Are returns the only thing one should look at?

For most of us every rupee earned is important. Therefore getting a good return on the amount invested is also important.

If you are young your risk taking capacity is good, but at that point of time we are not sure how to go about investing. So most of the investing happens with the advice of friends and family.

But the ones who are giving advice base it on their experience and age and not as per your age and risk taking capacity. So typically happens is either the investment is in very safe investments like bank fixed deposits or into shares without understanding the risks.

So the important thing is understanding what you are saving for and how much time you have for achieving it. This will give you a head start instead of just focusing on returns.

How will higher returns help you if you do not know what to do with the money? This obsession of returns will just take your focus away from life. Stay away from anyone who just talks about returns instead of your needs and wants. You would notice many advertisements as well as bank relation managers of wealth managers just talking to you about returns without understanding your requirements.

Your focus should be to invest in such a way that there is capital protection as well as returns, but they never go hand in hand. Hence some amount of risk is always necessary and the amount of risk depends on your current status of life and where you want to be. So the focus should be on optimizing returns with the right level of risk, taxation, liquidity and income needs. Please note I have said optimizing and maximizing.

Also ensure that the portfolio is easy to understand and manage.

Most young people I meet, mostly the successful ones assume that they know everything about investing, they feel that because they have been successful in one area, they can be successful in all areas, especially investing. The reason is there is so much matter available on the subject of investing in newspapers, TV channels and over the web, that it looks very simple. This leads them to invest based only on returns without understanding the risks.

So if you really want to achieve your goals, contact a financial advisor who will first understand your requirement, suggest a strategy and then and only then suggest the product.