In the era of smartphones and smart cities, it is no longer enough to be just an investor to grow your returns. It's imperative to be a 'smart investor' to keep up with the times. 

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This just means that if you want to see your investments reaping fruits, it is no longer enough to rely on analysts' views. An investor becomes a smart investor when he/ she uses their own perception and understanding, before putting money into the market or investing it into any investment instruments. 

How do you become a smart investor? 

Find out the risk over returns

The 30-share benchmark BSE Sensex was below the 23,000-mark in February, the lowest level not seen since January 2015. This was because of selling pressure built on weak global cues and a massive sell-off in sectors like banking, power and realty. 

Since then, fast forward to August, the benchmark index has recovered substantially and is around the 28000-mark. 

In a bid to cut their losses, and to cash in on returns before the markets fall much further, as was predicted by analysts at the time, investors rushed to sell their shares. 

Usually, during crises, investors either have a knee-jerk reaction and follow the broader market view or consult an advisor or market analyst. The latter two aren't wrong. But rather than relying on them completely, you can simply do a research on the company. Go through the historical data of the company, read about their performance, and issues affecting the company, and then calculate the risk factor.

Investment advice in analyst reports are generic. They don't take into consideration the risk appetite of the investor who is reading their report or his investment appetite. Neither does it take into account just how much money you can set aside to invest and for how long. While it isn't a bad practice to go through investment reports, it hence becomes important to take the final decision after evaluating the situation according to your own situation. 

According to Brijesh Damodaran, founder and managing partner, BellWether Advisors LLP, quoted in a Financial Express report, "We talk about risk from the returns' perspective. However, it is important that to know one’s risk capacity and risk tolerance. One is the ability to take risk and the other is the willingness to take risk. Both work hand-in-hand. If you have the ability to take risk, but not the willingness to take it, volatility in prices will effect your investment behaviour, which can affect your investment process."

Start early

Evaluation risk factors and returns come much later. Investing isn't easy. It is important to start at an early age, and form a habit out of setting aside a certain amount to invest. 

If you start investing early, the returns may not be much in the short term, but in the long-term, compounding effect will show the benefits. 

Betterment, a financial research website, gives a fine example to explain this. It says, if you start saving just $1,200 (about Rs 80,000) a year—a mere $100 (Rs 6,700) per month— starting at 25 year of age, by the time you're 65 years, you’ll have about $185,700 or approximately Rs 1.25 crore (assuming a 6% return).

But say you delay investing or saving money by 10 years, and start saving $1,200 (Rs 80,000) a year at the age of 35 years till you're 65, earning the same 6% return. You’ll end up with only $94,800 (Rs 63.5 lakh), nearly 50% less. 

Mobile Applications

When everything is just "click" away, there are now various mobile applications which can help you managing your finances and budgets. 

Some of the useful mobile apps are Good Budget, Mvelopes, Wally, Financial Calculator and Mint, which are available on Android and iOS. These apps will help you track and your expenditure and maintain personal finance.