Today, when fast-paced communication is the norm, and every influencer is giving “money” advice in all shapes and forms, it becomes difficult for investors to pick and choose the guidance they deserve smartly. Information related to personal finance is simply overwhelming and often, for lack of a better word, rubbish.
So how do you start your money investment journey in the right direction? How do you choose an investment instrument (fixed deposits, stocks, mutual funds, etc)? And most importantly, how do you select the right provider? Answers to these questions eventually hold the key to financial success, and this is undoubtedly the right place to find them.
The financial world is messy and chaotic. Therefore, you need to do a sufficient amount of homework to make crucial decisions. These decisions can depend on external and internal factors such as your current financial situation, short- and long-term goals, interests, and even your experience (both personal and professional).
Today’s financial decisions form the crux of your future financial well-being. The following article will give you insights into different investment instruments and best practices in leveraging those instruments to fulfil your financial goals.
The universe of financial instruments
The financial markets house a variety of investment instruments that cater to different objectives and have different requirements. As an investor, you must choose them according to your preferences and objectives.
- Mutual Funds: Who wouldn’t recognise the iconic statement “Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing” that accompanies every mutual fund advertisement on television and the internet. They are investment options that collect funds from multiple investors like you and invest those funds in equity markets or other tangible and intangible assets. Mutual funds are managed by fund managers who are experts in their fields.
- Fixed Deposits: If a loan had an antonym, it would have to be fixed deposits. Through fixed deposits, a customer invests money in a bank in a lump sum(full amount) or monthly at a particular interest rate. The interest rate plays an important factor for an investor in choosing the bank they want to invest in.
- Stocks: A stock is a financial instrument that allows one to own a portion of a particular corporation. Stocks, or equities as they are often called in the financial markets, can be bought through a trading platform. All you have to do is open a trading account and use a trading platform to buy stocks of a company of your choice. As a prerequisite, you have to research the performance of the companies and the stocks you want to invest in and analyse the overall market performance from the short-term and long-term perspectives.
- Tangible assets: As an investor, you can also choose to invest in commodities such as gold, silver and platinum. These commodities have a hard, tangible value as well as an appreciation of the value with time, serving as a great investment instrument for everyone. The availability of commodity trading options will provide you ownership of the assets without the risk of carrying the physical asset with you.
- Real Estate Investment Trusts (REITs): If you are interested in real estate, but either don’t have sufficient funds to invest or don’t want to get into the hassle real estate buying brings in, then the new Real Estate Investment Trusts (REITs) are the perfect investment instrument for you to invest in. REITs are asset agnostic in the sense that they can help you buy a variety of real estate properties like commercial buildings, plots, houses, etc, in fractions.
So what can actually be a good starting point for you?
With so many investment instruments aforementioned, it is fairly difficult to choose an appropriate one that aligns with your objectives and aforementioned. That’s why we recommend a plan that gives you a taste of all worlds. The plan involves creating a bucket of various stocks with similar characteristics and serving them in one package. HDFC Top 100 Fund is a plan that collates all large-cap (large corporations) funds into one fund. This fund covers firms such as Reliance Industries Ltd and Larsen and Toubro Ltd into its fold.
If you are interested in a riskier and more rewarding portfolio, you can choose the Birla sun life midcap growth direct plan. This fund focuses on long term growth of capital at a controlled level of risk by investing primarily in ‘Mid-Cap’ Stocks.( Medium-sized corporations). If this information is your ammunition, you can safely start your informed journey towards financial security and well-being today.