Investment Guide for Beginners

What Is a Share Market?

Every individual intends to fulfill his/her short-term or long-term financial goals of life. It is very crucial to choose an effective trading strategy in order to create a financial cushion for your family. Before choosing an investment strategy make sure that the strategy is not only aligned with your current financial needs but also with your long-term financial goals. There are various factors to keep in mind, in order to make the right investment. Some of the factors are mentioned below.

Determining Investment Objective.

It is crucial to determine your investment objectives before investing in any financial instrument. You can invest in bank FD’s (Fixed Deposits) or Bonds that provide medium or stable returns if your objective is to invest in long-term financial instruments. You can also consider employing your money in Mutual Funds (MF’s) or shares if you have a high-risk appetite and you are willing to multiply your money. So according to the investment objective, an investor should diversify their trading portfolio which can minimize risk and maximize the chances of profit.

Risk appetite

The investment returns are directly proportionate to the risks involved in it. It is often considered as, higher the risk endured, higher the chances of profitability on investment. However, risk taking ability differs from person to person. Some traders believe in operating at a low or moderate risk whereas some traders opt for highly risky investments.  Once you know your risk appetite you can choose the most suitable investment from a wide range of options.

Determining the amount of investment.

Large amount of money can be invested in one go. However, most of the traders prefer to invest in a slow and steady manner. It is important to decide upon how much amount do you want to invest in a particular share before making any investment decision.  You can save yourself from any financial burden by maintaining a disciplined approach which will help you as a beginner to avoid loss of a huge chunk of money in one go.

Age

While investing in stock market, age plays a prominent role. Experts often advise that the early you start making the investment, the more amount of money you can grow for a long period of time. Moreover, it is beneficial to invest at a young age as you can invest for a longer period of time and maximize your profits. Starting to invest at a young age means you also have the leverage to take high risk. On the other hand, you will have to consider multiple factors such as inflation, health care, retirement planning, child education etc. if you make investments at an old age. This will not give enough time to your employed capital to reap good amount of profits for you.

Understanding financial instruments

In order to cater the requirements of different traders and investors, there are a wide range of financial products available in the market nowadays. Most of these financial instruments are complicated in nature. It’s vital to have a good amount of knowledge of a product before investing in it. Having subtle knowledge about the financial product not only helps you to meet your financial goals but also assists you in making supernormal profits.

For example- If you are willing to invest in Insurance plans, you can consider investing in a term life insurance plan which facilitates high insurance coverage at an affordable premium price. You can opt for Mutual Fund schemes, ULIP’s etc. if you want to create wealth and receive high investment returns.

Know where you stand financially

It is important to understand your financial position before deciding to invest. Investments must be made according to your short-term and long-term financial objectives. You can invest weekly, monthly, yearly or as a lump sum to fulfill your financial objective.

Takeaway

By keeping the above-mentioned factors in mind, you can make effective investment decisions as a beginner and can determine which financial instruments are best suitable for you. Most importantly, don’t forget to have clear knowledge about the financial instrument you want to invest in.

Now that you know certain key points to consider before trading or investing in the share market, make sure you use them wisely and choose the correct investment option.

To know more about the financial market, stocks and financial instruments, you can visit https://www.indiratrade.com/.

Indira securities provides the best full-service trading platform across Central India. It also facilitates best mobile trading application for every level of traders and investors. Open your demat account instantly with the link below and start your trading journey with the best.