Looking for ways to begin your investment journey? Look no further and dig right in.
Women investors looking to up their finance game have reasons to cheer. With a ton of financial products to choose from, investing is no more the complicated choice that it once used to be. Whether you are a beginner at investing or a pro in the making, there is always something new that you can consider adding to your investment portfolio. But… where should you start?
Formulate A Game Plan
If you are serious about investing, you should know that it’s a long-term process. Yes, investing is a process of creating wealth, but you cannot achieve success overnight. Before you step into it, prepare a rock-solid plan. Begin by analysing your long-term plans and try to make an estimate of the amount of money you would require to fulfil them.
For instance, one of the major tenets of financial planning is saving up for retirement. Experts recommend setting aside a fixed sum every month towards your retirement fund. If you had to plan your retirement, how would you do it? You have no clue, do you? Don’t fret, take your time, and plan it out. Investment is all about making plans and sticking to them despite difficulties.
Keep The Taxes In Mind
No matter where you invest or how much you invest, you will have to pay taxes. While the tax burden is huge on some investment options, some are quite tax-friendly. If you are just starting out in a new job or you want to take a career break sometime in the future, make sure to factor that in while making your investment strategy.
Additional Reading: How Can ‘She’ Save Taxes In India?
As you begin to invest, you will notice minor volatility in your investments. This is especially true for those of you considering Mutual Funds as an option. Short-term volatility is normal and there is nothing to worry about it. Prices go up and down, that’s the way markets function. Look at your investments from a long-term perspective. Most investors who stick around for more than 5 years get to reap its enormous benefits.
Power Of Compounding
If you haven’t slept through your high school mathematics classes, chances are you already know what ‘compounding’ is. Let’s say, for instance, you have invested Rs. 10,000 in a Mutual Fund. Now, as you may already know by now, investing in Mutual Funds earn you an interest. Let’s say you earn 8% interest in a year’s duration.
So, you made an initial investment of Rs. 10,000. On it, you earned an interest of Rs. 830 (at 8% interest).
The final value of your investment becomes Rs. 10,830.
In the second year, your principal amount becomes Rs. 10,830. On it, you earn an interest and that gets added to your principal amount for the third year and so on.
It’s fun, isn’t? You can do it yourself with the help of this compound interest calculator.
Investment Options You Can Look Into
The best part about investing for the future is that you can start anytime you want. With SIPs in place, investors can literally invest as little as Rs. 500 every month in Mutual Fund schemes. Although Mutual Funds are one of the most popular investment tools, there is a lot more you can do to grow your wealth. Take a look at some of the most popular ones:
Public Provident Fund (PPF)
PPF has been an evergreen choice for investors since the beginning of time. It’s popular majorly because of two fundamental reasons:
- The interests earned on it are completely tax-free.
- The scheme is guaranteed by the central government, which means it is safe as a mountain.
However, you need to keep in mind that it comes with a minimum lock-in period of 15 years. So, if you have a goal that you need to realise 15 years later, jump right in.
Additional Reading: 5 Ways To Make The Most Of Your PPF Account
Fixed Deposits (FD)
Even if you are crushing majorly on Mutual Funds, consider Fixed Deposits as part of your investment strategy. Since FDs are not dependent on market movements, the returns are fixed and secure. If you are completely intolerant to taking risks, FDs should probably be your first choice of investment.
Investing in real estate can be a great option if you have enough surplus to invest. However, this is not for rookies. It requires you to have a thorough knowledge of land valuation, government policies, and a host of other things. Investing in real estate can turn out to be a great investment choice if you are well aware of the economics as well as the geopolitical conditions of the area where you are investing.
There are several ways of investing in gold. You can either buy physical gold or invest in gold ETFs. You can buy gold ETFs just as you would buy stocks. For this, all you would need is a demat account. Gold ETFs are generally considered safe and cost-effective.
Additional Reading: How To Invest In Gold Through ETF
Mutual Funds provide some of the highest returns when compared against other investment benchmarks. It’s easy to invest in Mutual Funds and you don’t need a lot of money to get started. With the help of Systematic Investment Plan or SIP, you can invest small amounts every month and watch your investment grow over time. If you are young, in your 20s, and have an appetite for growth, investing in Mutual Funds is perhaps the best thing you can do to safeguard your future.