BlogsA practical guide to Investing - For Beginners

A practical guide to Investing - For Beginners

I am sure this topic may feel very intimidating, but trust me, once you learn a few basics, it's quite easy to understand. Knowing the power of investing & how to make it work for you is one of the most powerful things that an individual can do to transform their own financial future. We see many people stay out of the game simply because they don't understand it and leave it to a few rich folks to get all the cherries.  

High time we changed the narrative. But first, let’s understand what investing is and what is the difference between savings and investing. The difference is simple, it matters how you plan to grow the money. Saving is something you do yourself. You add money to a savings account over time and generally, there's no risk or volatility when you're doing so. What you put in is what you get out of it, with maybe a small percentage increase.  

Investing, on the other hand, introduces risk. It's possible that the amount of money you put in can decrease, but it's also possible that a small investment can grow into a huge one with patience and a bit of luck. So, we understand that investing is different from savings in the sense that it represents a greater level of risk, but a greater level of potential reward with your money.  

This blog focuses on three main aspects of investing  

  • Understanding the importance of investing
  • When should you get started?  
  • How to start investing with no experience?  

Understanding the importance of investing  

By now, you got an idea that investment is something that puts money in your pocket even when you are sleeping, know that it is a long-term game and anyone who says otherwise is maybe selling you a get-rich-quick scheme. The underlying concept of any investment is the Power of Compounding. We have made a neat & simple explanation of compounding, check out the blog to know more.  

When should you get started?  

You should start investing as soon as possible. The answer is simple, and all investment advice agrees with us on this front. It doesn't matter how old you are. It doesn't matter how young you are. The earlier you start investing, the better.  

Yet, there are three basic hygiene checks you might want to consider as you are getting started  

  • Paying off your high-interest debts: Try to make sure that all your high-interest debts (for example, credit cards) are paid because losses/debt compounds just like how gains on investments compound. If you have a credit card debt that's eating into your bottom line every single month, pay it off as soon as possible unless you are smart and disciplined in managing it. Don’t get us wrong, credit cards are great tools if used wisely!  

  • Build an Emergency Fund: Next, build an emergency fund. A rule of thumb for an ideal emergency fund is to have a corpus that can survive your living expenses for 3 to 6 months. If you lose your job or decide to quit to take a break, or you’re hit with a medical emergency, you’d want to have something to fall back on without touching your investments or taking credit.

  • Creating goals-based buckets: Have a rough idea of your immediate financial goals. Do you have any travel plans? Are you planning to get married anytime soon? Do you want to go for your higher education? These are costly affairs and will require you to take money out of your pocket. Ideally, create separate funds or bank accounts for such necessities while keeping your investments separately running.  

The above-mentioned hygiene checks are a great start to have a general overview of what your finances can look like, because financial goals or investing strategies are different for everyone and determined on a case-by-case basis, no two people will have the same. A few great questions to help yourself set investing roadmap are - What am I investing for? How long do I have to invest? What kind of risk can I tolerate?  

How to start investing with little money?  

Learning about your options, especially if you are a beginner, can quickly intimidate you, no doubt. Plus, the amount of information overload & all the jargon that’s casually thrown around can add to your intimidation, we get it!  

Find the most accessible ways to invest, look for options that can help you get started by giving you all the necessary information not just at the start but all along your investing journey.  

If you need to start small, do it. Understand what risk profile might suit you at this point and give yourself time to get along with the game of investing. Again, ask yourself questions.  

Please remember that you don’t need to be good at math or understand the intricacies of the market to start investing, if you are a beginner, then you should at all costs check out the Dinero app . It is easier to get started with enough information provided at all stages of your investing journey. You can get started with as low as Rs.100 through Dinero Investment Plan can be customized on the go.  

With a beautiful and easy-to-use interface, it also offers a bunch of single-click games to keep your investing journey fun & a delight, you will stand a chance to win Rs.5000 worth of digital gold as you play the Slottery.

You might also like

No items found.