Investing Tips To Begin Your Career

Prashant Sawant May 24, 2021

The idea of investing can be intimidating, especially if you're just starting out in the workforce. One of the benefits of investing early or as soon as you start working is that you can plan for important events in life. As a youngster, you might not have many liabilities or dependents at this stage. Hence, early and prudent investments can help you achieve long-term goals through the benefits of compounding. The burden of family responsibility is at a negligent level, making your income almost exclusively available to you. Youngsters generally invest their money in different asset classes to make quick money, which may prove to be riskier. Don’t press the panic button, don’t trade on rumours, be patient and give time for your investments to grow. If you’re a fresher at investing, these tips are for you:

Financial Literacy- The most important aspect of financial planning especially as a beginner is financial literacy. Before investing in anything, it is crucial to gain some relevant information and make informed and well-evaluated decisions based on proper research. Without it, the decisions that you make or do not make can threaten your financial security since it lacks the solid foundation required. The financial market changes very often and is full of surprises. So, if you’re willing to invest your money, make sure to follow the trends yourself instead of depending on other sources. Once you know what works in the market, you can come up with simple rules that work for you.

Pin down your financial goals- You cannot choose the route without knowing the destination. Before starting your investment journey, create an ultimate goal. Some would say that making more money is their goal, but try to identify your needs and desires and invest accordingly. Ask yourself questions repeatedly until you get a clear goal. A good way to start is to start defining your goals and quantifying them in terms of the amount and the time you want to set to achieve the goal. For instance, collecting funds for your higher education or marriage is a short-term goal. Investing in buying a house is a medium-term goal and saving for your future family and for retirement are long-term goals.

Simple and long term

As a beginner, it is best to keep your investments simple on the basis of goals and requirements in the future. One of the simplest forms of investment that you can make is to create a Fixed Deposit. You can deposit a lump sum over a period and get a fixed rate of interest throughout the investment tenure. Sticking with the optimal long-term strategy may not be the most exciting investing choice. Although, even with the simplest investment, you’ll likely be more motivated to learn and invest. These simple investments can be used as an emergency fund.

Saving a fixed amount

There is a strong urge to splurge on the latest gadgets and other expensive items. Hence, from the pay you take home, you must set aside a fixed amount that you save and then invest wisely. It does not matter how much you save, it is more about starting to save and investing those savings in a disciplined manner. Even if it means starting with 1% if your income, and then gradually scaling up to 10%. Eventually, you should try to save and invest at least 25% of your income. This will ensure that over a period of time you will have a sizable amount for your goals and your portfolio will be diversified by adding other asset classes.

Stock Market

As a financial advisor and trader, I always insist people invest in the stock market. Big companies issue stock to raise money and when you purchase shares, you become a part-owner of the company and as the company earn profits you get the share according to your investment. As a beginner, stocks are a perfect place for you to start investing. Yes, they come with high volatility, which is one measure of risk. But over time, they offer strong returns, and since you won’t be retiring for many years, you can simply park your money and ride out the occasional stock market correction. With the right knowledge, investing in stock can turn out to be a great investment option.

Mutual Funds

Mutual funds are a good way to generate reasonable returns. Pick a few good schemes and start an SIP, a systematic investment plan. Investing small amounts at regular intervals over the long term will give you the benefit of the power of compounding. However, you have to be patient and disciplined. The benefit here is that you can stop your investment in a fund and withdraw the money any time you want, subject to the lock-in period, if any. It is one of the safest and systematic ways of investing.