Chapter 1:
If you’re one of those who day-dreams about choking themselves with loads of money or earn a little easy money other than your salary even just someone hungry for the knowledge but don’t know where to kick-start.
The goal of investing (the act of committing money or capital to an endeavour with the expectation of obtaining an additional income or profit.) is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.
Let's say that you have $1,000 set aside, and you're ready to enter the world of investing. Or maybe you only have $10 extra a week and you'd like to get into investing. In this article, we'll walk you through getting started as an investor and show you how to maximize your returns while minimizing your costs.
Personal finance can be complicated. There’s budgeting, saving, credit cards, investments, loans, retirement plans, insurance – that’s a lot to think about!
And even before the pandemic caught us off-guard, money was tight for many and many countries were greatly impacted and had to go-through a major recession, the history has ever seen. In fact, if you would’ve started investing at beginning at the lockdowns, you would have made a great profit as the Global markets grew a lot in these few months (but not the economies in general). But No to worry, it’s always a great time to start your new chapters, right!!
Let’s get into it.
To start with the journey of financial independence, you’ll need to know some basics sources of passive incomes (incomes other than your salary).
1. Gold and jewellery
2. Real estate
3. Saving accounts (practical for India only)
4. Fixed deposits (practical for India only)
5. Shares
6. Bonds and Debentures
7. Crypto-currency
8. Mutual funds
Every listed source has its own pros & cons and requires some lookout for them to get adequate returns off them but we’ll talk about them individually. One of the first rules of investing is never to dig in just one source – ALWAYS DIVERSIFY YOUR INVESTMENTS.
You could think of it as financial jargon for "don't put all of your eggs in one basket."
Every investment you’ll come across will have:
1. Return: returns off a particular investments means the profits you make from that particular investments and should always be more than the current inflation rates. For e.g.: you buy a particular share for Rs.10 but by the time you sell its price grew by Rs. 5, you’ll get a +Rs5 profit from it but given that inflation rate is Rs 20. The returns whatsoever will be in vain. RETURNS > INFLATION RATE.
2. Time: just like fruits take time and patience to ripen similarly investments too take time to give some sufficient returns. Some take days, years and some even decades. Patience and smart strategies are the keys!
3. Risk: When you invest, you’re exposed to different types of risk. Most of us think of risk as negative. I’m going to encourage you to think a little differently about it. Risk is a deviation of an expected outcome. In investing, we can look at risk as a deviation of expected investment returns. Risk is usually associated with investments which have an uncertainty about their growth. Review your existing investments. Which risks affect you? Are you comfortable taking these risks?
The bottom line:
It is possible to invest if you are just starting out with a small amount of money. It's more complicated than just selecting the right investment (a feat that is difficult enough in itself) and you have to be aware of the restrictions that you face as a new investor.
You'll have to do your homework and research & analyze a lot about those certain investments.
Disclaimer: contents of this blog are entirely my opinions or views and are not intended to malign any group, company, associations or individual. These articles are written keeping middle/lower class in mind and are entitled to them.
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