How2invest: A Beginner Guide To Start Investment Journey

How2invest or how to start investing? These are the main concern of lakhs of beginner investors. Since investing money is such a broad landscape, they often confuse how and where to invest. Also, many investment options are available, often confusing beginner investors in choosing the right one.

But the positive thing is you are not alone, and learning investment is not such a hard thing. Even I had a very basic investment knowledge when I started my investment journey in 2018.

Keeping the concern of the beginner investor, I have written this article to help them start a successful Investment journey. Keep reading…

How2invest: Basic To Know

How2invest? The answer to this question is very complex as there are many investment options available which I have discussed below. But before starting investing, I suggest analyzing your financial situation and goals, as every individual has a different financial situation and goals.

These five steps can help you figure out how2invest your money now.

1. Assess Your Financial Situation: Before investing, it’s crucial to have a clear understanding of your financial goals, current financial situation, and risk tolerance. Consider your income, expenses, debts, emergency savings, and other financial obligations.
2. Set Clear Investment Goals: Determine your goals with your investments. Are you saving for retirement, a down payment on a house, or a child’s education? Establishing clear investment goals will help guide your decisions and asset allocation.
3. Educate Yourself About Investing: Take the time to learn about different investment options, such as stocks, bonds, mutual funds, real estate, and more. Understand the risks and potential rewards associated with each type of investment.
4. Diversify Your Portfolio: Diversification is a crucial strategy to manage risk in your investment portfolio. Instead of putting all your money into a single investment, spread it across various asset classes and industries. This way, if one investment performs poorly, others may balance it.
5. Seek Professional Advice if Needed: Consult a financial advisor if you feel overwhelmed or unsure about your investment decisions. A qualified professional can help you create a personalized investment strategy based on your goals, risk tolerance, and time horizon.

But before starting investing, I would suggest you must have these three Insurance.

1. Term Insurance
2. Health Insurance
3. Emergency fund

Now let me explore these in detail…

1. Term Insurance

As the name suggests, term insurance ensures your nominee or beneficiary will get a fixed amount in case of any mishap to you. It is considered best to take term Insurance of 20-25 multiple of your salary. For example, if your annual salary is 5 lakh, you must have term insurance of 1.25 crores.

Read More: How Do I Know How Much Insurance to Buy?

2. Health Insurance

We all know how much medical expenses have increased. If you must be admitted to the hospital once, it may be your lifetime earnings.
Finished. In the Corona period, we have seen how many people put their lifetime savings. That’s why health insurance is very important.

3. Emergency Fund

You may probably be aware that many companies are doing layoffs, or you may have to take a break in your career. Then the Emergency fund comes to the rescue. Ideally, having at least 6 to 12 months of expenses in emergency saving funds would be best.

Read More: The Best Place to Store Emergency Savings

Now let me go through the Investing journey.

Types of Investment Options

So if you want to know How2Invest, then it is also necessary to understand the available investment options.

1. Fixed Deposit (FD)

When it comes to investing, the first thing that comes to mind is a Fixed deposit (FD). It is considered one of the safest investments because you will get a fixed amount of interest after a certain time, independent of market ups and downs. Usually, the rate of interest for FD is 6 7 percent.

Read More: 5 Best Tax Saving Fixed Deposits To Invest In 2023

2. Investment in Gold

Investment in gold is always considered safe, and you will get 8-10 % of your annual return. Here I would clarify that investment in gold does not mean buying jewelry, as it involves making charges, impurities, and conversion charges. When you will going to sell, you will never get the same value. So, always invest in digital gold, or you may consider sovereign gold bonds.

3. Investment in Real Estate

Investment in real estate may grow your money by 8-10 percent. But the main problem here is you need a lot of money at once to buy commercial or residential space. So I would suggest investing in a real estate investment trust.

4. Corporate Bonds

Usually, you will get 9-12% of return if invested in Corporate bonds. But it is a little bit risky. Corporate bonds are debt securities issued by corporations or companies to raise capital for various purposes, such as financing expansion, funding projects, or refinancing existing debt. When you buy a corporate bond, you essentially loan the issuing company for a specified period. In return, the company promises to pay you regular interest (coupon payments) and return the principal amount (face value) at the bond’s maturity. So you will get regular income if invested in corporate bonds.

5. Mutual Funds

Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. They are managed by professional fund managers, who make investment decisions on behalf of the investors based on the fund’s objectives and investment strategy. When you invest in a mutual fund, you buy shares, and your returns are directly related to the fund’s performance.

Conclusion:

Through this article, I have tried to clarify a very complex question of How2invest in a very simple manner. So I hope you have the answer to this question How2Invest, and now you can easily start investing.