How to get more profit with less risk in investment.

Let us know how to put your hard-earned money to work so that you can earn your money which is less risky and which can give you so much profit which is more than the rate of inflation so that your hard earned money keeps increasing.

First of all, we know which options we have to invest - like stock market, bonds, debentures, gold, fixed income instruments (eg fixed deposits, Sukanya Samriddhi Yojana, Public Provident Fund) etc.

We should also think about the rate of inflation before investing.

The rate of inflation is between 5-7% from the last few years.

I would like to tell you that no investment is risk free and there is some risk associated with every investment, there is less risk, medium risk and high risk investment. If you want to know more about risk then you can read my English post "Risk with Investment".

Now it is understood that if we invest in the least risky investment ie fixed deposit, then you know that the interest rate of fixed deposits is between 6-7%. So this means that if we make a fixed deposit of Rs 100, then after 1 year we should get 107 rupees at 7% interest, this is what you would think. But I would like to tell you that this is wrong, you will not get Rs 107 after 1 year.

Do you know why? Let me tell you how.

Now I tell you how much money you will get on 1 year fixed deposit. First of all I would like to tell you that the interest of fixed deposit is taxable if the fixed deposit is less than 5 years. Accordingly, the interest earned in fixed deposits will be added to your annual income and your tax will be deducted according to your income tax slab.

Now suppose that your TDS is deducted at the rate of 10% which is made at Rs. 0.70 and after that the inflation will eat your money. Now suppose that inflation is at 7%, so in total you earned -0.70 rupees from your fixed deposit investment of 1 year (Calculation -- 7 (interest) - 0.7 (tax) - 7 (inflation) = -0.70).

According to this calculation, your money is not increasing in fixed deposits but is decreasing.

Before your investment money is reduced, you have to wake up and do not invest without thinking so that your future can be bright.

Now, if we talk about other options, let us know how much profit we will make in those investments.
For example, if you invest in gold for a long time, you can get 8-9% profit and then take inflation and tax into consideration.
Apart from this, you will not get more than 9% interest in all available schemes such as bonds, debt funds, Sukanya Samriddhi Yojana, Public Provident Fund, Senior Citizen Savings Schemes, Post Office Saving Schemes etc and all other fixed income saving schemes.

Now after knowing all this, we have one option left which is the stock market for earning better returns.

There is a lot of risk associated with stock market investment.

And if you want to reduce the risk, then you should not invest thoughtlessly before investing in stock market. You can only suceed in stock market if you study all fundamental and technical analysis of the stock before starting the investment.

Most of us think that the stock market is an easy way to earn a lot of money which is not right whereas in my view the stock market is a very difficult and risky way to earn money. You may have also heard that less than 1% of the people in the stock market are successful.

Most people do not give time to investment, such as they sell in a few days after buying shares if the price of those shares goes up a little, and keep investing slowly in the type of Shares that do not increase in value means those stocks which keep falling regularly.

The result of which is that such stocks keep falling and losses continue to increase and the good stocks which we have already sold when we it has increased slightly. So in the end, only the stocks with losses in our portfolio are left which never grow even if we will wait whole life.

So, what should be the strategy for this, so that our portfolio will always be in profit, Let me tell you.

First of all, we should take the advice of our financial advisor and look at it and choose the best shares for our portfolio. For this, you should study technical and fundamental as well.

After that it is also necessary to buy the right stock at the right time, meaning that no matter how good your stock is, but if you did not buy it at a good price, then it will not be considered as a good investment. You should wait for the good shares to come at a good price.

Now after your portfolio is prepared, do not sell the good stocks that are giving you good returns, but quickly sell the wrong shares which are causing damage before the losses increase.

There is no easy way to earn money like you spend one-third of your life studying to get a good job and also like you study a lot before buying a car that which car will be the best for you because you are thinking here that you are going to spend a lot of money to buy your car and here one wrong decision will give you a trouble.

Similarly, before making a good investment, you will have to do a complete study and give time to your investment so that you can be successful.

When you do a business such as a shop or a factory, you do not sell it after a few days of investing in it, rather wait few years for it to benefit you.

Similarly, consider the investment made in your stock market as part of your business, which you have bought a little in many companies stocks and give it time to earn profit in it. 

The more time you spend in a stock market investment, the more patience you have, the more you will be able to profit from the stock market.

How did you like my post, please tell me in the comment box and do not forget to share it.


With Respect,
Team Nivesh-Shakti

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