5 ways for young investors to start investing

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Starting with the right investing habits will give you clarity and confidence. It’s not about being stingy and boring; it’s about creating funds for the things you love to do. Just as the confidence gained from learning to ride a bike helps in transitioning to bicycles, scooters and eventually cars, it is important to first build a foundation of fundamentally sound investments before moving on to riskier investment options. and more complex. Digital platforms make it easy to invest and you can start even with small sums. But aggressive marketing and a plethora of options can be overwhelming.

So cut the noise and just get started. Here’s how.

1) Invest before you spend: Investing what’s left after you spend is a surefire way to end up with zero savings. Start by automating the allocation of your investments before you spend. Being able to save at least 15-30% of your after-tax income is ideal, but if this is difficult you can start with as little as Rs 1,000 per month. Make a simple budget covering savings, investments and expenses, and stick to it. Stay away from aggressive marketing and the temptations that come from credit card systems and buy now, pay later (BNPL).

2) Protect yourself before you invest: Buy life insurance through low-cost term insurance only if you have dependents. High-cost insurance plans are a hard sell because investments with long-term lock-ins are best avoided when you’re starting out. Given the high commissions involved in insurance policies, plans tend to be pushed or mis-sold under the guise of investment plans. However, medical insurance for you and your parents, if they are your dependents, is a good thing. Medical expenses can be a big disruptor to family finances in today’s uncertain world.

3) Ignore peer pressure: Fear of missing out (FOMO) and peer pressure can cause many people to start investing in stocks directly on a tip basis or buying options such as cryptocurrencies. currencies without having an appropriate base. However, given the higher risks in asset classes such as direct stocks (stocks) and cryptocurrencies, you could suffer heavy losses. If you must invest, limit those investments to a small 5-10 percent of your investable amount as a way to explore beyond the core of a diversified mutual fund portfolio.

4) Set the right goals: Your first milestones could be building up an emergency kitty covering 6-9 months of your lifestyle expenses, as well as saving and building up your first lakhs. The confidence and satisfaction that comes from setting a goal and following through with a disciplined savings plan is always a nice feeling.

5) Invest in financial literacy: Well-regulated financial products like mutual funds are a great way to get started, and online portals like mutualfundssahihai.com help you understand the basics of getting started. Understanding the practical application of important concepts such as risk profiling, budgeting, inflation, asset allocation and managing market downturns/volatilities will be of great help.

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