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Evaluation of Investment Products

Saving, as a habit , has been a part of the human psyche since Stone Age. Even when surviving in caves, humans had the basic understanding to store or save their resources and utilise them in need. But all this while, we were never taught how our resources would or in today’s age, money will grow with time. The money that you invest fetches you additional monetary returns as years pass. But there are several factors to be considered before and after investing your money. Evaluation of Investment ProductsThere is always going to be a certain level of uncertainty that affects the ultimate outcome of any investment. That is something we cannot control. But we can control the quality of our investment decisions. Below are some factors to be considered while evaluating your investment products: Investment Period –It is important to understand the time period of investments. There are many investment products which have a lock-in period. For e.g.: Equity Linked Saving Scheme (ELSS) mutual funds have a lock-in period of 3 years before which you cannot withdraw the money. Hence, if your financial goal is a short term goal, for less than 3 years, you would most likely not invest in ELSS mutual funds.  ELSS are tax saving funds, which are very popular among the salaried class as investing in these funds help reduce your tax liability. Risk - Any decision is a risk. As investors, your decision will either result in making or losing money. To make a good decision, we need to know what risk we are taking, why we are taking it and what the expected outcome is. Knowing those things will allow us to evaluate the decision in the future.