If the word investing leaves you confused, wondering where to begin, now is a good time to hit the start button.
If you’re thinking to yourself “But I’m only 12. Why do I need to know about investing when I don’t even earn?” or if you’re a parent reading this thinking that your child has a lot more time before he or she get into the marketing game, you answered your own question.
It’s the golden rule of how investing works: Investing compounds with time. It’s not about how much you have, it’s about how much time you must invest the little that you have.
To know more on why you should start investing today, read our blog here.
Here are 5 tips on investing for beginners.
1)Set an Investment Goal
Whenever we set out to accomplish anything, we need to have a goal in mind. Investment is no different. Depending on your age, income and approach towards life, your investment goals take shape. Although there may not be a flow of income at an early age, one can always plan for the end outcome.
Investment goals help us achieve our plans for life : at this stage, even the college you plan to apply to, decides the fees required to pay for it.
It builds accountability and self-discipline and reminds us to stay on track when we are tempted by expensive choices.
It motivates us towards our vision. When we know where we need to be, we have clarity in our actions.
Here’s a universal Goal Setting framework which could help you get started. Your goals must be SMART.
While planning, set SMART goals (more on Mnemonics in a while). The goal must be.
Specific – Be specific on what you want to achieve.
Measurable – As you work, measure the progress.
Achievable – Set goals that are achievable.
Relevant – Actions towards the goal must be realistic
Time Bound – Set specific timeline for the goal.
2) Automate your savings
It’s easier to swipe a card and choose the “lazy pay” option than to automate our savings. The former is more of a live for now option, but by automating our savings we are building a safety net for the future. Automating our savings can be a one-time effort, where we can set up reminders at the beginning of the month to carve out the money rather than procrastinating it for next month. Automating our savings stops us from making any unnecessary expenditure while also building a safety net for the future without any delay.
3) Diversify your investments
Don’t put all your eggs in one basket. The age-old adage applies best to investment. Market fluctuations are beyond our control. When we put all our capital in the stocks of one company, there is a greater risk of losing all our money when the company runs into a loss. Instead, it’s smarter to hold shares of different companies where even if one is running a loss, we’re still reaping profits from the company that’s reining the trend.
4) Make a buck with Investment Simulated Games
Before you step into the real deal, you can get your hands on with investing through money games and no, we’re not talking of just Monopoly. Investment does require one to take risks, but before one gets to that stage, you can take every risk you want, and not run a loss (at least not a real one) and be exposed to how the market works at an early stage. The internet is a hub of stock market games which will teach you all about investments, while you have fun making money and also getting ready for the future!
5) Stay up to date with the market
Be it the news or the stock market, staying updated with what’s happening will always give you an etch over the trends. Reading about the market, understanding how global economy works, will help you make wiser decisions with your money and expose you to newer trends.
While the internet can be a rabbit hole of information, we’ve got a great start for you. Fortunately, Varsity by Zerodha, has created an extensive resource hub on financial literacy and stock market modules which are accessible for free.
Financial literacy gives you knowledge of money today so you know what to do with it tomorrow. It doesn’t have to be boring, it can be fun and games through this quiz here!
Did you know the word Bank comes from the old Italian word Banca, which means benches, which were used as makeshift exchange counters by Florentine bankers?
To know more about banks here’s a fun-nancial, (fun + financial) quiz for you!
QShala presents a
Financial Literacy Program
Learn the basics about money as you start out young, stay up to date with market trends with our questions and be money wise now, so that you can reap the benefits later.
If you are above grade 4, register for the Financial Literacy program here