First time investors are the most cautious. There is nothing wrong with playing it safe, but when it comes to investments, there is nothing that is safe. So don’t fool yourself into believing that a safe investment will ensure your financial growth.
Investments fall under three categories – low risk, medium risk and high risk. Higher the risk involved greater will be the returns. Even the advertisements inform that all investments are subject to market risk so the offer document should be read carefully. Keeping this fact in mind, there are a certain guidelines that you can follow to ensure the best possible return for the money invested.
How To Invest Sensibly/ Investment For Beginners
- Start With Small Amounts – always begin with small investments. See how they fare over a period of time. When the amount invested is small the risk associated with it also bearable. If you lose a little money, it will not hurt your financial standing by much. Small investments will not only build your confidence to invest more, but also, help you gain necessary knowledge of how similar investments or stocks perform.
- Invest in Different Schemes – the best practice is not to keep all your eggs in one basket, but to distribute them. This ensures the safety of your investments to some extent. If one or more investment fails to live up to your expectations, there will still be some that shall outperform. But, prior to investing in any scheme gather as much information as possible about it so as to make an educated guess about its future performance.
- Gather Information About Portfolio Manager – performance of any investment, especially mutual funds and SIP’s depends on the knowledge and experience of the portfolio manager. So, if you are a beginner when it comes to investing money and you want to play it safe then, invest your money in those schemes only where the portfolio manager is experienced and has a good track record.
- Learn About Market Trends – in case your interest lies in investing in the stock market, then learn about the market trends of those stocks that are of particular interest to you. Their long and short term performance will give you a fair idea of when to invest in them and when to exit. Knowledge of additional financial factors that play a role in defining the market trends is also beneficial.
- Take Advice From A Trusted Source When in Doubt – when in doubt regarding where to invest always go to a trusted source or broker for help and guidance. After all, there is no harm in making an informed decision.
Finally, remember your money will not grow on its own. Hence, keeping it locked does not serve any purpose. Investing your money wisely is the best way to ensure that you can reap extensive benefits in the future out of the money that you have saved.