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How to be a better investor in 2023

8 Mins 21 Dec 2022 0 COMMENT

Known to be one of the best ways to generate wealth, investing can be extremely rewarding if done right, but at the same time, there are certain things an investor must keep in mind. With the year coming to an end, many investors reflect on how their investments fared. This past year has been extremely difficult for big and small investors.

With rising inflation, a slew of interest rate hikes and geo-political tensions, the financial markets were highly volatile and rough throughout the year. The surety that the next year might be better, but here are some investing resolutions and things to keep in mind that will help you be a better investor in 2023.

Diversify your portfolio

Most successful investors have one thing in common - A diversified portfolio. It is wisely advised not to put all eggs in one basket. This applies to investors as well. Investors should make efforts to diversify their portfolios over various asset classes and different sectors. An investor who is primarily in stocks should diversify sector-wise, too, instead of concentrating his financial resources on one company or a sector. Diversification can help you mitigate risks and invest better. Not all sectors or asset classes perform the same, but during volatile times, a diverse portfolio can help you ride the waves better.

Invest through SIP

One of the best ways to invest money is through SIP. Through a Systematic Investment Plan (SIP), an investor can invest a small amount of money at regular intervals like weekly, fortnightly, monthly or quarterly. SIP reduces the need to have a large capital as you can invest with as little as Rs 500. The SIP amount is flexible and can be modified, paused or cancelled at any time. Moreover, an investor benefits from a lower cost price average and compounding of returns. You can start 2023 by investing through SIP. Not only will it help you manage your risk better but will also reduce stress.

Spending time on research and analysis

Investing is an art as well as a science. There is no one correct approach to investing in the stock market. Investors can make use of several different methods and approaches while coming up with investing strategies and techniques. Undergo fundamental analysis, business model analysis, management analysis, or even make use of quantitative methods by studying the financial reports, earnings ratio, cash-flow analysis etc. In order to be a better investor in 2023, an investor should spend time and look into the various approaches to investing. This can help you identify numerous investment opportunities and help you learn how to make money in stocks.

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Investing for the future

As important as it is to invest in order to create wealth, it is equally important to invest to live a comfortable life after retirement. When it comes to retirement planning, there are several options available to investors. The National Pension Scheme (NPS) and Public Provident Fund (PPF) are the best ways to invest in order to receive a regular income after retirement. In 2023, investors should look at these pension funds not only as an investment but also as a safety net for their golden years.

Stick to your rules

Many new investors looking to learn how to invest in stocks often overlook the importance of having a system and sticking to it. As an investor, it is not necessary to have a well-defined system but is important to have certain rules that should be defined and adhered to. These rules can pertain to entry or exit conditions, time horizon, averaging, etc. In 2023, creating and following your rules will help you be a more disciplined investor. Not only will it help you to inculcate patience, but it will also help you with keeping the emotions of fear and greed aside.

Take the help of a financial advisor

For newer and seasoned investors, taking the help of a financial investor can be helpful. With growing inflation and uncertainty about global events, the markets may carry on to see some volatility in the upcoming year. Taking the help of financial advisors is one of the best ways to invest if you lack the necessary experience. Portfolio management schemes and wealth and investment advisors can guide you correctly and help you be a better investor in 2023. Although seeking help may make things easier, it is very crucial to do due diligence while selecting an advisor. It is important to take advice from licensed professionals, and their past performance and history should be known as well.

As an investor, it is important to keep growing and changing along with the markets. The markets are always moving, and that should reflect on an investor’s approach towards investing as well. Following certain rules and risk management principles and maintaining a diverse portfolio can help you be a better investor in 2023.