How to Identify Promising Investment Opportunities

If you are looking to invest a share of your income, you must first choose from an array of options available to you such as mutual funds, fixed deposits, real estate, Public Provident Fund, etc. However, you can’t and shouldn’t invest in these instruments without devising a financial plan first. This is because all these options are unique in their own way and you must pick ones that serve your goals best. This approach will allow you to maximize your gains.

So, take a look at the checklist that you should follow to identify promising investment options when you evaluate your portfolio this year.

Check if the instrument suits your financial situation

Before selecting an instrument from the plethora of options, you must ensure that it suits your financial situation. You must strive to create a balance in your investment portfolio, which means that you must have liquid as well as non-liquid assets in your kitty. Additionally, you must know every benefit of the investment to understand how it is working towards achieving your goals. This includes being well aware of the tax benefits it offers and possible risks. Most importantly, check to ensure that the instrument is going to help you come out of a poor financial situation, or maintain enhance your financial stability.

Check if your Investment option caters to your financial goals and risk capacity

 You are sure to have different financial goals than your colleague, friend, or sibling, based on your family size, lifestyle, wants and needs, and the assets that you want to purchase in the future. So, it may happen that an instrument that works for others may not be ideal for you. In this regard, the investments that you make must also be in line with your risk appetite.

For instance, if you want to earn the regular income and have a low-risk appetite, you can invest in FD. It is extremely safe, carries high CRISIL and ICRA ratings, offers up to 8.4% interest, as well as flexibility with regards to the tenor and premature withdrawal. On the other hand, if you have a greater risk appetite, you can consider shares and mutual funds as well.

Check if it Yields High Returns

 Before investing, it is essential that you compare the interest rate offered by various institutions to identify the best option. Needless to say, you want to pick the instrument from a financial institution that is reliable and transparent, and offers competitive returns. Once you have selected the type of instrument, for example, an FD, you must compare the FD interest rate offered by different financial institutions by using an FD calculator. By viewing the maturity amount of various FDs, you will be able to find the best one for yourself.

Now that you know the measures you should take to identify the best investment option, you can decide whether you want to invest in short-term or long-term instruments and alter your portfolio accordingly.