Thursday, 26 April 2012

Investment Tips for Beginners- Basic Tips

Danilo Rizzuti
Investing is an art. You need to practice it to perfection. The most profitable way of create wealth is to make your money work for you.Remember Money Earns Money. For beginner investing can might sound quite confusing.  
Here are some Basic Tips that could help a beginner or fresh investor:
  • Know the Rules: Before you invest your hard earned money, you need to know and understand the rules thoroughly. There are various products available in market, Products meant for Long Term, Short Term, Insurance cum Investment, Equity Products(associated with an element of risk), Debt products  etc. Understand each one of them and do your ground works before taking any call. In case of ambiguity or confusion, make sure you get them clarified. Posting your query on financial forums is best way to get quick information.
  • Spread Your Investment: Diversification is the key. When it comes to diversification, there are no predefined rules. Diversification should be on the basis of your risk appetite.  Stock market has potential to give returns that would beat the inflation. This does not mean that you invest all your money in stock market. This approach would be very risky. On the Flip side, it makes no sense having 100% debt portfolio. Balanced Portfolio is very much essential to build wealth.  Diversify your investment across various sector or asset class like Real Estate, Socks, Mutual Funds, Debt Funds, Bank Fixed Deposits.  Click Here to know why you should invest in Mutual Funds.
  • Investing in Stocks:  Don’t buy stocks because they are available at cheap price. You need to evaluate the reasons why the stock is trading at cheap price.  Your stock pick should be based on value investing rather than price. Stay away from Penny stocks and SMS Tips. Always invest in A Grade stocks. Click Here  to know why not to invest in individual stocks.
  • Take Calculated Risks: Historically it has been observed Equity has outperformed any other asset class when invested with long term horizon. Investment in stocks is not everybody’s cup of tea. It would require Skills, Time and Temperament. The best option for new investor is to invest into stocks via mutual funds. Invest in good equity mutual funds. Stay away from Thematic/Sectoral Funds.NFO should be strictly avoided.
  • Term Plan: This may not be product that would give you returns; however Term Plan is integral part of the financial planning. Make sure you have adequate insurance. Stay away from insurance cum investment plans. Click Here for knowing, How to choose the Right Insurance.
  • Additional Reading:  Click Here to know Where NOT to invest or Products to Avoid?
Leave your comments if you need further details:


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