In a rapidly growing economy like India, investment is one of the driving forces of the economy, and its role is expanding with the growing interests of people and polity. Employment of financial resources with the expectation of beneficial returns over some time is an investment. Financial collateral is one of the main reasons for most people to invest; to lead a secure and steady life. Making use of your savings or idle money to gain monetary objectives through smart investment naturally increases its worth. Investment is unnerving for people who are thinking of investing or just starting because of fear and risk involved. Somebody new may not be able to decide where and how to invest, and it can result in financial losses.
Investing Tips for Beginners
So kick start your investment journey with right choices and with the help of these pointers.
Purpose of the Investment
Setting your objectives should be the first thing to do before embarking on this journey of investment. Whether you plan to invest for security, for steady life, to be wealthy or for other short-run objectives?
Beginners are advised to invest in short term investment plans and schemes to understand the dynamics of savings and investment better as some investment plans offer no certainty of returns. To grow your portfolio, start investing in the very first phase.
Consistency is the key to keep your earning to yourself as money earned through careless investing would eventually get spent. Don’t let your money rest as resting would subsequently make it an idle asset that may not be ideal for you as idle wealth is a missed opportunity. So investing on regular bases in short term investments or even long term investment will yield you higher profits.
The very first thing to assess before going for any plan or investment scheme is to analyse the risk involved in that particular plan. Analysing would give you an insight into the level of risk a product or project holds. You should do comprehensive comparative research between schemes and then invest appropriately. Doing the research study would help you avoid any potential danger and loss.
Best of All
One best way to make your portfolio attractive is to diversify it. Investing in different assets and markets would undoubtedly give you an advantage of avoiding huge losses, as investing in just one asset may have higher chances of your money drowning but investing in a mix of assets, products and markets would give you an edge over the potential loss. After investing in a less risky plan, one must choose between short term and long term investment or both, depends on your objective. Diversification is the most favoured method of risk management.
One of the biggest mistakes people do is opt for short cuts to avail instant profits, and this is the reason people end up losing a large amount of wealth. Your best bet is to invest in an orderly and well-disciplined manner to yield higher returns. Options available to make instant money are subject to investment hazard, stay away from these gimmicks.
These tips will help you avoid making investment hazards.
Where to invest?
Where to invest is the big question that troubles many budding investors who are looking for a suitable field to invest.
Some of the best ways to invest for beginners in India are:
Mutual funds are in high demand in the market. Investing in mutual fund SIPs is becoming popular because of their return benefits, be it debt funds, equity mutual funds, or hybrid mutual funds. But professionals advise to invest in debt funds because of the low level of risk involved, and it would be best for a beginner. Understanding various terms and schemes is very important in this case as a beginner wouldn’t know all the know-how of this. And as a beginner, it is best to go for short term mutual funds to get to know it better.
Public Provident Funds
PPF is favourable to people because of its tax-free interest. PPF serves as an excellent deal for people because of earning without the tax and also because of relatively higher interest rates. It is a long term investment plan, so this gives a drawback for people looking for short term plan with higher interests. PPF is better than bank deposits in terms of long-run strategies.
Everyone in India loves Gold, and it is the source of financial stability for people as this is also an excellent option for investment. It is suitable for everyone because of its unfixed tenure and greater chances of high returns. Investing in gold is a better choice of looking for short term or long term investment in India. Keeping gold as a material thing is not the only option; investment in gold ETFs and gold bonds is also a good option.
Stocks and Bonds
Stocks and bonds are also a good option because of their returns. Although there is a degree of uncertainty in this area, the profit is handsome, making people take risks and invest in these.
A significant difference in stocks and bonds is that in case of loss or bankruptcy of the company, stockholders don’t get any returns whatsoever, but bonds are like a loan to the company so even if there is a loss, bondholders receive the amount promised.
But investing in shares is still a good option for people looking for higher returns and is not afraid of risks.
Fixed Deposits (FD)
Investors looking for a short-run investment generally opt for fixed deposits as these are good options for good returns. Also, these are good in terms of long-run investments because they give higher returns. High risk involved in these is the main reason for risk takers to be more interested in them. They could be corporate FDs, bank deposits, and NCDs (non-convertible debentures).
Other than the options as mentioned earlier, there are many different options available to invest for budding investors, like recurring deposits and money market account.
So, instead of pondering over things like where and how, start your investment journey and grow your portfolio.
Remember, when you invest, you are saving up for your future; you are buying a day for that time when you don’t have to work. So invest wisely, you need to decide for it alone, take the plunge.