Most investors do not want to let go of the tradition of investing their funds into Fixed Deposits, National Savings Certificates etc. Although these deposits offer you return, they are just not good enough. But how much of your income is good enough to be saved? If you wish to increase your investments, it is very important for you to start early and invest smartly. The initial years of your career should be the time where you can rigorously invest with a good appetite for risk, since this is the period where you do not have any responsibility for catering to a family.
The main reason why investments are required is so that it can save you from the tension of getting into debt like a home loan, personal loan or any type of loan in order to take care of your financial requirements. Having a loan simply reduces your returns since your funds are getting diverted toward EMI payments. That is an unnecessary requirement in your initial years of your career.
In the very initial stage, it is of primary importance that you list out what your financial requirements and goals are. Once you do that you will get an idea as to how much you require saving in order to fulfill your requirements. Also it will give you the much required motivation to achieve your goals as soon as possible. If you are a first time investor, it is very important for you to understand the markets. And the best way to do is to get information from primary sources, preferably a financial advisor. Heeding to the advice of other investors are not going to help you much since their financial goals, income, returns percentage, risk appetite etc are going to be different from yours. So try to get all the information you can and begin by structuring your portfolio. Initiate your savings plan by first investing into a Public Provident Fund (PPF). Investing in this fund for 15 years will give amazing tax benefits along with good returns at the end of the tenor. The next step is to identify funds that provide you adequate returns especially in terms of investing in Mutual Funds (MF). Opt for investing in Mutual Funds through the Systematic Investment Plan (SIP) route. This will guarantee you systematic growth and also enable you to monitor the performance of your fund.
Try to invest about 40-50% of your income. Look out for those funds that have a good performance background and have the experience of withstanding the variations in the market cycles. In the sense that choose those funds that have been stable during booms and also in the eventuality of market crashes. Although it is important to assume a certain degree of uncertainty since markets can be studied up to a certain limit and not beyond that, patience is what is required the most. Do not exceed more than 4-5 funds in your portfolio. Select the ones that are good performers and invest your savings into these. Having many funds just reduces the rate of your returns since they are likely to be charged with the processing fees and charges that are demanded by the particular fund and hence your overall returns are reduced. Therefore it is advisable to invest a good portion of your funds in these selective funds.
On a later date, include insurance policies, preferable pure term covers and not Ulips in order to provide protection for yourself. Also, a medical cover is also advisable since it will help you to cover your medical expenses without undergoing any financial stress in case of emergencies.