How To Start Investing : A Beginners Guide To Investing In India

If you’re saving money for a goal and won’t need the cash for at least five years or so, the money should be invested. Unfortunately, many people are afraid to invest in any means, or don’t do it because they don’t know how to start investing.

The good news is, investing can be easy, and you don’t have to know a lot about the stock market & other investment options to make wise investments.

If you are new, you can learn here – How Share Market Works.

To make a better investment approach, you just have to follow these simple steps to get your money into the market for profit: 

Step 1. Decide on an Investment Approach

When you invest your money in the stock market or in other asset, there are some different approaches you can take. You can manage the money yourself with a full-service broker and simply have an investment advisor to manage your money or you can choose Algorithm.

  • Managed Investment : Managed investment accounts usually carry high fees. Further, handing over investment decisions to an advisor isn’t the right approach for many people.
  • Self-Managed Investment : You can choose self-managed investing approach because it gives you confidence & full control over your money & investing.
  • Algorithm Investment : Investing with Algorithm, which means an algorithm picks diversified investments for you based on your risk profile and investment goals. While investing with an Algorithm sounds simplest, but there are fees associated with automated financial advising. However, fees associated with Algorithm Investing, is lower than if you have a human advising you.

Step 2. Open an Investment Account (DEMAT Account)

Once you’ve decided your approach, it’s time to open an DEMAT Account. DEMAT Account gives you liberty to investing your money to Stock Market, Mutual Funds, Exchange Traded Funds (ETF), Commodity, Equity etc.

If you’re going to invest funds yourself, there are a huge number of discount broker are available to choose from. You should pick a brokerage which fits to your requirements and situations.

While choosing a broker, you should keep following points in mind:

  • Compare brokerage fees (you’ll pay for buying and selling assets)
  • Minimum deposit requirements
  • Types of investments available
  • Trading platform. 

You should select a broker that offers a low commissions or free trades with plenty of commission-free investments, and an online platform that provides education on Investments, if you’re a beginner.

Step 3. Make an Initial Deposit

After opening your DEMAT account, you’ll make an initial deposit to start Investing, usually through a transfer from your bank account. There are generally no fee will be charged for this transfer, or you can also send in a check if you’d prefer.

You can deposit money to your DEMAT Account by following options:

  • Net Banking (instant transfer from your linked account)
  • Cheque

As I told you earlier in this article that you can make investment on different types of assets through DEMAT Account, you can put in as much money as you want to. 

Step 4. Build a Diversified Portfolio

Once you’ve deposited money into your investment account, it’s time to actually purchase assets to make investments.

If you are confused about where to invest. I’ve described in my guide about Best Investment Options in India.

If you are using Advisor or Algorithms to manage your money that they will take care of this process for you once you’ve filled out some basic information about your risk profile and goals for the money.

If you’re investing yourself, you’ll need to determine where to put your funds for better returns.

I strongly recommends that don’t put all your eggs in one basket, so invest in a mix of different assets. A classic mix for a diversified portfolio includes investing in large-cap stocks, small-cap stocks, real-estate investment, bonds, and mutual funds.

ETF stands for exchange-traded fund, and the funds put the investor money to buy different categories of assets. ETFs, or exchange-traded funds, make it really easy to diversify investment because you can trade them on the market like stocks, and there are many different ETFs that provides you a better exposure to a broad array of different kinds of assets. 

Step 5. Start Investing Today

Whether you decide to choose an investment advisor to manage your money, use a Algorithm, or buy ETFs, you’re going to be in a much better position, if you start investing now rather than leaving your money to languish in a low interest saving bank account, or spending whatever you earn.

The younger you are when you start investing, the more you can take advantage of compound interest and build real wealth while growing. So, start Investing today. Open your DEMAT account now and get your money in the market so it can start working for you.