With rampant innovation in financial products and galore of them available, very often many investors are left to wonder as to which investment avenue, is the most suitable as per one's objective and financial goals. While there's host of information available disseminated by magazines, pink papers and websites, it hasn't helped investors to select the right investment avenue and dawn wisdom upon them.

We believe that investing at its core is a rather simple activity but requires a lot of discipline. At the same time as investors you ought to exercise caution and act responsibly while making any investment decisions. Through this article, we present a few points which one needs to take into account to transform into being a smart and a wise investor.
 

1. Have an investment objective in place
   
   While we all invest with the sole objective of wealth creation, it is vital to reckon the unique financial goal for which we are ploughing in our hard earned money today, to reap benefit in future. All of us, in our life cycle have different financial goals - they could be buying a dream home, car, travelling abroad for leisure, children's education needs, their marriage and even one's retirement needs. But in order to achieve these goals, it is imperative to prioritise them and develop an investment portfolio depending on your age, income, existing liabilities, appetite for risk and nearness to your goal. A systematic and discipline approach to investing is far better than investing ad hoc, as by doing so your portfolio would be structured with those investment avenues which suit your need(s).
   
   Remember to define and set clear goals; happy go lucky attitude may not always work for you.
    
2. Recognise the risk profile and adhere to it
   
   As an investor, it is necessary to be clearly aware of appetite for risk (commonly known as risk profile) while making any investment decision. Broadly speaking the ability to take on risk reduces as one ages. Thus, it should be understood that each individual has a unique risk profile and recognising the same should be the first step. For example, there could also be two individuals of the same age group, but are having dissimilar risk profiles. For one despite the age permitting him to take high risk, there could be other facets such as income, existing liabilities, etc. which could refrain him from taking high risk. Thus for one, exposure to risky asset classes such as equity could be high, while for the other, due to appetite for risk being low, could be exposed to more low risk asset classes. Thus investors need to invest in investment avenues in line with their ability to take on risk, by evaluating facets such as age, income, existing liabilities and time horizon for which one would like to stay invested.
   
   Remember the age old proverb, 'Live within your means'; do not go overboard and invest in asset classes whose risk profile does not match with yours.
    
3. Don't ignore asset allocation
   
   Investing a large portion of the portfolio in the same asset class can prove to be a risky proposition. Thus one, in accordance to the risk profile and other facets thereto (as cited above) needs to allocate his assets in a systematic manner, across asset classes such as equity, debt, gold and real estate. Moreover, apart from diversifying your portfolio on the basis of asset classes, one should also consider diversification on the basis of investment avenues, time horizon, across issuer of securities, across countries; for diversifying wisely and finally one should also not refrain from rebalancing the portfolio if required.
   
   Remember not to keep 'all your eggs in one basket'. Also, diversification is the key as it helps to reduce the overall risk on your portfolio.
    
4. Track your investments
   
   Making investments to achieve one's investment objective or goal does not bring an end to the investment process; it is rather the beginning of the journey to wealth creation. Investing is an on-going process, whereby one needs to continuously review their portfolio at appropriate time intervals. This ensures that one is not only updated with respect to their portfolios, but also gives an opportunity to make necessary alterations to the portfolio in case some investments have failed to deliver.
   
   Remember being alert about the performance of your investments goes a long way in making smart decisions.
    
5. Select the right investment advisor
   
   While there is host of information and investment advisors today from whom you can seek advice on your investment, in our view it is imperative that you select your investment advisor wisely. This is because, as we have said earlier, investing is a serious business, and thus the investment advisor too should be serious and ought to consider various facets such as your age, income, existing liabilities, risk profile, goals and nearness to goals, in order to provide a serious and prudent advice. You can't have an advisor who puts his interest (of earning commissions) at forefront, and keeps investors interest at bay. Moreover, while one often tends to seek advice from friends, relatives and family, you ought to recognise that there's in-depth research which goes in before making an investment, as thus merely relying on tips may be hazardous to your wealth.
   
   In order to obtain a prudent investment advice, it is important to hire the services of an independent and unbiased professional investment advisor; and if you do so half the battle is won because here the investment decisions will be guided by solid research and keeping the interests' of the investor at the forefront.
   
   Remember it is your hard earned money that you invest in order live a blissful life ahead. Thus is imperative for you to adopt prudence and be a responsible investor.

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