Investing Tips For Beginners

Investing is a long journey. One should sail through the crests and downs of the investment process!

To benefit from the “Power of Compounding” one should start investing early! Beginning your investment journey once you received your first pay-check is the success mantra for wealth creation!

Whatever the amount may be, starting investments should be the primary agenda for young earners. Beginners should not hesitate to cultivate investing habit in their initial years.

To be a successful investor, beginners should develop this financial habits-

  • Set goals and Time Horizon– when they are young, they should be clear on their financial goals and have a plan to achieve them in a specific time period! They should set a target date and choose suitable investment vehicles to reach that goal.

They can take help from their elders who have sound financial knowledge on choosing investment products at that age. As They don’t proper financial knowledge, they should seek advice from them. As years passby, you would gain experience and you can take your own investment decisions.

  • Don’t ignore Inflation– Youngsters may have heard from their grand parents that they would purchase kilos of groceries with 50 paisa, 75 paisa, is it possible now?

This is due to inflation. Prices generally rise and the purchasing power of money would decreases as years pass by. There is no end to inflation. In future also your purchasing power decreases.

So you have to select investment products which beats inflation. Though they are risky in short-term, past history shows that your investment would beat inflation with large margin in the long-run.

  • Follow Asset Allocation– You should periodically rebalance your portfolio as per your risk appetite. As each asset class has its sweet time, periodical rebalance between debt and equity assets would maximise your returns.

While rebalancing, you should be stable and don’t get swayed by the market swings. Have courage in turbulent times and rebalance them as per the market cycles.

  • Create “Emergency Fund”– Allocating your full earnings to investments is not safe! You should have a emergency fund to protect you and your family from unwanted expenses! This emergency fund will help in emergencies like accident, medical and hospitalisation expenses.

One should create an “Emergency Corpus” of upto 3-6 months of their expenses and it would be better if it is higher than this.

  • Plan for Retirement– When you are young, you have income and can take housing loan, personal loan as per your eligibility!

But have you ever heard that banks giving loans during retirement? Even a high-networth individual can’t take loan during retirement as they don’t have regular source of income.

So to be financially independent during retirement, one should plan for retirement during early stages of earning! Though it is awkward to start saving for retirement during early years of earning, considering inflation and life style expenses, one should consider retirement as their primary goal.

If Beginners(young earners)follows the above steps, they would lead a secured financial life,

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