I will not give you ideas on stocks  and funds in this article, but what I will give you here is the thinking power to answer this most valuable question of life, how to start investing?

As a newbie it is always confusing to locate the starting point of the process of investing. Generally the investing process completes a full circular process and comes back for where it started. In this process what changes is investor’s net worth. By Investing what investors do is to create a portfolio of assets (shares, mutual funds, bonds etc), buying these assets increases the net worth of the investor. So the focus of our question, how to start investing, will revolve around ways and means of creating a portfolio full of assets that will turn increase investors net worth. So how a new investor can start investing? The following milestones will guide any new investor during their investment cycle:

Few simple steps which will guide new investor on how to start investing

• Fix your investment options as per budget
• Start investing with a mutual fund

Identify your investment options as per budget

(1) Starting with Rs 2500 per month is not bad

I know this amount may look very nominal one but systematically investing each month even a small amount like Rs 2500 will make a heavens difference to investor’s net worth. Investing such a small amount may not be a good idea when it comes to direct stocks purchase but following a mutual fund route will be ideal. Systematic investing is one of the answers to How to start investing? Because compounding of money comes into play while investing is done regularly over a period of time.

(2) One time investing (lump sum) investing till Rs 5,00,000 is next step

Investors has plethora of investment options in this budget range. Even for advisors like us it becomes easy for us to recommend investment options when they come to us asking how to start investing and they have this budget. For such investors the first investment advice will be to understanding the important for portfolio diversification. With such investment budget investors can start investing with 30% of their budget in value stocks and balance in diversified equity linked mutual funds. For people who are not ready to take the risk of equity linked plans, they can go for debt linked mutual fund which is also giving reasonable returns of 7% after tax.

(2) One time investing (lump sum) investing above Rs 5,00,000 is next step

Here investors shall become careful. How to start investing with this budget can be tricky and it required a bit of investing intelligence on part of investors. Here I will advice investors to learn what is value investing. This principle of investment has been made popular by the master investor Warren Buffett. Value investing requires investors to show patience and invest only when an undervalued stock is available in the market. According to Warren Buffett buying an overvalued stock or even an average performing stock is a crime towards the investor’s fraternity. Let this average results satisfy ‘traders’ but ‘investors’ should stick to value investing.

What better way to start investing than a mutual fund option

Whenever a newbie asks me that how to start investing, I tell them to invest in equity through mutual funds. But my investment advice does not stop there, I also ask them to follow and observe the portfolio on the mutual fund which consists of various value stocks. Observing mutual fund portfolio can give huge insights to new investors regarding the process of portfolio creating and selecting value stocks.

(1) People who want to invest for retirement

There are mutual fund companies who specifically allocate your investment fund to meet your retirement goals. An investor who would like to know how to start investing to meet retirement goals after 20 years and can spare Rs 10,000 per month today for retirement investing. Mutual fund companies will advice of the risk-return paradigm to the investors and accordingly allocate fund in various investment options.

(2) People may also decide to invest oneself to meet various monetary goals.

The best to answer how to start investing is to do it on oneself. This is not as difficult as it looks. I started investing when I was 28 years of age. I carefully evaluated by investment budget and decide that I will keep my investment theories as simple as possible. I decided to invest Rs 10,000 per month with 50% in directly in stocks and balance 50% divided in two separate mutual funds. My investment portfolio looked like this on day one

Related posts:

1. Beginners Guide to Investing: Where to start? This “Guide is for Beginners” and is designed for those...
2. How to make money by investing in stocks The Internet is your best friend when it comes to...
3. How to Get Rich by Investing Money? In the rapidly changing world, we have little time breathing,...
4. How to invest money in stocks It is very simple: investing means putting your money to...