Five tips to safeguard your investments by reducing your financial risk

When making a financial investment, considering the risk factor is one of the primary parameters. Plenty of investment tools are available for investors of all risk types. However, circling in on one can be a daunting task. Market-linked instruments can yield more returns, which increases the overall risk factor. Because if the market does not perform well, investors risk losing out on capital.

Other sound tools like fixed deposits, senior citizen saving schemes, etc., may yield lower returns, but they score more on the safety parameter. So it is of paramount importance to choose a tool that not only ensures safety but also facilitates growth. You can follow a few tips to protect your investments from these market volatilities and ensure you earn well from your assets.

Here is how you can safeguard your investments and make them immune to certain market turbulences.

1. Start young

A key to growing your wealth is starting young. It enables you to earn more via the compounding effect. One challenge could be not having enough funds to invest in one go, but with Bajaj Finance, you can start investing with just Rs. 15,000. Even better, you can begin saving monthly and invest in tools like the (Systematic Investment Plan) SIP. Bajaj Finance also provides a facility which works like a SIP called the Systematic Deposit Plan, which starts at monthly deposits of Rs. 5,000 and offers interest up to 7.75% p.a.

2. Align investments with your financial goals

One easy way to determine your investment tool is by aligning it with your financial goals. Experts suggest that your income, goals, and investments must work in tandem to earn more seamlessly. This threshold will help you determine if you must liquidate your investment or keep investing until you accomplish your goal. Fixed income instruments like fixed deposits with high FD rates up to 7.75% p.a. can help you realise your financial goals effectively. It is because the returns are determined at the start of the tenor.

3. Diversify investments to mitigate risks

Experts generally advise not to put all eggs in one basket. By diversifying investments, one can balance the risk arising from market-linked instruments. It will ensure your losses in a risky investment will be compensated for by the gains you make in another safer investment. You can allocate a portion of your assets, basis financial goals, to fixed income instruments like the Public Provident Fund (PPF) or National Savings Certificates (NSC), Fixed Deposits (FD) for stability and equity-linked investments like mutual funds, stocks for higher returns. Real estate and gold are good investment instruments that people have invested in for aeons.

4. Consider expert guidance

Amateur investors must consider the help of experienced financial advisors for planning. It will instil faith in the power of investments. Counselling during a market downturn can prove to be of help to the pre-determined path to achieving long-term financial goals. It also helps in the aversion to panic, which can help you avoid panic selling and buying.

5. Invest in tax-saving financial tools

Investing in tax-saving instruments helps in not only save money but offset risks as well. You can save a good amount of money by investing in instruments that help save TDS. PPF, LIC policies, etc., are a few schemes that help save tax.

Amongst many tools that help reduce financial risk, Bajaj Finance FD is one instrument that fits the bill.

About Bajaj Finance Limited

Bajaj Finance Limited, the lending company of the Bajaj Finserv group, is one of the most diversified NBFCs in the Indian market, catering to more than 44 million customers across the country. Headquartered in Pune, the company’s product offering includes Consumer Durable Loans, Lifestyle Finance, Digital Product Finance, Personal Loans, Loan against Property, Small Business Loans, Home loans, Credit Cards, Two-wheeler and Three-wheeler Loans, Commercial lending/SME Loans, Loan against Securities and Rural Finance which includes Gold Loans and Vehicle Refinancing Loans along with Fixed Deposits. Bajaj Finance Limited prides itself on holding the highest credit rating of FAAA/Stable for any NBFC in the country today.

These tips reduce financial risk and ensure your investments remain safe even during volatile market movements.

 

Moneycontrol journalists were not involved in the creation of the article

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