Introduction to Investing: A Beginners Guide!

Every individual wants to fulfill the short-term and long-term financial objectives of life. In order to create a financial cushion and secure your family financially, it is very important to make smart investment planning. While making the investment, it is important to keep in mind that the investment made by you should not only match your current financial needs and also fulfill your long-term financial goals.

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In order to make the right investment, there are various factors that should be kept in mind.

In case you are new to the world of investment, consider this article as a guide on investing for beginners.

Investment Objective

Before investing money in any financial instrument, it is very crucial to determine your investment goals. For example, if your financial objective is savings for the long term, then you can consider investing in bank fixed deposits or bonds that provide medium returns. However, if you have a high-risk appetite and want to multiply money, you can consider putting your money in mutual funds or shares. Therefore, according to one's own investment objective, investors should avoid keeping the eggs in one basket so that they can minimize the risk and gain profit in the long term.

Risk Tolerance

Where there is a return, there is a risk. Some products allow investors to take higher risks, while others come with low-risk investment options. However, risk tolerance or high-risk appetite varies from person to person. It exclusively depends on the financial situation and income of an individual and how much risk he can bear. For example, an investor earning INR 50,000 will hardly invest his savings of INR 10,000 in a highly risk-associated market. However, a person earning INR 5 lakh per month may easily invest INR 50,000 in a highly risk-associated market in order to accumulate a better return. Hence, the person earning less is likely to invest in debt instruments. However, an individual earning significant income may invest in the equity market. 

Decide the Amount of Investment

At times you can invest a large amount of money in one go. However, most people get much better returns if they invest in a slow and steady manner. Therefore, before making any investment, it is very important that you decide how much amount you want to invest in a particular investment plan. By maintaining a disciplined approach, you can save yourself from the financial burden of paying a lump-sum amount. It will also help you not lose a big chunk of money at once. In addition, the amount of premium must be grown at a specific period of time. 

Diversification of the Investment

Diversifying investment is one of the best ways to reduce risk by limiting the asset to one type of share. An investor must spread the funds by investing some portion in equity while the remaining portion can be allocated to debt funds in order to reduce the risk of loss and increase the returns on the investment. In addition, the investment method should be changed by investing in another asset from time to time.


Age is one of the most important aspects that should be kept in mind while making an investment. According to market experts, it is always advised that the earlier you start investing, the more corpus you can create over the long term.  Moreover, it is beneficial to invest at a young age as you have high risk-taking ability and can invest for a longer period to maximize your wealth. On the contrary, if you make the investment at an old age, you will have to consider various factors like inflation, retirement planning, health care, child education, etc. Thus, you will not have much time for your investment to reap profitable returns.

Understanding of Financial Products

Nowadays, there are wide ranges of financial products available in the market in order to cater to the requirements of investors. However, many of these financial products are complicated in nature. Thus, before making any investment, it is very crucial that you have a proper understanding of the product in which you are investing. Having proper knowledge of the product not only helps you to meet your financial needs but also offers higher profitability. For example, if you want to have insurance coverage, then you can consider investing in a term life insurance plan that provides high insurance coverage at an affordable premium rate. On the other hand, if you want to create wealth and gain a high investment return, you can invest in mutual fund schemes, ULIPs, etc.  

Know Where you Stand Today

While planning your finances or before deciding where to invest, it is very crucial to understand where you stand financially. Therefore, it would be best if you make an investment keeping your short-term and long-term financial objectives in mind. Then, as per your financial suitability, you can invest weekly, monthly, or lump sums to fulfill your financial objectives.

Over to You

By keeping these factors in mind, you can determine which investment products are best suitable for your financial conditions, age, goals, and risk profile. Moreover, do not forget to clarify the product you are investing in. The investment in a product should be only made after determining the risk factor and investigating the history of returns it has generated over the years.


  • Does an Investment need to be registered?

    The sale of securities needs to be registered with the SEC (Securities and Exchange Commission) since the investor is provided with a key to get information about the management and services of the company. Therefore, an intelligent investor should always verify whether the investment is registered.
  • What is the most important thing I need to assess before commencing the investment?

    An ideal investor must assess the goal of the investment and the financial need he may be required to fulfill in the future. An asset without a plan or visit is futile.
  • What are the key factors one needs to consider while making an investment?

    First, an investor must consider the safety of the fund. Then, he must consider the income he may generate and the capital growth he may expect from an investment product.
  • When should I start Investing?

    One should enter the investment market as soon as possible. Investing at a young age will be fruitful for an investor to accumulate a significant sum for retirement or meet plans. The investor should analyze the power of compounding and start investing accordingly.
  • What is the primary rule of investing?

    The primary rule of investing is "Never lose money." This advice is given by the legendary investor Warren Buffet.

Past 5 Year annualised returns as on 01-05-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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