It is never too late to start investing money for your future goals,however, it better to start early in life. If you have not started investing money yet then its time when you start planning for your future and you start investing. Investing money is not just about investing in risky and volatile assets. You can also invest your money in safe assets which guarantees you a fixed return.
Investing money can bring you closer to your dreams. For example, if you want to purchase a house in the next 5 years then investing money can help you in making a down payment of a considerable amount. This will reduce your mortgage amount and hence it will reduce your monthly EMIs significantly. So, in this article, we are going to share some of the steps with you that you to teach you how to invest money and the best ways to invest money.
Step by Step Guide to Grow Your Wealth in 2018
Investing for Beginners
If you do not have any knowledge of investing and if you have never invested at all in your life then you should actually start by learning. You need to learn about the stock markets, various investment options, how to invest in stocks and other such things. If you want, you can take a short-term course about investing or you can read books about it. If that is not enough then you can also go ahead and check out some of the videos about the investing on the internet. It is going to consume some of your time but it is all going to be worth it. This will give you an idea about how to start investing.
Learn about all the options that you have before you start investing and try to understand how much you can invest. It should also be noted that at the start of every month, you need to set up some funds aside to invest. Never wait for the end of the month to save what you are left with. This is the best way to invest money.
Once you have learned the basics of investment, you then need to understand your risk profile. You need to understand how much risk you can take. There are basically 3 types of investors and you would fall under one of these. The details of these three are mentioned below.
- Aggressive – These types of investors are high risk-taking They usually invest in highly volatile assets like stocks and options. It should also be noted that the risk is directly proportional to return so higher the risk, higher the return.
- Moderate – These types of investors usually adopt a balanced This means that these investors would choose an investment option which is not very volatile. The example of this can be balanced mutual funds which invest your money in debt as well as equity.
- Conservative – This is the third category of the investors and these investors like to invest their money only in the secure assets. Most of the times, they would invest the money in government bonds, Fixed Deposits and Savings The growth of wealth isminimum in this case.
Once you know your risk appetite, you then need to understand the best investment options that you have. As mentioned earlier, if you are an aggressive investor then you can invest in stocks, options and even hedge funds. You can also invest your money in equity-based mutual funds. The investment options can vary as per the type of investor and a lot of people choose to create their own portfolio. For example, I might be moderately aggressive and hence,in this case, I might allocate my 60% funds to bonds and other 40% funds to stocks.
This is the next important step that you need to learn about. You need to research well about the asset that you are planning to invest in. Consider the past returns and conduct a technical as well as fundamental analysis of the security. Consider the impact of government policies on the return of the securities. All these are quite an important factor while you are investing your money and hence conduct a good research and use multiple sources to get the data. You can also choose a reliable dealer for purchasing the securities. In most of the cases, your bank can provide you with a Demat account to trade and purchase securities.
Short-Term Goals vs Long Term Goals
You have now learned a lot about the investments but there is one more thing that you need to consider before investing your money. Consider your goals and if they are short-term goals then invest money in bonds as the market risk tends to be higher. However, if you are investing with a goal of over 10 years then you can choose for volatile assets because the market risk squares off or cancels ours in such a long time. Hence, consider the horizon of your investments and invest your money accordingly. An example here could be that if you need to have money available with you in short-term then you can opt for liquid funds which can give you safe returns and also provide you liquidity.
Automate Your Investments
After learning all this about investments, if you still feel that there are things that you are not confident about then you can opt for mutual funds by various investment companies. In mutual funds, a professional wealth manager is managing your funds. Moreover, if you think that there is a lack of disciple in terms of investment, then you can choose to automate your investments by going for SIP. SIP stands for systematic investment plans and in this, the money istaken off from your saving account just like EMI but the money is invested in the fund you choose. This brings in the discipline in your investments.
This is how you can grow your wealth and fulfil your dreams. In this digital age, the process is not at all complicated and it is certainly very easy to follow. So, from today onwards, start working for your goals and be a disciplined investor.