How to start Investing as a beginner

 

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Investing can be defined as an area of action where you should move forward when you feel like you are financially stable and you have some extra amount above your savings which you can invest to grow and nurture your finances. You should figure out that your debt payments, bills, rent, and other expenses are stable when you are just starting out for investing. You should explore investing after you have created and mastered the budget for your expenses and payments and also created an emergency fund for a possible emergency in the future.

Starting Investing as soon as possible.

The earlier you will start the better growth you will get in your financial life. If you start in your 20s and you are planning for long-term investments, you will start seeing the benefits of your good decisions by compounding interest after 5 years of investment. You can start small with small amount of your savings, and when you have long-term plans to grow your savings you can learn a lot about the ups and downs that happen in the stock market and you can prepare yourself to keep your investments and returns stable in the long run.But you have to also realize that investing requires knowledge about different aspects of the market and how it all works. So before you invest your hard earned money, you must have some patience to figure out, how much i can invest, do i have the knowledge about how an organization is performing, in whose stocks i am going to invest?. You can do some calculations to figure out how much amount will be needed after your retirement and also decide the percentage of your income that you want to invest. Firstly you should divide your income in your expenses, savings for retirement, and your emergency fund, and then you should invest your left over percentage of your income to grow your finances. Now you have figure out how investing works and what all preparations you have to do in order to start investing, you can now look at the options for your investments- 

1. Mutual Funds- Mutual funds can be seen as a safe Investment when it comes to beginner's investment. They are considered less risky than investing in stocks. The benefit of investing in mutual fund is that you can purchase a vast collection of funds in one transaction instead of picking up individual stocks and bonds. You should figure out the fees involved in mutual funds as some mutual funds are managed by a professional. You should look at index funds as they charge lower fees than managed mutual funds.

2. Bonds- A bond can be defined as a debt taken by the government agency or an organization, for which you are provided with interest over the principal amount. They are generally less risky then the stocks, as you can calculate how much return you will get and what will be the time period.

3. Exchange-Traded Funds- Exchange-Traded Funds are the funds the trade on exchanges and is actively traded throughout the trading day. They offer real time settlement and liquidity as they are listed on an exchange and traded like stocks. They also provide the benefits of lower risk and diversification, which often makes a fund safer to own than a stock.

4. Stocks- A stock can be defined as a share of ownership in an organization. Investing in stocks provides you the benefits of share in the profits of the company and also you can be a part of decision making process in the organization. Prices of the stocks can range from single digit to multiple digit number, and you can own stocks of multiple companies.  

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