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You make efforts to maintain your hair – you oil them, you apply gels, you even try home remedies such as applying curd or lemon. Without all this, you will still have hair but would there be volume, strength or growth? Maybe not! Likewise, when you save money, you sure will have savings, but will there be growth in that money or will the fund be strong enough to support your financial needs? Again, maybe not! And this is why you must opt for investments.
You make efforts to maintain your hair – you oil them, you apply gels, you even try home remedies such as applying curd or lemon. Without all this, you will still have hair but would there be volume, strength or growth? Maybe not! Likewise, when you save money, you sure will have savings, but will there be growth in that money or will the fund be strong enough to support your financial needs? Again, maybe not! And this is why you must opt for investments.
But how to invest money? Well, nobody really talks about the 'how' of investing. This is why we have your back with this simplified yet useful investment guide for beginners!
But how to invest money? Well, nobody really talks about the 'how' of investing. This is why we have your back with this simplified yet useful investment guide for beginners!
Why should you invest your money?
Why should you invest your money?
Before moving to the topic of how to invest money, let's understand why you should invest in the first place. The simple answer is to build wealth and fulfill your goals. The more complex answer, however, is to beat inflation, grow the value of your money with systemic returns, and create wealth that is able to hold its ground in the future.
Before moving to the topic of how to invest money, let's understand why you should invest in the first place. The simple answer is to build wealth and fulfill your goals. The more complex answer, however, is to beat inflation, grow the value of your money with systemic returns, and create wealth that is able to hold its ground in the future.
Take the example of iPhones. iPhone 1 was launched in India in 2007 at a price of Rs 10,850. The latest iPhone 13 Pro launched in 2021 is priced at Rs 1.70 lakh. If you saved Rs 10,000 in 2007 for your future use, you would not be able to buy the latest iPhone with this amount right now. But had you invested Rs 10,000 every year since 2007 and earned an interest of 8% per annum, you could have amassed Rs 2.93 lakh in the last 15 years.
Take the example of iPhones. iPhone 1 was launched in India in 2007 at a price of Rs 10,850. The latest iPhone 13 Pro launched in 2021 is priced at Rs 1.70 lakh. If you saved Rs 10,000 in 2007 for your future use, you would not be able to buy the latest iPhone with this amount right now. But had you invested Rs 10,000 every year since 2007 and earned an interest of 8% per annum, you could have amassed Rs 2.93 lakh in the last 15 years.
This is why systematic investing is important!
This is why systematic investing is important!
Types of investments available in India
Types of investments available in India
There are several investment options in India, such as:
There are several investment options in India, such as:
1. Different types of mutual fund schemes (equity funds, debt funds, hybrid funds, etc.)
1. Different types of mutual fund schemes (equity funds, debt funds, hybrid funds, etc.)
2. Stocks
2. Stocks
3. Bonds
3. Bonds
4. Insurance plans
4. Insurance plans
5. Fixed deposits
5. Fixed deposits
6. Public Provident Fund
6. Public Provident Fund
7. National Pension Scheme
7. National Pension Scheme
8. Real estate
8. Real estate
9. Commodities
9. Commodities
10. Derivatives, and more!
10. Derivatives, and more!
Mutual funds: Ideal investment for beginners
Mutual funds: Ideal investment for beginners
As a beginner, investing in a mutual fund online can be one of the suitable opons. Mutual funds pool in money from different investors and invest it in other securities to earn a profit. The profits are further invested back and earn higher yields, also known as the mechanism of the power of compounding. This helps you earn returns and ultimately achieve your financial goals.
As a beginner, investing in a mutual fund online can be one of the suitable opons. Mutual funds pool in money from different investors and invest it in other securities to earn a profit. The profits are further invested back and earn higher yields, also known as the mechanism of the power of compounding. This helps you earn returns and ultimately achieve your financial goals.
