I don't know anything about investment, mutual funds, SIPs etc. I want to learn and start investing. Please tell me how to start.
Ans: It is truly inspiring that you want to start investing now. Many people delay it for years. You are taking the right step at the right time. Wanting to learn is the first and best decision.
Now let me guide you from zero knowledge to confident investing. I will keep it simple, clear, and practical.
» Understand the Purpose of Investment
– Investment helps you grow your money.
– It beats inflation and protects future expenses.
– It builds wealth over time with discipline.
– Investment also supports retirement and life goals.
– Without investing, money loses value over time.
– You earn today, but investing grows that earning.
– Saving alone is not enough. Investing is must.
» Difference Between Saving and Investing
– Saving means keeping money idle or low return.
– Like bank FD or savings account.
– Investing gives you better returns by taking calculated risk.
– It involves equity, mutual funds, gold bonds, etc.
– Investing can beat inflation over the long term.
– Saving gives safety, but returns are too low.
– Investment gives growth with time and planning.
» Start with Clear Goals
– Define what you want to invest for.
– Like retirement, child’s education, wealth building.
– Write these goals down with time frames.
– Goals help you choose right investment types.
– Short-term and long-term goals need different plans.
– Having clear goals gives your money direction.
– Don’t invest blindly without knowing the reason.
» Know What Mutual Funds Are
– Mutual fund pools money from investors like you.
– A fund manager invests it in stocks or bonds.
– You get returns based on performance of those investments.
– It is managed by professionals and well-regulated.
– Mutual funds are safer than investing directly in shares.
– They are transparent and give liquidity.
– Returns are market-linked, so they can fluctuate.
– But over time, they give good growth.
» Types of Mutual Funds You Should Know
– Equity mutual funds invest mainly in stocks.
– They are for long-term wealth building.
– Returns can be higher, but fluctuate short term.
– Debt mutual funds invest in bonds and deposits.
– They are for low risk and short-term needs.
– Hybrid funds mix both equity and debt.
– They suit medium-term investors.
– All these funds are managed by experts.
» Don’t Start with Index Funds
– Index funds only copy a stock market index.
– They have no active fund manager.
– They can’t manage market falls.
– They fall fully when markets fall.
– There’s no active stock selection in them.
– They don’t offer downside protection.
– In India, actively managed funds still perform better.
– So avoid index funds in the beginning.
» Don’t Choose Direct Plans in the Beginning
– Direct mutual funds are low cost but lack guidance.
– You must select and track everything alone.
– Small mistake can lead to big losses.
– Beginners should not go for direct plans.
– Regular plans come with service and review.
– When you invest through Certified Financial Planner, you get advice.
– A CFP tracks performance and makes changes for you.
– It saves time and avoids confusion.
» SIP is a Good Way to Start
– SIP means Systematic Investment Plan.
– You invest small fixed amount every month.
– You don’t need large amount to start.
– SIP creates habit and discipline.
– It works well for salaried people.
– SIP reduces market timing risk.
– It works in both rising and falling markets.
» You Can Also Invest Lump Sum
– If you have saved money, invest lump sum.
– For lump sum, equity investment should be slow.
– You can use STP from liquid fund to equity fund.
– STP means Systematic Transfer Plan.
– It moves money every month automatically.
– It balances market entry timing.
– A Certified Financial Planner can help you set it.
» Learn the Basic Process to Start
– First, complete KYC with PAN, Aadhaar, and mobile.
– It is required for mutual fund investing.
– Then link bank account with your investment account.
– Choose a SIP amount or lump sum amount.
– Select fund categories as per your goal.
– Invest online or through a CFP platform.
– Get statement and track regularly.
» Use Only Registered Platforms
– Avoid random apps or websites.
– Use platforms where CFPs are involved.
– These platforms offer personalised investment service.
– They also offer portfolio tracking and tax reports.
– Everything stays consolidated and simple.
» Always Keep Emergency Fund Ready
– Before investing, keep 6 months expense as savings.
– Use liquid mutual funds or savings account.
– This fund protects you during job loss or health issue.
– Emergency fund avoids breaking long-term investments.
» Take Only Term Insurance for Protection
– Do not mix investment and insurance.
– Avoid ULIPs and traditional LIC plans.
– They give low returns and poor flexibility.
– If you already have such plans, consider surrendering.
– Reinvest the money in mutual funds.
– Take only term insurance for life cover.
– It is cheap and gives large cover.
» Don’t Try to Time the Market
– Many try to wait for perfect time.
– That perfect time never comes.
– Best is to start early and stay long.
– Over time, ups and downs balance out.
– Delay only reduces compounding benefit.
» Start Small But Stay Consistent
– You can start SIP with Rs.1000 also.
– Don’t wait to save big amount.
– Even small steps lead to big results.
– Increase SIP when income rises.
– Consistency is more important than amount.
» Don’t Follow Market Tips Blindly
– Many YouTube and WhatsApp groups give wrong tips.
– These tips are not suitable for you.
– Each investor has different goals.
– Avoid such noise and stay on your plan.
– A Certified Financial Planner gives customised advice.
» Track Your Investments Periodically
– Don’t check returns daily.
– Markets go up and down.
– Check performance once every 6 months.
– Rebalance the funds if needed.
– A CFP does this with proper reports.
» Taxation Rules You Should Know
– Equity fund profits after 1 year are long-term.
– LTCG above Rs.1.25 lakh taxed at 12.5%.
– Profits before 1 year are short-term.
– STCG taxed at 20%.
– Debt funds are taxed as per your income slab.
– Plan redemptions smartly to reduce tax.
» Use Goal-Based Investment Strategy
– Set a goal for each investment.
– Like Rs.10 lakh for child’s college in 10 years.
– Then select fund as per the goal.
– This gives purpose to each rupee invested.
– It also makes tracking progress easier.
» Don’t Panic During Market Falls
– Market may fall sometimes.
– It is normal and temporary.
– Don’t stop SIPs or withdraw money.
– These corrections are part of the journey.
– Stay invested and let time work.
» Keep Your Documents Organised
– Maintain folio numbers and investment proofs.
– Save them digitally for easy access.
– Link email and mobile for alerts.
– Nominate family member for all investments.
– This avoids future legal problems.
» Learn More Slowly and Steadily
– Read about mutual fund basics from good sources.
– Follow reliable platforms and YouTube channels.
– Ask questions to a Certified Financial Planner.
– Don’t try to learn everything at once.
– Learn one step at a time and apply it.
» Stay Away from Complicated Products
– Avoid stock trading, crypto, NFOs, PMS.
– Stick to mutual funds and term insurance.
– Keep things simple and easy to manage.
– Simplicity is powerful in wealth creation.
» Have Realistic Expectations
– Mutual funds don’t give fixed returns.
– Returns change year to year.
– Expect 12% to 15% from equity over long term.
– Debt funds give 6% to 8%.
– Don’t expect miracles in short time.
– Stay calm and focused on your goals.
» Take Guidance from a Certified Financial Planner
– A CFP helps you plan investments as per your goals.
– They guide you on which funds to choose.
– They help you track and rebalance yearly.
– They give clarity and avoid confusion.
– You will get customised and unbiased advice.
– Regular plan with CFP gives complete support.
» Finally
– You have made a bold and wise move.
– Starting is more important than knowing everything.
– With right guidance, you will succeed in investing.
– Mutual funds are powerful tools for growing wealth.
– Learn gradually and invest consistently.
– Your money will work for you with time.
– Stay patient and positive. Future is bright.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
