Common Investment Dilemmas 1

Common Investment Dilemmas

Getting into a problem while investing is a common sensation. It usually happens when traders are indecisive about two seemingly similar situations or investment avenues. If the dilemmas on aren’t tackled early, it might lead to a flawed investment decision, which may be disastrous for finances. These dilemmas generally are a result of the lack of knowledge among investors about various investment options.

This leads to a dilemma about which investment option is the most suitable in a given situation. In the bid to simplify things, investors look for answers that may have worked because of their colleague or friend before. However, because the situation varies across investors, there is no clear-cut answer or standard solution that will hold best for all investors.

In this informative article we bring out 5 common investment dilemmas that traders grapple with regularly while investing. This is undoubtedly the most common investment dilemma faced by several investors, no matter their investment expertise. This problem is rooted in the investor’s belief that investing in stocks and equity funds is the same thing.

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  • The ability to gather baseline data before the start of project, if necessary, and
  • Mortgage re-financing / collateral take-out and the result on cash flow
  • Strategic planning

In actuality they are very different and suit investors with distinct profiles, although for a category of traders both options may prove practical. While buying stocks, investors are required to do their homework (read research) pre-investment and post-investment. This involves understanding not simply the company, but the root sector also.

This is in addition to grasping the macro-economic implications and its own impact on the business under review. Having conducted the research pre-investment, the trader must continue to do this post-investment to ensure he is spent with the right company. With shared funds it’s a little less complicated. You’ll still want to do the essential research to select the right equity fund.

But having done that, the rest of the research (that the trader in stocks must do on an ongoing basis) is performed with a team of experts (read-fund managers). This is the dilemma that a lot of investors grapple with. In fact, it won’t be wrong to term it among the most challenging investment decisions.

Of course, in many cases, the traders are cornered in this situation because they are uncertain of their investment objectives. If there is clarity on that front, your choice to redeem/stay invested is a relatively easy one then. Investments are usually designed to achieve a specific investment objective. Hence, ideally investments should be held before the set objective is reached. However, there could be situations where investors are left without a choice but to redeem their investments mid way. Usually, such situations arise if a specific investment does not perform relating to goals making the redemption an apparent option.

Although this problem sounds surprising, yet it’s true. Many traders find it difficult to select from ELSS (equity-linked savings system) and ULIPs (unit connected insurance plans). It is obvious that they fail to appreciate that while both are tax-saving avenues, they are two completely different investment options and cater to different trader needs and goals.