There are several benefits of mutual funds for newbie and seasoned investors. But the convenience and seamless options that they offer can particularly appeal to novice investors.
There are several benefits of mutual funds for newbie and seasoned investors. But the convenience and seamless options that they offer can particularly appeal to novice investors.
Here's why mutual funds can be a good option if you are just starting out:
Here's why mutual funds can be a good option if you are just starting out:
- Mutual funds offer easy investment methods:
The brilliance of mutual funds is that they allow you to invest in a lump sum or via regular instalments. If you have lump sum funds, such as a festival bonus or a cash gift, you can invest it all in a mutual fund scheme of your choice. If not, you can start an SIP in mutual funds. Short for a Systematic Investment Plan, here's how SIP works – SIPs enable you to make small periodic investments in a mutual fund scheme at a chosen frequency, like per month or quarterly.
The brilliance of mutual funds is that they allow you to invest in a lump sum or via regular instalments. If you have lump sum funds, such as a festival bonus or a cash gift, you can invest it all in a mutual fund scheme of your choice. If not, you can start an SIP in mutual funds. Short for a Systematic Investment Plan, here's how SIP works – SIPs enable you to make small periodic investments in a mutual fund scheme at a chosen frequency, like per month or quarterly.
- You must also know about STP in mutual funds.
It allows you to periodically transfer funds from one scheme to another of the same fund house. This helps you tackle market fluctuations and minimize investment risks. For example, say, you have Rs 2 lakh at your disposal today but the markets are not favorable. In this case, you can invest the money in debt funds that are relatively less volatile, and keep transferring a certain sum to equity funds over me.
It allows you to periodically transfer funds from one scheme to another of the same fund house. This helps you tackle market fluctuations and minimize investment risks. For example, say, you have Rs 2 lakh at your disposal today but the markets are not favorable. In this case, you can invest the money in debt funds that are relatively less volatile, and keep transferring a certain sum to equity funds over me.
- Mutual funds offer diversification:
Mutual funds invest in different securities and industries, offering diversification within the same scheme. A single mutual fund portfolio can have investments in different industries like pharmaceuticals, technology, finance, IT, consumer goods, and more. Birds of the same feather flock together, so spreading your money in different industries reduces risk and improves the chances of beer returns.
Mutual funds invest in different securities and industries, offering diversification within the same scheme. A single mutual fund portfolio can have investments in different industries like pharmaceuticals, technology, finance, IT, consumer goods, and more. Birds of the same feather flock together, so spreading your money in different industries reduces risk and improves the chances of beer returns.
- Mutual funds are cost-effective:
You can start an SIP with an amount as low as Rs 500. Moreover, the expense rao and exit load of mutual funds can be low depending on your choice of fund. Equity Linked Savings Scheme (ELSS), a type of equity fund, also offers a tax deduction of up to Rs 1.5 lakh annually under Section 80C of the Income Tax Act. So, you get to save more money and, at the same time, invest it for inflation-bean growth.
You can start an SIP with an amount as low as Rs 500. Moreover, the expense rao and exit load of mutual funds can be low depending on your choice of fund. Equity Linked Savings Scheme (ELSS), a type of equity fund, also offers a tax deduction of up to Rs 1.5 lakh annually under Section 80C of the Income Tax Act. So, you get to save more money and, at the same time, invest it for inflation-bean growth.
Conclusion
Conclusion
These are only a few benefits of mutual funds. Only when you start investing will you realize that the actual list is as long as Rapunzel's braid. So, if you are a beginner wondering how to invest money for your varied financial goals, consider investing in a mutual fund online. If all goes well, you may be using the latest iPhone 10 years from now to keep track of your returns!
These are only a few benefits of mutual funds. Only when you start investing will you realize that the actual list is as long as Rapunzel's braid. So, if you are a beginner wondering how to invest money for your varied financial goals, consider investing in a mutual fund online. If all goes well, you may be using the latest iPhone 10 years from now to keep track of your returns!
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