How to invest your money ? | Beginner's guide to Investment| Sudha Saswati Nayak
You work hard. You earn the money you deserve. You save a bundle of money. But you are worried because you just don't know how to get benefits from it in the long run.
So, I thought why not shed light into this particular thing!! Let's Begin from the beginning.
You save when you spend less or put it in this way, you spend exactly how much you need to. Now in order to spend a particular amount, Your income should exceed your expense. Otherwise you would end up in no savings.
For example: Your Monthly income is Rs. 20,000. Now you calculate your expense for 1 month and find out that you have spent Rs. 15,000 already in the end of the month. So you are left with Rs. 5000 and you have kept Rs. 3000 as your emergency fund. There you go! Rs. 2000 can be invested or kept aside for future investments.
For a full guidance on Savings, Read this blog "Why you should start Saving money?"
So before you plan on investing money somewhere make sure you have enough money with you i.e.
Your Expenditure+ Emergency Fund
If you still save some part of your income which you think you will not be needing in near future (At least for a year) then that's the money you will end up in investing.
2. What is a Share?
Shares are a unit of ownership that represents an equal proportion of a company's capital. Or simply put, Buying/ investing in shares means you are contributing money to the particular company which issues shares to raise fund. The logic here is to get money from number of investors, run a company, raise profit and distribute the profit among the investors in the long run.
Before you make your mind to invest in shares , you should have a clear idea about different types of shares and their individual benefits.
Mainly, There are two types of shares. Equity share and Preference share.
Important things to remember:
Share prices fluctuate from time to time that means It can go down as well as up.
So buying shares involves some risk, but over the long term, they can generate good returns.
Now If you intend to double your money in a year or half, buying shares is not the best way to do it. But if you want to invest the same amount of money for 5, 10 or 20 years, shares may be a rewarding investment.
3. What is a Mutual fund? Why you should consider investing in M.F?
Mutual Fund is one of the best and safe way to invest money. Here, you invest your money along with other investors (A group of people) in a certain stock, bond or other securities.
Now why it is considered safe?
Reason 1: Here, you don't have to worry a lot about the process of investing or keep an eye on the progress as a fund manager (or "portfolio manager") decides how to invest the money and do all the help. (Of course, he is paid a fee, which comes from the money in the fund.)
This is not the only reason for which you should consider investing in mutual funds.
Reason 2: The main reason is the risk involved in Mutual funds is minimum as compared to other securities.
Not interested to take help from a Fund manager? No worries. You can choose "Direct plan of a mutual fund" where you login directly to the website of the mutual fund you want to buy and invest in it from there. It involves all the paper work, Repeated research and monitoring the progress too. But you will not have to pay any fees or commission.