In today’s world, many people advise you to invest. They often say that earning and saving alone is not enough. If you want to secure your future, you need to invest. We believe this too and start investing, but often make mistakes because we don’t have the right information. In this process, we begin investing but fail to make a strong start.
It’s important to understand a few things before you start investing. If you don’t, you might not make a good start and could miss your financial goals. So, let’s discuss the key things every investor should consider before starting.
Why Invest?
- Beat Inflation: The inflation rate is around 6-7% per year. If your money is kept in a savings account, its value decreases over time. By investing in the right places, you can beat inflation and earn better returns.
- Achieve Your Goals: Whether it’s buying a house, funding your children’s education, or planning for retirement, investing helps you achieve your financial goals.
- Grow Your Money: Investing allows your money to work for you, helping it grow over time.
Investment Options
- Stock Market:
- When you invest in the stock market, you become a shareholder in companies.
- Example: Shares of companies like Reliance, Tata Motors, Infosys.
- Risk: Stock prices fluctuate, so the stock market can be risky.
- Mutual Funds:
- In mutual funds, professional fund managers invest their money in a mix of stocks and bonds.
- Examples: Equity funds, debt funds, and hybrid funds.
- Risk: The risk varies based on the type of fund.
- Gold:
- Gold is a traditional investment option in India.
- Examples: Gold ETFs, gold coins, or jewellery.
- Risk: Gold prices depend on international market conditions.
- Real Estate:
- Investing in property can give you good returns in the long term.
- Risk: Real estate requires a large initial investment and can take time to appreciate.
- Fixed Deposits (FD):
- Fixed deposits in banks or post offices offer safe returns.
- Risk: Returns are low but the risk is also low.
Things to Know Before Investing
- Set Your Goal: Identify the purpose for which you are investing. This helps determine the right investment option.
- Time Frame: Decide whether your goal is short-term or long-term. If it’s a long-term goal, equity investments might be better.
- Risk Tolerance: Understand how much risk you are willing to take. If you prefer safety, choose low-risk options.
- Diversify: Spread your investments across different options to reduce risk.
How to Start Investing
- Read and Learn: Educate yourself about stocks, mutual funds, and other investment options before starting.
- Start Small: Begin with a small investment and increase it gradually as you become more confident.
- Consult a Financial Advisor: If you’re new to investing, seeking advice from a financial advisor can help you make informed decisions.