Though there is more participation from retail investors in Indian investments, but still most of us have not changed our perception on some investment myths although the awareness about investment has increased in the recent past. Let us go through some of the famous beliefs/myths that people still give importance.
1. I am very young to think about retirement
In today's world, a youth in early 20's having a good job at hand will most likely not even think about retirement planning. He is more inclined to spend on modern accessories. Nothing wrong in spending but it should not happen at the cost of "retirement planning". Its never early to start for retirement planning. Early planning will give the benefit of compounded annual return on your retirement investment.
2.Investment should be made only for 80(c) limit of 1 lac.
Most of us think about tax only in the month of march and collect funds upto 1 lac to be invested in tax instruments to save tax. People don plan tax early in the financial year. Investment should not be limited only to 1 lac of 80(c). If you have a positive net worth , you should consider investment with the positive net worth.
3.You can take higher risk in rising markets.
This is the most glaring mistake that investors commit in a bull market. When stocks are on the rise, they violate their asset allocation, invest more than needed in equities and when the market crashes they realize that they had invested more money in equities than actually required.If you are risk averse investor, you should be the same irrespective of market changes.
4.Invest only in equity since it gives higher returns.
One should not concentrate all his investments in a single asset class. It should be a diversified investment portfolio. Take the current situation, if you had invested all your money in equities, you would be suffering big loss now.
5. Invest once in a year and forget it
Investment is not a one time activity,it should be constantly tracked in a regular interval and evaluated once in a year. If your investment is not doing well over a prolonged period, you should consider exiting and moving to a different investment channel.
As a educated investor, try to avoid giving importance to these myths and also spread a word to your friends on the same.