Investing without any goal in mind can leave you nowhere. It does not give you the drive as to where and how much you need to invest any fund, or even what is the type of fund you want to opt for. Having a goal in mind gives you the pursuit you need to opt for safe, secure and guaranteed earnings.
The first step in the pursuit of investment is to pen down what your financial requirements are. Divide them on the basis of short term and long term goals. Once you pen them down, gather all the information about the various funds that are available depending upon your risk appetite. If you are not a risk averse person, then there is no point in taking decisions just to feel the edge, and then losing out on your funds in the end. Opting for a personal loan, home loan etc to finance your requirements will just simply add up to your financial burden.
If your risk appetite is more, investing in mutual funds through the Systematic Investment Plan (SIPs) is what is advised. If not, investing in fixed return funds is what can be opted. But that decision can be made depending on various factors like age, income, your job, your financial requirements, number of dependents etc. The most basic of all investment mantras is to have a good balance of equities and debt allocation. If you are in the initial stage in your career, make sure that you have exposed yourself to 60% towards equities and 20% towards debt. Since, you are in the beginning of your career and have a long way to go, saving and growing your investments in these early stages is what is required.
Coming to the point where you need to term your goals, short term goals are better off in ultra short term or short term funds. Short term goals like buying a laptop or even going on a vacation abroad can be listed down. Any goal that falls within 1 year time frame can be termed as short term goals.
Your long term goals, goals that exceed more than 3 years, can be invested in long term mutual funds. Consider investing in large cap funds. These funds basically look forward towards investing in large cap like the market index like NIFTY etc. This gives you the opportunity to gain good returns over a period of time. But, as an investor what you need to be clear off is that when there are slight downsides in the market movement; do not inflict panic within yourselves. These slight changes are bound to be corrected over a period of time, say, 5-10 years. So the markets are bound to be corrected.
Apart from these plans which are generally formulated initially, what should also be kept in mind is that, once you are near to achieving your goal, say like about 2-3 years for your fund to attain your maturity, transfer it to a debt fund where it can be safe from the market’s shocks. This will protect your savings from losing any amount of your invested sum if there is a slump in the market. Investing in a debt fund, will not keep your funds idle till you require them and moreover, you can earn a little more over them, depending on the type of debt fund you opt to invest in.