Your investment is USELESS if it does not meet these criteria!!

When seeking investment returns, we frequently fail to recognize the importance of additional essential factors. This article explores the lesser-known criteria that extend beyond just returns.


As individuals, we are constantly seeking out opportunities to invest in products or assets that promise remarkable returns down the line. However, if we solely base our investment decisions on returns, we run the risk of entering a dangerous territory. There are other crucial factors that we must consider, which are outlined below…

# Liquidity

Let me give you a great example of a product that perfectly demonstrates this idea. PPF is an outstanding debt instrument in the world of debt assets. However, it does have a 15-year lock-in feature, as you probably know. Therefore, if your goal is shorter than 15 years or requires some flexibility, PPF is not a practical option for you, even though it is considered one of the best debt products available to us.

# Risk

We are all aware that equity is designed for the long haul, while debt serves to either spread our risk or finance our short-term objectives. Nevertheless, if we foolishly expect equity investments to yield the exact same returns as they did a year or two ago, we are truly misguided.

Same way, Bank FDs kind of products are best suited for short-term goals. However, if you invest in FDs for your long-term goals, then it will devalue your money.

Equity has a volatility risk for short-term and debt products (like debt funds or Bank FDs) devalue risk for your long-term goals. Choosing the mix of assets based on time horizon and risk appetite is the most important aspect of investment.

Derisking your portfolio as the goal is nearer is the most important part of planning.

# Inflation

Inflation is a crucial factor to consider when setting financial goals. Yet, it is common for us to assume a uniform inflation rate for all our goals. However, this may not be the most effective strategy. For instance, if you anticipate a 6% inflation rate for your child’s education fund and diligently invest accordingly, but the actual inflation rate increases by 8% to 10% each year, you might find yourself falling short of the funds needed to achieve your goals. It is essential to account for varying inflation rates to ensure your investments align with your aspirations.

Hence, trying to understand the nature of the goal and the inflation is the most important part of the investment journey.

# Patience

Investing in equity is often driven by the desire for lucrative returns. However, if these returns fail to meet our expectations, we tend to abandon the investment altogether. Unfortunately, this approach can hinder our ability to achieve long-term financial goals. When it comes to assets like equity, it’s crucial to embrace volatility as a friend rather than an adversary. Understanding and accepting this reality is essential to ensure that our goals are adequately funded, accounting for inflation-adjusted returns.

# Finding your path

To reach your financial aspirations, there are two strategies to outpace the inflation associated with a specific goal. The initial approach involves incorporating a combination of equity and debt in your investment portfolio and allocating funds accordingly. However, if you feel uneasy about equity investments or lack knowledge in this area, be prepared to invest a larger amount to secure the necessary funds for achieving your financial objectives.

Unfortunately, it seems that human nature is wired to desire high returns without taking any risks. However, this mindset is simply not feasible. You must either embrace the possibility of risk or be prepared to allocate more funds toward your financial objectives. If you cannot do both, then regardless of the investments you choose, they will not adequately support your financial goals.

Conclusion – Ultimately, the success of your investment hinges on achieving your financial objectives. Regardless of the quality of a product or asset, its value is negligible if it fails to deliver when you require it the most.

4 Responses

  1. Basu,
    Where do you invested emergency fund. Kuvera’s SaveSmart product helps you to do instant redemption up to 2L by investing in 4-5 AMCs Liquid funds. In todays digital world, Do we need 2L cash as an emergency . Because most of us using Gpay,CC or some sort of digital transactions. Would like to know your thought on this emergency fund access. Please share your views.

    1. Dear Devan,
      When you PARK (not invest) your emergency fund, the two most important aspects to look for is LIQUIDITY and SAFETY. These are most important aspect. Rest everything is just a gimmick created by these companies to get your money.

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