Investing can increase the value of your money by using them in right place at right time. Do not depend on one source of income, have at least 2-3 sources of income. Investment is the best way to have more sources of income. Some side investing tips are:
- Share market (long term compounding)
- Capital market ( Land, Company or firm)
- Online market (is still alien for many people but the best source of passive income)
Section 1: Start with the end in mind (investing tip no. 1)
Money can be the source for living comfortably. You can’t do without your money. It can become your source of living comfortably and you can earn money at the same time.
Investing in stocks and bonds allows you to increase the income from your money. If you invest in stocks then you can earn some extra income. Stocks are a good source for increasing your investment value.
Most people are looking for ways to earn money on the side but some of them are just trying to earn from the wrong source. While these people are focusing on earning extra income from the side, they are not focusing on where their money will come from to spend.
The best way to increase your income on the side is to invest in stocks and bonds.
You can Invest in Nepal share market NEPSE through the secondary market or apply for IPOs.We can also do SIP (systematic investment process) in open-ended mutual funds. SIPs are best for those who have a habit of spending.
Diversify your portfolio (investing tip no. 2)
Diversify your investment portfolio into two types of assets: stocks, which could be listed and traded in the stock market, and fixed income assets, which are generally long-term investments such as treasury bills and bonds. By investing in stocks and bonds you can increase your long-term rate of return on your investment. While investing in stocks you can also take advantage of high earnings growth, low price volatility, and high capital growth. For fixed-income investments, you can choose to invest in debt instruments such as treasury bills, fixed deposits, etc. By investing in these instruments, you will not only increase the investment duration but also you will get the benefits of decreasing interest rates in their favor.
Let me tell you saving and investing are two different things. Saving can also mean keeping your money in your bag or depositing them in a bank where you don’t get any return. But investment means you take the risk and get a good return.
More Risk means More return but you need to be careful. Don’t invest all your money on a single project or share, diversify it. Diversifying will reduce your risk. Let’s say you invest in 10 companies and 5 of them suffer losses and get bankrupt but the rest are in profit. This will give you back your money.
Choose the right investment mix (investing tip no. 3)
Investing is like doing business. You must have a strategy that you can follow and customize according to your age, risk appetite, financial goals, and time horizon. In terms of how to make money on the side, you need to have the right mix of stocks, mutual funds, and Shares. A good part of your assets should be invested in mutual funds and Shares. The same is true for the long term, too.
Using the right mix will reduce your overall risk and make you an expert in it.
Adjust your asset allocation
In case you are under 40 and are planning to retire with 70% of your money, then you should have 30% of it in Shares and 30% in your mutual fund. If you are 60-year-old and planning to retire with 10%, then you should have 35% in Shares and 45% in your mutual fund.
A mutual fund in Nepal right now is not profitable but be optimistic and invest in mutual funds. Now you can invest in Open-ended Mutual funds through SIPs.
Always know the Power Of compounding and invest for the long term.
Invest only what you can afford to lose (investing tip no. 4)
Set a budget that makes you feel comfortable
Look at your account regularly for changes and volatility
Monitor your account daily
Don’t invest money you don’t trust
Act on market volatility
Avoid mutual funds
Sell when prices rise and not when they go down
Not invest in an interest-bearing investment
Be realistic with the amount you plan to invest.
It is better to invest a small amount than invest a large amount.
The returns that are needed depend on the risk associated with the investment.
Let us know what you think about this article in the comments below.
Keep an eye on taxes (investing tip no. 5)
In Investing we pay taxes but ignore them because we think that tax cannot be avoided. You should always understand the tax policy before investing. In Nepal, if you are already a share market investor you know that we pay tax when we sell/ purchase shares. But how many of you know that you pay 7.5% capital tax when selling a share before one year of purchase and pay 5% after one year. So, you must keep in mind that if you want to sell shares in Nepal wait for 365 days after purchase to save your 2.5%. Similarly, we can avoid tax by using different ways such as:
- Contributing to the citizen investment fund.
- Life insurance expenses.
- Write off medical expenses.
- Claiming expenses.
- Making donations.