A goal refers to a result that is desired to achieve in the future by making efforts in present. The most significant work to be performed before you begin investing is to define your investment goal. Your desire to Turn Your Investment Goals into Reality can be fulfilled if you have genuine and realistic expectations.
The genuine and realistic expectation to meet the returns by financing money for a static span of time is called an investment goal.
The three most important things that will benefit you to turn your investment goals into reality are:
1. Setting a realistic goal
Are you interested to invest in stocks? Are you curious to make a huge profit? If yes, Great! But, if your plan is to invest Rs 10,000 in the market and you are expecting to get Rs 20,000 within 5-6 months, then it would be difficult to digest but the goal which has been set is not accurate.
Ideally, there are various examples that verify how stocks give us better returns as compared to bank savings, fixed deposits, gold, etc. However, if you want to double your money in just 6 months, then it seems more like gambling than investing.
Be truthful to yourself while you are setting the investment goals. Goal setting should be very realistic and genuine.
The return of around 10-15% annually is quite astounding as compared to a return of about 3.5-4% interest on bank savings. Moreover, if you are financing your money wisely, beating the market and getting better returns won’t be tough for you.
The impractical goals will put extra pressure on you for taking risks that are not even necessary to achieve the desired target. Such risks can have an adverse effect on the portfolio and its achievement.
Hence, it is necessary for an investor to set an ‘achievable’ goal before the investment.
2. Investment alone is not enough to make a living
To be honest, not everyone can earn a living by just investing. You must be thinking, why? Let me clear
Taking the example of India, an average family’s income in India is Rs 10 lakhs per year. As we have already discussed that the average return of the market is around 10% per annum. For the sake of getting a return of 10 lakh yearly, an investment of around INR 1 crore will be required.
Suppose if you are expecting to get a return of 20% yearly, still, an investment of Rs 50 lakhs is needed to earn the livelihood.
Practically, not everyone has this much amount of money for investment. Specifically, if you are a beginner, you can’t afford to take such a move.
That is why people who are entirely involved in the market pick ‘trading’ as their career.
Hence, if you are having a huge amount of money, you can get into it and begin investing your money easily. But if you can’t afford such a huge investment, then it becomes necessary to find some other income source.
The famous Investor Warren Buffett initially worked as a ‘fund manager’. Even he was not a full-time investor in the first half of his career. By working as a fund manager (not an individual investor) he collected a big amount of money to buy ‘Berkshire Hathaway’s share.
3. Avoiding loss is more important than making a profit
It is necessary to avoid loss while investing because loss is much harder to earn back. It is even more important than making a profit in investment.
Even the legendary investor Warren Buffett emphasized avoiding loss. In his famous quote he said:
Rule1: Don’t lose money
Rule2: Don’t forget rule 1
“Cut your losses short and your winners run”, is one of the famous sayings on Wall Street.
At last, the conclusion is that one should not lose a huge amount of money by wrong investment tactics.
Be very careful while investing the money.
Also ReadLong-Term Investing Tips For Beginner