The 5-day festival of lights begins with Dhanteras. In our culture, it is the greatest holiday of prosperity and prosperity. Since ancient times, people have bought gold and silver, utensils, houses, etc. on this occasion. The learning from an investment perspective is that we should invest a small portion of the income. There is a tradition of launching new investments in the stock market at an auspicious time during Diwali. Here we will discuss from starting to investing in a simple way to strategizing through questions and answers.
When should you 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 an investment perspective, the sooner we start investing, the better returns we can get. This investment can help you buy a house, a car, travel, start a dream project or pay your bills in the future.
How long should you invest? The most important thing is that investing is a long-term endeavor. 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. Keep in mind that fluctuations are part of the market. In such a situation, do not panic in the event of a fall.
How to create an investment strategy? Just like you can’t build a house without a plan, it’s important to have a strategy before you start investing. First, set aside 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 evaluate risks in order to obtain investment returns consistent with your objectives. Here are some questions to consider-
How much money am I willing to invest? What types of investment vehicles are right for me? What type of asset allocation should I choose to avoid risk and diversify my portfolio? What are the most attractive sectors at the moment? My risk tolerance? When should I change direction in case of losses?
How much money do I need to start investing? You can start with Rs 500 per month through SIP in mutual funds. There are stocks available for investment ranging 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 took place in 1997, when a share was worth less than two dollars. After 25 years, a share is now worth $3,300.
How should we construct 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 rule of thumb of 100 minus age. Suppose a person’s age is 30 years, then 100-30 = 70, that is, this investor can invest 70% in stocks. The remaining 30% can be divided equally between gold, bonds and retirement funds.
The main reason to invest in blue chip funds and index funds for the long term is low risk with reasonable growth. Investing in indices and blue-chip stocks also offers the benefit of diversification. Over the past three years, these investments have generated profits compounding 15-18% per year. Over the next 5 years, compound annual returns of 13-15% can be expected from index funds.