Investing wisely is the first step towards wealth creation. The earlier you start, the more you can gain from the magic of compounding. But what do you do when you have no financial knowledge and very little money to begin with? A lot of people shy away from investing as they feel they do not have a lump sum amount. This is where they are wrong. Even a couple of thousand rupees every month can help you reap big rewards over time.
Here’s what you should do if you are an investing noob:
1. Do your research
There is a lot of information available online. Pick a reliable source and read up on various investment instruments that allow you to invest small amounts of money every month. You have plenty of options, such as recurring deposits, SIP mutual funds, digital gold, Exchange Traded Funds (ETFs), stocks, etc. Invest in instruments that align with your style, strategy, life goals, and risk appetite.
2. Talk to friends/family
If people around you have been investing for a while, they would have the experience and knowledge. It will be a good idea to pick their brain. Talk to them about various investment options, their pros and cons, and tips and tricks to make wise financial decisions. However, it is important to not blindly follow everything they say. Take their advice, but use your own judgement while investing.
3. Open a Demat Account
Now that you know the what and the where, it’s time to explore the how. The first step is to open a demat or trading account that will help you invest in a safe, swift, and seamless manner. HDFC Bank Demat Account can facilitate all this and more! It is an easy and convenient way to start trading as it allows even beginners to start investing in a few clicks. Not only will your transactions happen instantly, they will also be extremely secure.
4. Have a clear goal
Any investment you make – whether it is Rs 2000 or Rs 2 lakh – needs to done with a goal in mind. Is the investment going to pay for foreign travel, or a child’s education, or your retirement? The answer to this will decide the investment tool and tenure you choose. Compounding has a snowball effect on your investments. Discipline and consistency are the two key factors that can help you attain any financial goal if you stay invested for the long term. Create a separate bucket for each financial goal, and prioritise and nurture them accordingly.
5. Consider your risk appetite
There are certain risks associated with every market investment. You need to pick and choose an investment mix that aligns with your risk appetite as well as your investment goal. Consider an asset allocation strategy that allows you to maximise returns while managing risk and volatility. You can always consult an investment expert to understand your risk tolerance and the investments best suited for your needs. Always start slow and then expand your investment bouquet as you gain experience and confidence.
6. Diversify your investments
Diversification is a proven strategy that helps mitigate the risks of your investments. By investing in various tools, you spread the risk. This means that if one investment is not performing well, your other investments can make up for it. For example, you can spread your investment in stocks, mutual funds, and digital gold. Even if the stocks are not appreciating, your mutual funds and/or gold investment can still help you reach your goal. It is important to note that when you start out you shouldn’t invest in too many instruments. Pick two or three and monitor them regularly.
For a one-stop solution for all your investment needs, open a DigiDemat Account with HDFC Bank. This unique 3-in-1 account comes at no cost and allows you to save, invest, and manage all your investments on a single platform.
Looking to open a Demat Account? Click here to get started.
Read more about DIY investing here!
*Terms and conditions apply. This is an information communication from HDFC bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.
