preferred to stand back and observe. Similarly, some people may be more willing to accept risks than others when it comes to investing. And your risk profile indicates how much risk you are willing to face when investing.


    Risk Profile

    Everyone has different financial objectives in life. That is, your risk tolerance is determined by your financial ambitions as well as your existing financial health.

    Let’s have a look at the various risk profile groups. There are three major kinds –

    The careful investor – this means that you want to take a low risk.

    The average risk-taker – this indicates that you are willing to take a small level of loss in exchange for higher returns.

    The aggressive risk-taker – this indicates that you are willing to take on more risk in exchange for a higher potential return.

    However, you are not required to fit within any of the categories. Depending on your investment objectives, you can choose to participate in all of them.


    Consider the following example.

    When it comes to keeping an emergency fund, you want to invest in something that will provide you with security and liquidity rather than large profits. In that instance, you choose a low risk, low return profile, showing that you are cautious.

    However, if your financial goal is retirement, which could be 25 years away, you can be an aggressive investor. This is because you want to earn a good return over a long period of time. In this case, the high profits would be directly proportional to the risk. Furthermore, because your investment horizon is decades away, risks can be handled in the long run.

    Start by taking care of emergency funds and investments with low-risk investment options. Then, move on to the funds needed for your children’s education and retirement. Next, adjust your risk appetite to invest in stocks building your wealth.


    You can control investment risks in two ways:

    Invest for the long term.
    Regularly invest little sums.

    Some investors try to outperform the market in a relatively short period of time. However, history has shown that short-term investments do not generate the same level of return as long-term ones. Long-term investment works because bull and bear markets provide wonderful opportunities to ride through the highs and lows of cycles while investing in high-return, high-yielding assets.

    Investing in smaller quantities allows you to benefit from rupee cost averaging. This technique ensures that you purchase more shares (or units) when prices are low and less shares (or units) when prices are high. As a result, you can average out your investment costs and deal with market volatility.

    Furthermore, adopting a disciplined approach, such as investing little sums on a regular basis, helps create excellent financial habits that will undoubtedly come in helpful in the long term.

    Investing tiny amounts over time might help your investments develop. All owing to the compounding power. Earnings from stock investments are reinvested, allowing your investments to generate even greater income. So, even if you start with a tiny amount, the longer your money stays invested, the greater the chance for growth and compounding.

    But did you know that you may utilise both of these methods to reduce risk in high-risk investments?


    Here’s how it works:

    If you have a substantial money to invest in a high-risk investment, consider putting it in a low-risk investment vehicle such as a debt fund. You can then gradually transfer tiny amounts of money from that fund to a high-risk investment vehicle.

    For example, if you wish to invest Rs. 10 lakhs in equities stocks or funds, you can put Rs. 1 lakh into equity stocks or funds in the first month and the remainder in a short-term debt fund.

    The remaining funds can then be transferred in small increments over the next few months.

    This way, you may manage market volatility while still earning high long-term profits.