Top 5 Investing Tips for Beginners

Are you ready to make your first move in the world of investing? Here are a few tips that will come in handy:

1. Don’t mix insurance with investments
   For a lot of us in India, insurance is the first serious “investment” we make in our lives. You might have bought a traditional policy, which has a tiny insurance component and large investment component. This large investment component would give returns at par with the savings rate, or sometimes a little higher but not more.
   If you’re starting out with investments today, keep your insurance separate from investments. Get a term cover for life insurance. For investments turn to mutual funds, fixed deposits (FDs), Public Provident Fund (PPF) etc.
2. Allocate across assets classes
   Investing 100% of portfolio into a single asset class is not advisable. You should diversify your portfolio, through allocation in assets like debt funds, gold Exchange Traded Funds (ETFs), diversified mutual funds or large cap mutual funds. Asset allocation can help to limit your exposure to risk and keep your portfolio in tune with your goals.
3. Retirement maybe far but start investing early
   Early birds get to build their long term corpuses, thanks to the magic of compounding. If you start investing for a goal like retirement, when you have as much as 3 decades or more to go, you need to put away just a few thousands a month to live a comfortable life in retirement.
4. Invest in gaining financial know how
   Investing is easy and will become your second nature in no time. However, there are plenty of crooks and traps out there in the financial world. So, read up on how to approach investments, how to match goals with investments, how to analyse fees and costs of investments and so on. Consult a good fee-based advisor if required.
5. Spend without regrets
   Lastly, what good is life if we don’t live well in the present? While you prudently budget and plan your monthly investments, don’t feel guilty about the little splurges. Dine out sometimes, surprise your folks with gifts, go on fun trips. Keep aside a judicious budget to spend on yourself and loved ones every month.