Q. I am 40, successfully running my online grocery delivery business for the last 7 years. I am about to sell my business and I expect a windfall of ₹50 crores. I want to invest 50% of this in financial products. Please suggest options that can fetch me high returns with low risk.
If you have no prior experience in investing in the financial markets, please take the following steps before you start.
Define goals: Understand your financial objectives. The products you choose must align with your intention and purpose.
Educate yourself: There are many financial products available, like fixed deposits, stocks, bonds, mutual funds, exchange-traded funds, real estate, and more. Study the diverse types of financial products and understand the associated risks, potential returns, and fees. This will help you make informed investment decisions.
Assess your risk tolerance: Risk tolerance refers to your ability to cope with fluctuations in the value of your investments. Every investment comes with risks and every individual has a different level of tolerance. Understanding your risk tolerance will help you determine the types of financial products that are suitable for you.
Research and compare: Seek out credible sources of information, such as financial websites, prospectuses, and financial advisors. Consider factors such as historical performance, fees, risk ratios, and other relevant information in relation to your objectives and risk appetite. Financial products usually charge various fees. Understand all fees and charges because these can have an impact on your overall returns.
Diversify: Diversification involves spreading your investments across different asset classes, sectors, and regions to reduce risk. Diversify to minimise the impact of any one investment's inferior performance on your overall portfolio.
Review and monitor: Once you've invested, you must regularly review and monitor your investments. Keep track of their performance, assess whether they are still aligned with your financial goals and risk tolerance, and adjust as needed.
If you lack sufficient knowledge of financial metrics and are unsure about investing, consider seeking advice from a qualified financial professional. A financial advisor can help you assess your goals, risk tolerance, and recommend suitable products based on your individual needs.
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