When is the right time to invest?
Yesterday was the best day to start your investments. If you missed it, you should start your investments today. Delay it further only if you want to forgo some extra returns.
Don't worry too much about getting everything right. If you are following the basic rules, you will definitely get it right. It is quite usual for you to feel a bit nervous when you are investing in unfamiliar instruments for the first time. But you will learn on the way. So, don't let your nervousness delay your investments further.
As said before, always try to match your investment horizon with your investment choice. This will help you eliminate unwanted choices, and identify the right ones. It will also save you a lot of headache later. As a rule, avoid risky investments like stocks, equity mutual funds for short-term goals. This is because equity can be extremely risky and volatile in the short-term. You should try to preserve your capital and try to secure stable returns for short-term needs. However, if you have time in hand, you can be a little adventurous and invest in equity. It will help you earn a few extra percentages. This is because equity has the potential to offer superior returns than any other asset class over a long period of time.
Don't forget to review your investments periodically. Investing and forgetting all about it is not a great strategy. You should regularly check how your investments have done over a period of time. Always compare the performance of a mutual fund of your choice with its peers and the relevant benchmark. If you find that the performance is not up to the mark, put it in a watch list. Track it for the next few months and try to find out the reason for its underperformance. If you find reasons to believe that it is not going to bounce back again, sell it. There is no point in continuing with a bad investment because it robs you a chance to make more money elsewhere.
You should also sell your risky investments at least two years before your goal and park the proceeds in a safe avenue. This is to ensure that you have the money safely parked somewhere when you need it.