Are you interested in investing but not sure where to start? You might be scared or clueless to make this decision but with the steps mentioned in this article, you won't be jumping the cliff but taking baby steps towards investing and will remain safe.
This article is for beginners. It provides a step-by-step guide to help you take safe and informed steps toward investing. So let us begin.
When you start earning money via salary or any income source, first figure out where your money is being spent, by making a list of your expenses. Try to save more by cutting down on things you don't really need. Understanding how you spend helps you learn to save.
Then, start saving for emergencies. Build an emergency fund. Aim to save three to six times your monthly expenses in a safe and easily accessible account. This will provide a financial cushion for any unexpected expenses.
Once you've built up your emergency fund, think about getting health and term insurance, especially if you have people depending on you financially. Even though it might seem like a waste of money to some, it can be a lifesaver during emergencies.
You might think why are we talking about personal finance before investing? Because it is very important to get your house in order before you start investing. Otherwise it is easy to get swayed by a lot of advises around you!
The next step is to start investing. Open an online investment account and begin with safer options such as index mutual funds or hybrid mutual funds. If you're eligible, consider tax-saving options like ELSS funds. As you become more comfortable, you can explore other investment options like equity funds. Short-term goals can be met with options like fixed deposits or liquid funds, while equity funds are better for long-term goals.
Once you have started investing and been in the market and want to level up – find Guide for intermediate investors which discusses advance steps to attain financial freedom.
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