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How to Start Investing for the First Time?

IndianMoney.com Research Team | Updated On Tuesday, November 12,2019, 05:22 PM

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How to Start Investing for the First Time?

 

 

If you are a beginner and want to start investing then you may have several questions floating in your head. The most basic one is how to get started? Investment strategies differ from person to person as each tries to achieve different financial goals. However, the below-listed points will help you understand how you should proceed when you are a complete beginner.

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How to Start Investing for the First Time?

Decide How Much You Should Invest?

The amount you plan to invest should be in line with your investment goal. Therefore you need to chalk out how must you expect as the maturity proceeds and the time by which you need to reach it.

The most common investment goal people opt for is retirement planning. Most people have a PF account which is a mandatory tool that works for your retirement. You can open additional accounts like PPF account or NPS to create an additional corpus for your retirement.

As a general rule people often invest 10% of their income towards their retirement corpus. For that matter, it includes your contribution to your PF account. If you want to be more specific, you may use the online retirement calculator to exactly calculate the money you need to invest to reach your goals. 

Similarly, for other investment goals, consider the time and amount you want to invest. Then work on breaking this amount into monthly or quarterly payments without disturbing your monthly budget. Though it’s easier said than done, you can achieve such goals with persistence and determination.

See Also: Best Investment Plans for 2019

Open an Investment Account:

If you are self-employed and do not have a retirement account, then you may choose to invest in an individual retirement account like NPS or PPF account. You can avail of great tax benefits as well by making such investments. But retirement accounts have certain restrictions about when and how the money can be used.

If you have other investment goals, you may have to open other investment accounts that may not have tax benefits, unlike retirement account. You do not need a lot of money to fulfill your investment aspirations. You can easily deposit a lump sum amount in FDs or NPS accounts. Other investment accounts that can be started with relatively small amounts are ELSS, SIP or RD accounts. Your investment choice solely depends on your risk appetite and the number of returns you want to generate from your investments. You must also evaluate the tax implication of these investment instruments to maximize your returns.

See Also: A Five-Minute Guide to the Systematic Investment Plan

Pick an Investment Strategy:

An investment strategy is essential to keep you away from distractions and remain motivated.

While investing in stock market instruments you need to take a few investment approaches. You may manage the money yourself or may take the help of brokers or a fund manager to get assistance in managing the money.

If you opt for a broker or a fund manager who helps you manage your accounts and make the right investment choices, you may have to spend some extra amount as their fee.

For investment accounts that require you to stay invested for a longer period, you need to devise an investment strategy to remain focussed and extend money with dedication. With an increase in income make subtle changes to these plans to accommodate the extra income into your investment accounts. This way you can stay invested for a long time and create a robust corpus without negotiating with your lifestyle.

See Also: Types Of Investment Plans

Build an Investment Portfolio:

Once you have created an emergency fund and have some safe deposits like FD or NSC you can think of diversifying your investment portfolio by investing in other options.

You may consider investing in the stock market or mutual funds. For better outcome invest in a mix of different assets. A well-diversified investment portfolio consists of large-cap investments, investments in equities as well as in debt instruments. You must also invest a portion of your income in real estate and gold.

Given below are some of the best investment options known to generate promising returns:

Invest in Equity: Equity investment is known to generate inflation-beating returns. The choice of equity investments can help you achieve your financial dreams faster than any other investment tool. Thus you can double your money when you sell your stocks at a much higher price as well as receive a bonus and dividend payment that further maximizes your returns.

Invest in Fixed Income Securities: investment in such securities helps you receive periodic payments in the form of interest or dividend payment. The most common fixed-income securities consist of treasury bonds, preferred stocks, and certificates of deposit.

See Also: Best Investment Plan For 3 years

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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