Investment for beginners
Are you new to investing? Do not know where to begin and where to look for best investment options? Then this article is for you.
Is the investment options for beginners would be different from the regular investors. The answer is yes to some extent. A regular investor knows where to begin, various investment options available and the risks involved in each investment option. On the other side, a beginner is an individual who want to invest money and may or may not have enough knowledge about investing.
8 investment tips for beginners
There are various investment tips for beginners.
Investment Tip – 1: What are his / her financial goals?
What are his/her financial goals? What is he / she expecting by investing the money. It can be for wealth creation, marriage expenses, children education expenses, daughter marriage, hospital expenses, emergency fund maintenance, etc. Based on the goals, he/she can select appropriate investment options.
- Wealth creation: Read how you can become crorepathi by investing Rs 1,600 per month in bank recurring deposit for 20 years.
- Children education / Daughter marriage expenses: There are various best investment options which can be used for children education expenses or daughter marriage. Read our popular article on this subject.
- For married individual who has family and children and want to create wealth, investing in best performing mutual funds for longer term would benefit.
- Insurance policy is not an investment option, but is a necessity or must; hence we would limit our discussion to only investment options here.
Investment Tip – 2 –How is he / she managing the money:
What are his / her monthly savings ? Are enough steps being taken to cut-down the expenses and increase the saving? This step would enable to take decision about whether the amount to be invested is a onetime surplus or whether there are monthly savings which can be invested regularly? If it is a monthly recurring savings to be invested, going for a bank recurring deposit or a Systematic investment plan in mutual funds would be a good idea.
Investment Tip – 3 – What is the investment period?
This would largely influence the decision of selecting the investment options. If an individual has just started earning money, investing in long term (high risk, high margin) investment options like large cap stocks, large cap best performing mutual funds etc. would benefit.
Investment Tip – 4 – Is the amount to be invested an emergency fund?
If an investor wants to invest emergency fund, he/she should look only for safer investments which may provide low returns. There are various safe investments for short term like bank fixed deposits, debt mutual funds etc.
Investment Tip – 5 – Tax saving schemes
Typically an individual started earning; he/she would have a very small limited or zero tax liability. Hence going for tax saving schemes would limit the returns as they are high safe, low / medium returns investment options.
Investment Tip – 6 – Selecting a broker or a bank account
If the investments decision taken is to invest in stocks/mutual funds, then an investor needs to select broker to open an account. There are various brokers who provide these services. Choose a broker who offers lower transaction charges and lesser annual fees.
In case the investment decision is to invest in bank fixed deposits, an individual needs to open the bank account (in case he does not have it).
Investment Tip – 7 – Select a financial planning advisor if required
Sometimes it would be difficult for a beginner to take a decision about the investment options. This could be due to that he is new to investing. In such case he can consult a financial planning advisor and take his/her advice. Financial planning advisor provide more insights about the investment decision, risks involved etc.
Investment Tip – 8 – Track the investment portfolio
Once the investment decision is taken either to invest in stocks, mutual funds, bank fixed deposits, bonds etc. these investments needs to be tracked regularly. In case the investment option is not giving enough return or there are better investment options, switch to such alternate investment option.
Conclusion Remarks: There are various best investment options for beginners which can maximize the returns. It depends on the financial goals, fixed or regular savings to be invested, the investment period etc. Based on this, a beginner can choose the good and right investment option.
Readers, are you new to investing? What are your views about the options discussed here? Do you know any other better investment options for beginners?
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