Smart Investment Tips for Beginners

By November 5, 2018
investment options

Saving money is not enough as inflation eats away at the value of your money. So, you need to invest your corpus for it to grow. Whether you are in your mid-20s, starting a new venture or approaching retirement, a smart option is to begin investing as soon as you can so that you can achieve your big financial goals. Start by diverting around 10% of your earnings towards investing in financial instruments and secure better financial security for yourself.

To build a corpus of funds successfully, ensure that you are practicing good financial habits such as monitoring your expenses and using credit wisely.

As understanding how, where, and how much to invest can prove to be a challenging task, here’s a guide packed with tips on how you should make a beginning.

Set time-bound financial goals

Before investing your hard-earned money, set objectives and goals. This will give you a reason as to why you should invest and where. If you are planning to invest for your retirement, for your children’s marriage or higher education abroad, you must invest in long-term investment options in india such as fixed deposits, real estate and mutual funds. Similarly, choose instruments that align with your short term goals and the amount that you need to fulfil them.

Start investing early

If you want to earn the best returns possible, you must also start investing early. This is because when you start investing early, say at the age of 25 rather than 30 years, you will earn interest for 5 more years. This may seem insignificant but in the larger scheme of things it will have a sizeable impact on your finances. By starting early, you give yourself a chance to multiply your money at a better rate.

Determine your risk appetite

Choose investment instruments based on your risk appetite. For instance, if you have just started working, your risk appetite is higher as you have several working years ahead of you and can make up for any losses that you may incur now. As a result, you can invest a larger portion of your funds in market-linked instruments.

But if you’re in your 40s or 50s, closer to retirement, your risk appetite is low because if you incur a loss now, you won’t have enough time to make up for it. Therefore low-risk, secured return options are better for you at this stage.

Create a balanced investment mix

Even if your risk appetite is high, it is ideal to create a portfolio that has a mix of high- and low-risk instruments. This ensures that in the eventuality that one instrument fails to deliver results, the returns from the other instruments will balance out the loss. One way of earning good returns without any risk is by investing in instruments such as fixed deposits, government tax-free bonds, and other such instruments.

Fixed Deposits from NBFCs such as NBFCs give you assured returns. Besides, you can enjoy high FD interest rates of up to 9.10% if you are a senior citizen starting a cumulative FD for a minimum of 36 months, or 8.75% if you’re a regular investor. You can invest amount as low as Rs. 25,000 and still enjoy tax benefits. You can also choose a tenor of your choice and forecast your returns with an FD interest calculator before you invest.

When it comes to investing, in addition to these tips make sure that you seek professional advice if you’re unsure. Also read up on investment options before taking the plunge and explore instruments from various financial institutions to get the best deal.