Online Investments and its flaws

Erratic investment pattern

Rather than undertaking ad-hoc investments, make the act of investing a part of your routine. By doing so, you follow the ‘savings first’ approach towards your finances. Regular investments over a long period of time, makes your money grow exponentially.

Concentration of investments

Do not concentrate your investments plans in a particular asset class, industry, company, etc. In case the underlying asset class/industry/company does not perform as expected, the capital erosion would be severe.

Mismatch in investments and goals 

The investment you choose must match your financial goal(s).  For instance, in case of a short-term goal, a debt oriented investment would be preferable vis-à-vis an equity oriented investment.

Inadequate insurance cover

While it is essential to have insurance, you also need to reassess your insurance needs regularly. An insufficient insurance cover Enhance or prune the insurance cover to ensure that you are optimally insured at all times.

Not making nominations and a will

You should assign nominees to all your investments. It is also desirable to make a legal will. This would safeguard the rights and interest of your heirs and prevent them from getting embroiled in complex legal proceedings for establishing their rights on your financial assets.

Not maintaining proper records

To ensure smooth transactions for your investments, maintain all records. Have copies of accounts statements, pass book copies, etc. Not only will you have a bird’s eye view of your portfolio, these would also serve as a reference for portfolio rebalancing. The records need to be maintained and updated. You should also make such records available to your nominees and legal heirs.