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The 5 day festival of lights starts with Dhanteras. In our culture it is the biggest festival of prosperity and prosperity. Since ancient times, people have been purchasing gold and silver, utensils, houses etc. on this occasion. The learning from investment perspective is that we should invest a small part of the income. There is a tradition of starting new investments in the stock market at an auspicious time on Diwali. Here we will discuss from starting to investing in an easy way to making strategies through questions and answers.
When should one start investing? 'The best time to plant trees was 20 years ago. The second best time is now. If we look at this saying from the investment perspective, the sooner we start investing, the better the returns we can get. This investment can help you buy a house, car, travel, start a dream project or pay your bills in the future.
For how long should we invest? The most important thing is that investment is a long term venture. Short-term profits are often illusory. The longer you invest, the better returns you can get through the power of compound interest. Give your investment at least five years time. Keep in mind that fluctuations are part of the market. In such a situation, do not panic if there is a fall.
How do I create an investment strategy? Just as you cannot build a house without a blueprint, it is important to have a strategy before you start investing. First, set aside some money to invest in your future. Also, create a separate emergency fund to cover 6-9 months of expenses. Start investing now and educate yourself so you can calculate and assess the risks to get returns on your investments that are in line with your goals. Here are some questions to consider-
- How much money am I willing to invest?
- What kind of investment vehicles will be better for me?
- What kind of asset allocation should one choose to avoid risk and diversify the portfolio?
- Which sectors are most attractive at the moment?
- What is my risk tolerance? When should I change direction if there are losses?
How much money do I need to start investing? You can start with Rs 500 per month through SIP in mutual funds. Stocks available for investment range from less than Re 1 to Rs 1.26 lakh. The fact is that some of today's biggest companies started with penny stocks. Amazon's IPO came in 1997, when one share was worth less than two dollars. After 25 years, one share is now worth $3,300.
How should we build our portfolio? New investors should focus on diversification and asset allocation to build their portfolio. You can choose safe options like mutual funds, blue chip stocks, gold ETFs. New investors can follow the thumb rule of 100 minus age. Suppose someone's age is 30 years, then 100-30=70 i.e. this investor can invest 70% in equity. The remaining 30% can be divided equally between gold, bonds and retirement funds.
- The main reason for investing in blue chip and index funds in the long term is low risk with reasonable growth. Investing in indexes and blue chip stocks also provides the benefit of diversification. In the last three years, such investments have seen compounding profits of 15-18% per annum. Over the next 5 years, 13-15 percent compounding annual returns can be expected from index funds.
