Investment options for beginners

Investment options for beginners. All you need to know

Mutual funds, the stock market, and bank deposits are India’s best beginner investment options.

The majority of novice investors are young and just starting their careers. They will therefore be investing for the long term.

Beginner investors should aim to maximize their investments as they have experience and time on their side. In this article, we will be discussing the following topics:

Why should you begin investing right away?

You may take full advantage of the benefits of a long-term investing horizon by starting to invest when you are young.

You might use an aggressive approach to your investment methods because of your age. Even if something went wrong, you would still have ample time to recover and go on to make a profit.

Therefore, the key to maximizing investment prospects is to start investing early.

Investment options for beginners in India

Here are some investment options for people with no background or experience in investing.

These options have lower, moderate, and higher risks, and an investor can choose to invest in different investment vehicles based on their needs.

1. Bank deposits

People who don’t like taking risks should put money in a bank. Minimal-risk investments have equity runs, though.

You should consider investing in fixed deposits assuming you have a lump sum available. The interest rates on fixed deposits are rather decent and, if invested for a long time, can return a large sum. You may invest in a recurring deposit if you can put aside a set amount regularly, such as monthly or quarterly.

One thing to keep in mind is that the potential profits provided by mutual funds and the stock market never match those provided by bank deposits.

2. Stock markets

Among all investment options, investing in stocks gives you the possibility to get the best returns. You may invest with a long-term investing horizon because time is on your side. By doing this, you will combat market volatility and gain long-term advantages.

To invest in the stock market, you must have some market understanding, though. If not, you should avoid the stock market.

Without market expertise investing in stocks is equivalent to gambling. Your investment would be worth Rs 4.75 crore now if you had invested Rs 55,000 in shares of Eicher Motors, the company that makes Enfield motorcycles, in the year 2001 ($17.50 per share). The stock market has that kind of power.

Additional read: What is the foreign direct investment?

3. Mutual funds

If you have a long-term investment plan, you can invest in mutual funds and take advantage of the power of compounding.

Additionally, you do not need to be market-savvy. Mutual funds are run by expert fund managers with a proven track record of running successful investment portfolios.

You may invest in equity funds given that you are a young investor and that these are recognized for providing outstanding long-term returns.

Although investing in hybrid and debt funds might reduce your profits, they are still attractive options. You can invest in equity-linked savings plan to reduce your taxes (ELSS).

With this money, you can defer up to Rs 46,800 in taxes each year as per Section 80C of the Income Tax Act of 1961. No other tax-saving investment provides the twin advantage of tax deductions and wealth building like ELSS mutual funds do.

Investment options for beginner

4. Government schemes

A few government programs are available for investment. The Public Provident Fund is the most well-liked government savings program (PPF).

It has a 15-year lock-in period with returns of between 7% and 9% annually. Additionally, you can put money into a Voluntary Provident Fund (VPF) or National Savings Certificate (NSC) (VPF).

Starting to invest early in life is the secret to being wealthy. This will provide you with the chance to build a significant amount over time, and you can rely on this to achieve different goals.

Conclusion

There are various types of investment options in the market but only a few for people who don’t have enough knowledge to study their investments.

Hence, you should compare the options available to know and find out the risks involved and whether they suit you. In any case, whenever you need advice or information regarding investment plans, reach out to a financial expert.

Consult an expert advisor to get the right plan

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