Investing is beneficial, but it can often get complex for beginners. This is because there are plenty of investment options, and filtering and choosing from the list is often the hardest task. But it doesn’t mean cracking it is impossible. You could start by researching different investment options. Then you have to understand your investment goals and risk appetite. This will give you much-needed clarity about what option to choose.
Once you have done that, it is time to choose an investment option. To make it easier, you could start by considering some investment options that are better suited for beginners. Let us explore some such options.
How do you normally invest in shares or other securities? Let us take the case of shares first. You will have to start by researching and finding stocks that match your risk appetite. Once you are a clear idea about that, you could start investing to create a portfolio according to your taste. But your job never ends there. You will have to continuously monitor your portfolio and make sure that the investment is still fruitful and your portfolio still matches your goals. You will need to make changes to your portfolio as well on a daily basis.
While the above is completely doable and something thousands of investors do, it may not be feasible for a beginner. That is where a mutual fund will come to your rescue.
A mutual fund will have a theme and a fund manager. The theme describes which category of investors will find mutual funds useful, and the fund manager will pool money from different investors and design a portfolio according to the same. The fund manager will also ensure the portfolio is monitored on a regular basis. This makes investing in stocks easier. Similarly, mutual funds investment in other securities as well, making those investments easier as well.
Fixed deposits are an investment option provided by banks and NBFCs. The working of FDs is simple. You receive a fixed interest for the money you invest in them. What makes FDs a suitable option for beginners is the fact that there is no risk at all. This is because FDs are not market-linked, and the profit is accrued only from interest. This makes FDs a conservative option. Additionally, fixed income makes investment planning easier for beginners as well.
Bonds are another conservative option that could work for beginners. Bonds are debt instruments. Similar to FDs, there is no market linkage here as well.
Bonds are a way for governments and corporates to raise money. The money you use to buy bond units is the amount that the company or corporate gets. The investment will have a set tenure. You will continue to receive a fixed interest rate till the end of this tenue. Once the tenure ends, you will get your whole initial investment back as well.
Here, bonds are much simpler to invest in and understand, making them even more suitable for beginners. Furthermore, bonds can be traded in the secondary market, making it adequately liquid as well.
Investing could seem troublesome for beginner investors, especially when there are plenty of options to choose from, and choosing right is extremely important. But the effort you put in for research and study will become worthwhile when the investment becomes fruitful.