Investment is the way to make your money work for you when you are busy with your work. To start an investment you must keep the capital ready. The total money you want to invest is called capital. If you are a beginner in investing then this article will help you with the basics.
Set your Goals
You have to set goals on how much you can invest and the period of the investment. Setting goals will help you to choose the right investment strategy. You can plan your goal to match your long-term or short-term needs like an investment for retirement, buying property, kid’s education, etc.
Know your Risk Appetite
Investment in equity and mutual funds is a risky investment. If you want a risk-free investment then you can invest in bank fixed deposits, Post office schemes, RBI Bonds, PPF, etc depending on your needs. If you are not satisfied with the low returns given by risk-free investment then you should consider investing your money in the stock market.
The higher risk you take higher will be the returns you get or you may be losing your capital. So decide how much risk you can take.
|Risk Capacity||Investment Options|
|Very low Risk||PPF, Bank FDs, RBI Bond, Post Office Schemes, Senior Citizen Savings Schemes|
|Low Risk||Annuities, Insurance, Gold Investment|
|Moderate Risk||Debt Mutual Funds, National Pension Schemes|
|High Risk||Direct Stocks, Equity Mutual Funds, Crypto Assets, IPO|
Don’t put all your eggs in one basket by investing all your money in a single asset. Depending on your goals you should invest in different assets and within different options in asset classes. Diversification lowers the portfolio risk because if a single investment is failing, others may rise and will balance the portfolio.
Whether you want to invest in the stock market or in risk-free assets, you must read all instructions and policies carefully. This blog is just for informational purposes and not intended for investment advice.