You have to ask a lot of questions before committing to an investment. But the due diligence is often limited to looking at the risks and returns. To check the suitability of an investment, one needs to do more. Here are some factors you must consider during your investment process.
Go beyond returns
A 10% expected return may seem a good reason to invest. But that alone is not enough. Look at how the returns are structured. If your goal needs periodic funding, then the investment too must provide periodic returns, such as fixed deposits, bonds or monthly income schemes. If your investment is in equity, where the return is more from appreciation in value, generating a regular income would be difficult.
