Investment as a middle class Indian is a very delicate job . It is a highly sensitized topic . Because being a part of a middle class family you are conditioned to take care of that cash like an infant . It is not wrong to be sensitive about it but not taking any actions and keeping it in the savings account would not take you anywhere .

Slowly , people have came in terms of investment . They are aware about it but not educated enough .

Investment means allocating money to some assets such as shares , land , gold ,bonds , real estate etc . with the expectation of generating an income or a profit over a time period .

Mistakes Middle Class Indians do before investing

Below mentioned mistakes are made by middle class people while handling money –

• Keeping entire income Idle in Savings Account

The mindset to consider all the money you have as an emergency fund leads to parking of your entire income in savings account. As the time goes on ,  inflation slowly starts to eat your capital. The capital would remain the same but it’s buying capacity would gradually reduce .

• Starting investing late

Generally the capital is considered important while investing and time as a instrument is gravely underestimated. The power of compounding always comes with time . The thinking in the headspace of a middle class indian is that investment journey would start only when he has ample capital for it . Starting small doesn’t make sense for them because they can’t relate to the direct proportionality of time and compounding . Whatever you have , always spare a part of it for investment. Start early to brace for the retirement.

• Confusing Safety With Wealth Creation

Upon venturing into investment , middle class generally choose the safest place to park their money . These safe havens include FD , savings account ,RD . The inability to take risk is allowing inflation to bite into their capital .Risk doesn’t always means future and options or intra day . It also includes mutual funds , stocks , commodities. The interest you receive from these options tend to overrun inflation when invested for a long period of time.

• Investing Without Understanding

Investing without any knowledge is quite gamble . Those risk taking gambling includes

a)Investing in a product because it is attend

b)Investing without understanding the risk

c)Suggestions from friend/relative

Also check out : 7 lifestyle related mistakes every middle class should avoid

Things you need to do before investing

Now that we have discussed what not to do during investment , we will now look into the things you need to do before you do an investment

• Decide a goal or target for which you have to invest .

Have a target in your head which allows you to tie your investment to something solid .

• Decide time horizon of that investment

Keep fixed long term time horizon for your funds to achieve your goal , make sure the time horizon allow your funds to have a breathing space.

• Calculate the risk taking appetite for your self .

The amount of risk you are willing to take equals to amount of profit you may get , but the probability of success will not be higher in the beginning , it only increases as the time frame grows .

• Diversify your funds 

There is an age old proverb “Never keep all of your eggs in a single basket” . Never put all of your funds in a single asset. If that asset gets railed down , you will end holding falling knives in your hand . Keep your funds diversify to control the risk

• Focus on wealth creation rather than short term returns 

There will always be many funds or assets that will guarantee to make you rich in a short time . Only upon investing in it , you understand its a complete scam . Never be in a hurry with returns , always focus on wealth creation rather than cheap returns .

• Review your investment regularly 

What may have been right yesterday may not be right today . Methods and approach evolve with time . Hence , the funds you chose for 30 years span may not be the right option for the entire span. To avoid being part of such blunder , you should review the performance of your funds/assets every Financial year .

A good investor is not the one who always find the best performing investment ,but who understands his goals , manages risks and stay disciplined throughout his investment journey .