Real estate investment tip
1. Save Just 10: From every rupee you earn, save 10 paise. That doesn\'t seem like a lot, right This translates into saving 10% of your salary every month. Saving money you earn will be your first good investment.
2. Long-term Savings: Invest in long-term savings such as a retirement plan. You can do this effectively by taking 10% of every pay hike and investing it. Your contributions will thus increase as your pay rises without you feeling the pinch.
3. Analyze Your Risk Appetite: Your risk appetite is essentially your ability to withstand market ups and downs and tolerate uncertainty in your investments. In quantitative terms, it is the amount of money you are willing to lose today to make a profit in the future. If you are the kind of person who always needs to know where his next pay check is coming from and stays up nights worrying about real estate investment , opt for safer investment options. Get the right advice from a professional after explaining your risk appetite to them.
4. Diversify: Remember when the IT bubble burst in 2000 causing losses to millions who had invested all their savings in the industry It is essential to segregate your investments so that you don\'t lose a lot of money if one investment fails. Follow this thumb rule invest no more than 5% of your assets in one investment option.
5. Be Wary Of Scams: If the returns on an investment policy sound too good to be true, they probably are. Today, financial scams are commonplace and you as an investor should be cautious. It is better to get small returns from well known, safe investments rather than large returns from investments that might go bust.
Is Real Estate a Good Investment Option
Are you fatigued by the diminishing income and risk-factors associated with main-stream investment avenues fixed deposits, stocks, mutual funds, etc. Think `real estate\\': a lesser explored investment option. Why real estate investment stands out Quantum of investment required is high Investment horizon is long
Dual returns are available in form of rental income and capital appreciation What are the promising avenues of real estate investment Offices Shopping malls Retail outlets Industrial warehouses What is the current Indian real estate scenario Periodic returns on commercial property ranges from 10 to 13 percent
per year
The Indian real estate industry has a growth rate of 35 to 40 percent annually The demand for real estate is picking up as the IT industries set up their base in India or look for expansion in these cities. Top financial companies have recognized the advantage of India as a business process outsourcing destination and had started expanding their business. Companies are increasingly switching over to renting office premises.
This offers flexibility in operations and avoids locking capital. Companies operating in automobile design, auto components manufacturing, computer aided design and drawing are also entering
India in search of acquisition of space preferably as ready-to-occupy premises. Real estate developers are offering premises on long lease to the companies. Individual investors are benefiting from the developing commercial real estate market in India by investing in pre-leased properties. NRIs / PIOs are investing in real estate as the rental income and capital
used to purchase the property is easily repatriable What are funding sources supporting investment in real estate Banks Financial institutions High net worth individuals Real Estate Mutual Funds What are the procedures to be followed before investing in real estate Find out credibility of develope Check out the attractiveness of property to tenants/ buyers Weigh future value potential
Get to know the chances of project completion (in case its under construction) Investigate the quality of project Explore the availability of financing option Take advice from a reputed and a credible real estate consultant.
Consult a reputed financial institution
Diversify Your Risks
When investing, it helps to remember one fundamental dictum : always expect the unexpected. No matter how much research you do, and how many `experts you consult, things can always go wrong. The best way to insure yourself against unpleasant surprises is to diversify your risks. So put some of your money in stocks, some in bonds, perhaps some in real estate investment , and a little in gold. Within stocks themselves, diversification is a good hedge against a downturn in any one particular industry . The infotech sector might be going great guns today, so you may be tempted to put all your money in it. That might be lucrative, but it's also dangerous. That's why they say: "Never put all your eggs in one basket."
Optimise your Investment Portfolio
Is your real estate investment portfolio skewed towards any particulartype of investments
If your investments are mostly in bank deposits, your returns are lower .
If yourinvestments are mostly in deposits with finance companies, the safety of youramount may be in question
If yourinvestment in shares is more, both the safety and the returns may be uncertain.
There are manypluses and minuses that one has to consider while making an investment decision.How do you strike the right balance in your portfolio The optimum investmentstrategy depends upon your risk taking ability, your family needs and yourability to monitor your portfolio on regular basis. As a thumb rule, put about70% of your investments in Government securities, bank deposits and AAA ratedinstruments and the balance in shares of good companies to optimize your returnswith reasonable risk
Criteria for Investment
What are the main criteria for investment Does one investonly for the future, because tax compulsions dictate us to, or to safeguardfunds Probably all three and more! Investments are aimed at ensuring safety,liquidity and returns on funds. A good investment strategy will always ensurethat investor earns steadily and regularly on investment.
One invests insavings to earn. But savings may not always earn returns of the sort you expect.
Savings incash attract tax deductions ; besides the returns may not always be as high asone expects (accrued interest may not keep pace with inflation).
Safeinvestments like those in bonds and debentures yield fixed income but scorepoorly on value appreciation ; the case is diagonally opposite in the case ofinvestment in real estate.
An idealoption would be to invest in the equity shares of reputed companies. This wayone is assured of regular yields and value appreciation.
Risk andreturns are the other concerns for investments. Higher risks enjoy higherreturns, but one must make a fair calculation of risk-taking capacity andliquidity requirements. Availability of funds, option to invest elsewhere, etc,should be considered while planning investments.
Divide earninglife into four phases: Early career, Mid-career, Mature career and postretirement. Plan investment in such a way that it supports the requirements ofeach stage.
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