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How Should A First Time Investor Start Investing ?


Congratulations on the first step towards investing and growing your money. As a first time investor, here are certain things you should be aware of:

  1. Taking the first step: Learn, but more importantly start.
  2. Start small: Take baby steps and invest small amounts monthly.
  3. The power of compounding: The longer you stay invested for, the larger will be your savings as you will earn interest on ‘earned interest’
  4. Emergency Fund: Set aside about 3-6 months of expenses in a separate liquid fund
  5. Insurance: If you have dependents, you should have pure life / term insurance and Health Insurance
  6. Insurance as Investment: Do NOT buy ULIP’s, Endowment or Moneyback plans. Talk to us to find out why.
  7. Learn: Know more about Inflation, Asset Classes (Equity, Debt, Real Estate, Gold) and portfolio diversification and how it affects your money

There are 4 primary asset classes available to an investor:

  1. Equity or Stocks: Risky but can give returns of 12.5 – 15% per annum over a long term
  2. Debt: Average of 7 to 9% returns over short or medium term. Includes FDs, PPFs, NSCs, Debt Mutual Funds etc
  3. Real Estate: Returns vary based on location. 
  4. Commodities: Gold, silver etc. 

Every investor should have a diversified portfolio with a mix of the above asset classes. Most people however usually have more of debt assets and less of growth assets like equity. If you don’t have exposure to growth assets, you are losing out on an opportunity to grow your money significantly.

Why start Investing ?

If you start with Rs 5000 per month, it can become

  • ~ Rs 4.6 lakhs in 5 years
  • ~ Rs 14 lakhs in 10 years
  • ~ Rs 32 lakhs in 15 years
  • ~ Rs 3 crores in 30 years !!

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