How To Start Investing: A Guide For Beginners

In today’s world, young professionals are earning good salaries and enjoying greater financial freedom with increased spending capacities. However, with great spending power comes great responsibility. Instead of binge spending, why not trim the overspending habit with savings and investments?

Sure, market-linked investments offer high returns at a higher risk – a decent choice for newcomers in the financial market. Yet, for those looking to truly amplify their wealth, alternative investments are the way to go.

It is a smart and high-yielding move for a new investor aiming for substantial growth. Remember, it’s not just about earning – it’s about making your money work for you. In this blog, we will discuss how you can start investing with an aim of building wealth.

Why Investing Is Important?

Investing is important for every earning individual. It is the most effective way to build your wealth and achieve long-term goals like paying for college for your kids or saving for your retirement. It is important to have that extra fund for your hard times. Everyone should start investing from a young age only so that you can take advantage of the compounding gains and your money can grow rapidly over time. Investment is not just to keep your money for financial security; instead, it is to grow your money and outpace inflation.

How To Start Investing: 6 Tips

Young earners are inclined to look for quick gains through investments. Some indulge in betting and high-risk returns in the share market and end up losing funds. Saving and making quick bucks is good, but one needs to have an informed approach. However, it is important to maximise your savings and funnel them into lucrative investments. Here are some quick steps that you need to follow while planning for your investment:

1. Retirement Account:

Your ultimate aim for investment is to build wealth so that you can live your life peacefully once you retire and stop earning. In this case, you should first look for a retirement planning and according to choose a plan to invest for your retirements. You can consider investing through National Pension Scheme for this. 

2. Risk Management

You should look to diversify your portfolio with index funds and consider a target-date fund for automatic rebalancing as you near retirement.

3. Explore Options

You should Investigate various assets like stocks for potential growth, bonds for steady income, mutual funds, and Exchange-Traded Funds (ETFs) for a balanced approach.

4. Match Goals With Your Investment:

Matching your investment choices with your financial objectives is a key part of investing, whether you are investing for the short term or long term. For the short term, it is better to choose a high-yield savings account or certificate of deposit, while the stock market is the ideal place for long-term investment.

5. Avoid Common Pitfalls:

You should resist the urge to over-manage your investments. Passive funds often outperform active trading in the long run.

6. Stay Informed:

Keep yourself fully aware of all the financial developments in the market. You need to adjust your strategies to fit the global developments and make smart investments

How Can a First-Time Investor Start Investing?

Mutual Funds

The best options for investing for new investors is a short-term investment plan. SIPs are a great way to help your money grow. Mutual funds deliver 15% compound annual returns. For instance, a monthly investment of INR 5,000 in a mutual fund with a 15% compound annual return could yield about INR 13.93 lakhs after a decade. If you’re able to increase your monthly SIP to INR 10,000, even with a modest 10% return, you could see your savings swell to approximately INR 20.65 lakhs. Setting a target is the best way to help your money grow.

How Should You Maintain This?

Some experts advise setting aside 10%-15% as savings, and as the income starts moving up, you can expand up to 20%-25%. Your salary account can be given standing instructions of compulsory debit within 5 days of receiving your salary each month. This financial habit will help you spread your money in various investments like fixed deposits, recurring deposits, SIP, corporate bonds and contributions in mutual funds.

Have An Annual Investment Plan

One should follow a planned yearly financial goals for investing money. This will give the investor better financial freedom. A first-time investor can invest in short-term investments like recurring deposits, hybrid MF SIPs, post office schemes etc., or alternative investments like asset leasing or corporate bonds bringing higher returns in short duration at low risk over other investments. Exploring alternative investment options could be an interesting option to invest your money and multiply your assets.

Commercial Real Estate

If you are in the second stage of investment and willing to set aside a minimum of 7 years,  investing in commercial real estate is a good investment. Top builders pre-lease commercial properties to MNCs and marquee Indian tenants for 5+ years. Now, this investment format traditionally demands high capital, but co-investment decreases the initial investment capital. The investors earn quarterly rentals, and the average yield is 11%. It is an asset-backed, moderately risky investment which gives high returns to the investors.

Build Long Term Investments

While the stock market can bring potential returns at high risk, commercial real estate can bring potential returns passively at moderate to low risk. This long-term investment can help youngsters build wealthy assets, securing future goals for starting a business or enrolling in technical courses.

Conclusion

Investing is not just about money; it is about shaping your future. Whether it is building wealth, securing stability, achieving dreams, or gaining financial freedom, it is important to make good investments for beginners. Investing smarter would lead your tomorrow to prosperity. Investment is a calculated move that demands focused growth and success. So, when the options are getting wider and more imaginative, why stay fixed on investments that bring low returns or highly unpredictable high returns? An investor should try different types of investments to diversify the portfolio. However, it is important to be sensible while investing. High-yield investments on Grip offer you a fresh and unconventional dynamic approach to growing your wealth. Don’t just watch the future unfold—be part of it. Explore the possibilities with Grip and invest in a future that’s as ambitious as you are.

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