How2invest: A Beginner’s Guide To Beginning Your Investment Journey
How to start investing or how to how2invest? These are the primary issues for thousands of novice investors. They frequently mix up how to invest and where to invest because there are so many different options available. Additionally, there are a lot of investment possibilities, which frequently make it difficult for novice investors to select the best one.
The good news is that you are not alone and that learning about investments is not very difficult. When I began my financial journey in 2018, I even had very little knowledge of investing.
I wrote this essay with the concerns of the beginning investor in mind to assist them in beginning a successful investment journey. Continue reading
Knowing the Basics of Investing
How2invest? Given the variety of investment possibilities available, the answer to this issue is highly complicated, as I will explain below. However, as every person has a unique financial condition and set of goals, I advise doing some analysis before you start investing.
You can determine how to invest your money right now by using these five steps.
But I would advise you to get these three types of insurance before you start investing.
Let me now go into further depth about these.
1. Initial Term Insurance
As the name implies, term insurance guarantees that your nominee or beneficiary will get a set amount in the event that something were to happen to you. It is recommended that you purchase term insurance that is 20–25 times your annual pay. For instance, if your annual pay is 50,000, you need to carry 1.25 crores in term insurance.
How Can I Determine How Much Insurance to Purchase?
2. Insurance for health
We are all aware of the significant rise in medical costs. Your lifetime earnings could be at risk if you need to be hospitalised only once.
Finished. We have observed how many people invested their life savings during the Corona era. Health insurance is crucial because of this.
3. Emergency Fund
You may be aware of the fact that many businesses are making layoffs, or you may need to take a professional hiatus. The Emergency fund then steps in to save the day. The optimal situation would be to have enough emergency savings to cover expenses for at least 6 to 12 months.
More information: Where to Keep Emergency Funds
Let me now walk you through the investing process.
Investment Options by Types
So understanding the various investing possibilities is also vital if you want to learn How2Invest.
1. Fixed Deposit
A fixed deposit (FD) is the first financial product that comes to mind when thinking about investing. Because you will receive a fixed amount of interest after a given amount of time, regardless of market ups and downs, it is one of the safest investments. FD interest rates typically range between 6 and 7 percent.
Continue reading: The Top 5 Tax-Saving Fixed Deposits for 2023.
2. Purchasing gold
You will receive 8–10% of your annual return if you invest in gold, which is traditionally thought to be a safe option. Here, I would like to make it clear that investing in gold is not equate to purchasing jewellery because doing so requires making fees, impurities, and conversion fees. You will never receive the same value when you sell. Don’t ever invest in physical gold; instead, think about buying sovereign gold bonds.
3. Real estate investment
Your money could increase by 8 to 10 percent through real estate investment. The biggest issue, however, is that purchasing business or residential space requires a large sum of money all at once. Consequently, I advise making an investment in a real estate investment trust.
4. corporate bonds
Typically, if you invest in corporate bonds, you will receive a return of 9–12%. But there is some risk involved. Corporate bonds are financial securities that companies or corporations issue to raise money for a variety of purposes, including project financing, debt consolidation, and financing expansion. By purchasing a corporate bond, you essentially grant the issuing business a loan for a predetermined time. The corporation guarantees that you will receive regular interest payments (coupon payments) in exchange, and that the bond will mature with the face value returned. So if you invest in corporate bonds, you will receive a consistent income.
5. Mutual Funds
Mutual funds are financial instruments that pool the capital of many investors and use it to buy a variety of stocks, bonds, and other securities. They are under the supervision of qualified fund managers, who choose how much to invest on behalf of the investors depending on the fund’s objectives and investment philosophy. You purchase shares when you invest in a mutual fund, and your returns are closely correlated with the performance of the fund.
Conclusion:
I have made an effort to simplify a very complex subject about investing through this essay. So, hopefully, you now know the solution to the query How2Invest and are ready to start investing.
