Most investing mistakes happen before the first purchase: money that will be needed soon goes into something that can fall, or a person invests without knowing what the money is for. Five questions help.
1. Do I have an emergency fund?
Keep enough to cover several months of essential expenses (many people aim for three to six months) somewhere safe and easy to reach, such as a savings account or a short fixed deposit. Then a job loss or a medical bill doesn’t force you to sell investments at a bad time.
2. Am I insured?
Health insurance protects your savings from hospital bills. If anyone depends on your income, a term life insurance policy protects them. Insurance is for protection; mixing it with investment usually costs more and gives less of both.
3. What is this money for, and when will I need it?
Write down each goal with a date: a home deposit in four years, a child’s education in twelve, retirement in twenty-five. Money needed within a few years is usually better kept away from shares, whose prices can fall sharply and take years to recover. Money you won’t need for a long time can ride out those falls.
4. Do I have expensive debt?
Paying off a credit card or personal loan that charges a high interest rate is a guaranteed “return” that few investments can beat.
5. How would I feel if it fell by a third?
Share prices sometimes fall 30% or more within months. If that would make you sell in panic, hold less in shares. A plan you can stick with beats a better plan you abandon.
How i-wise helps
Record what you already own to see your whole picture in one place, and use the retirement planner to see whether your savings are on track. See what i-wise does.
General information for education, not investment, tax or financial advice. Rules, rates and limits change: check the official sources before acting, and consider a SEBI-registered investment adviser for advice on your own situation.