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How to create an investment strategy for beginners

September 20, 2023

Achieving financial goals is important for individuals across age groups. However, with multiple investment options in India available today, it can lead to massive confusion, both for amateur and seasoned investors. But it is generally the beginners who struggle with creating a good investment strategy. The world of investing can be overwhelming and we completely understand that.

That’s why we have some crucial strategies that can help beginners make informed decisions for the long term.

Evaluate your financial goals
Before you go for investment options in India, take some time out and understand what your financial goals are. Are you looking to save for your retirement or is achieving certain milestones on your mind? The investment time horizon must also be accounted for in your decision. If the goal is saving up for your retirement corpus, it means you can take more risk. That won’t be the case if it’s a short-term goal.

Do some research
This tip is equally imperative. Brush up on the basics before you start your investing journey. Stock up on some credible books; take online courses, watch videos and anything else that helps you understand the world of investing better. You could also consult a financial advisor to discuss your financial goals and the way ahead.

Take baby steps
Like everything else, you need to be a little judicious when you start investing. Take baby steps and invest a small amount – it could be as little as Rs 100. Once you take this direction, you know you’ve made your foray into the world of investing without worrying about the risks associated with it. If you are 45 years and plus, and have no idea from where to begin for saving a corpus for your retirement, then you need to take baby steps towards getting a Systematic Retirement Plan for your golden years. Plan systematically for retirement today to live a, worry free tomorrow!

Include index funds
Before we delve deeper, let’s understand index funds. As the name suggests, these are funds that invest in stocks of a particular market index. When you invest in these funds, you are getting a chunk of the entire market. This can automatically minimise risks, which is beneficial particularly when you are a beginner.

Have a retirement plan
It is a good idea to invest in a retirement plan early on for the tax benefits¹ it offers. If in case you already had a National Pension Scheme account, post it maturity you can choose to opt for Annuity Plans with, Deferred or Immediate Annuities.

Diversify your portfolio
The best way to reduce risks is to invest in diversified assets, since the negative performance of a particular asset can be offset by the positive growth in another. This strategy also ensures that you have enough peace of mind and stability in the long run.

Ensure regular investments
Investing regularly is the best way to ensure wealth-creation in the long run. For instance, you can set automatic payments to your investment account every month.

Rebalance your portfolio
Over time, there’s a likelihood of your portfolio losing its balance, particularly because some assets show better performance than others. With rebalancing, you can sell some of those investments and buy the ones that are not performing well to get some balance.

All in all, following these tips as a beginner in investing will ensure you reap returns and at the same time, have stability in your portfolio.

Related Article:

ARN - ED/07/23/3495

Francis Rodrigues

Written By:

Vishal Subharwal

Reviewed By:

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1. Tax benefits are subject to conditions under Sections 80C, 80D, Section 10(10D) and other provisions of the Income Tax Act, 1961.

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