What matters is how much money you keep, how hard it works for you, and how many generations you keep it for..
The most surefire strategy to build wealth over time is to invest your money.
You’ll need to have a fundamental understanding of how to invest your money properly before you put your hard earned money into an investment vehicle.
The following is a list of some of the best ways to invest your Money:
Stocks
Stocks are bets on a company’s potential for growth. Stock investments allow you to gain profits alongside the company.
Bonds
Similar to how most people borrow money from time to time, businesses and municipalities also borrow money by using bonds.
Index Funds
This well-liked investment product can help balance your portfolio and monitor a market index.
Real Estate
One of the most popular investment options for individuals, HNIs, NRIs, and the working class alike is real estate. Real estate is for you if you believe you can assess market trends after five to fifteen years.
FixedDeposit
Indians continue to appreciate traditional, straightforward FDs, mostly because they have the lowest risk profile of all available assets. It is more of a “Invest It, Forget It” option because it doesn’t require extensive analysis or research prior to investment.
Bullion
Bullion is a valuable metal that is regularly exchanged in bulk form in the commodity market, such as gold, platinum, silver, iron, and aluminium. Inflation, metal purity, and metal mass all affect pricing. It is a highly speculative situation. When choosing this, you should be able to anticipate daily market volatility and process the ensuing losses or gains.
Forex
Due to its scale, volatility, high liquidity, and the fact that it is a market that is available around-the-clock, forex is a popular choice for investors with hectic schedules. When rates move in your favour, you can make significant gains, but you might also lose money if the global market becomes volatile.
Cryptocurrency
Digital currencies like Bitcoin that are backed by neither actual assets nor real assets exist as cryptocurrencies. They are tracked on digital ledgers and exchanged between willing parties without the use of a broker. Investing in cryptocurrencies has the potential to be profitable, particularly if you do so at the appropriate time. For instance, if you had put $1,000 into Bitcoin ten years ago, you’d have more than $15 million now, providing you kept on to your investments and didn’t sell them.
Although it is feasible to make a fortune with cryptocurrencies, not all investors will succeed in doing so. It requires patience and knowledge.
However, there isn’t a universal solution to this. Whichever strategy you choose to invest your money, it’s the most effective for you.
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To determine that, keep the following in mind:
- Your Style.
- Spending limit
- Your capacity for danger.
Your Style: How much time are you willing to devote to your financial decisions?
Active and passive investing are the two primary categories in the world of investing when it comes to the many ways to invest money:
Active investing entails doing your own research on potential investments as well as building and managing your own portfolio. You intend to be an active investor if you intend to buy and sell individual stocks via an online broker.
You’ll need the following three things to succeed as an active investor:
- Time
- Information
- Intent
Instead of flying an aeroplane manually, passive investment is comparable to setting it on autopilot. Over time, you’ll still obtain good outcomes, but it will take far less work. In a nutshell, passive investing is the use of investment vehicles in which the hard work is already done by someone else. mutual fund investing is an example of this method. Or you could employ a mixed strategy. For instance, you may employ a Robo-advisor to create and implement an investment strategy on your behalf instead of hiring a financial or investment counsellor.
How much money do you have to invest according to your budget?
You might believe that a sizable amount of money is required to establish a portfolio, but you can start investing with just $5,000. Your decision over how much to invest is entirely up to you.
Establishing an emergency fund is a crucial step before investing. This is money that has been set aside in a way that allows for a speedy withdrawal. You never want to find yourself having to sell (or divest) your investments in a time of need. All investments, whether stocks, mutual funds, or real estate, have some level of risk. Your safety net to prevent this is the emergency fund.
Your risk-taking abilityWhat level of financial risk you ready to accept?
All investments do not succeed. Each investment has its own level of risk, but returns and risk are frequently linked. It’s crucial to strike a balance between increasing your financial returns and determining how much risk you can tolerate. Bonds, for instance, yield comparatively low returns of just 2% to 3% but offer consistent returns with very low risk. In comparison, stock returns can vary greatly depending on the firm and time period. Nevertheless, the overall stock market typically returns close to 10% annually, and if you include the cryptocurrency market, that figure increases to over 100% depending on your portfolio.
Goal-based investing, in my opinion, is the ideal investment strategy.
Take Anjan, a 30-year-old, for example.
30 years old
The monthly investment limit is $12,000.
2.2 lacs are held in a savings account.
Now, Anjan has three goals he’s set for himself and wants to achieve them in a specific amount of time:
The first goal is to save Rs. 5 lacs for a car in two years.
Goal 2: Spend Rs. 65 lakh on a home over the next 16 years.
Goal 3 is to save Rs. 1.4 crore for retirement in 25 years.
His financial advisor has offered the following advice:
The first goal is to save Rs. 5 lacs for a car in two years.
This is your most challenging objective, and 2 years is a short-term goal. What I can advise is this:
Step 1: Invest 1.2 million in a lump sum and another 3,000 in the following funds:
Lumpsum 40k, SIP 1k for Axis Midcap Growth Fund (Mid Cap)
Lumpsum 40k, SIP 1k for the Parag Parikh Flexi Cap Fund ( Multi cap for a diversified portfolio).
Mahindra Kotak Blue Chip Fund: 40,000, 1,000 SIP (large-cap)
Even with a CAGR of 10%, you can now reach close to 2.3 lacs after two years with this portfolio. However, if it performs similarly to what they have in the past, it will give you more.
In order to give you safety and balance in your portfolio, I’ve combined large, mid, and flexible-cap funds.
You can get a car loan for the remaining 2.7 lakhs or put it toward it now if you have extra cash.
However, if you like to take risks and want to earn more than 10%, consider using cryptocurrency. Investing early and selling when the price rises is one of the best strategies to make money with cryptocurrencies. Find high-calibre projects with genuine applications and real platforms supporting them.
For instance, the DOT blockchain, which is a blockchain for commerce, was my best investment personally.
Within 1.5 years, I deposited $200 (about 16000 INR) and withdrew $15,000 (or 1,185,000 INR).
In a similar vein, research promising projects and make investments.
Or,
If you’re brand new,
70% Ethereum to start, 70% Bitcoin initially.
Before introducing riskier altcoins, lay a solid foundation and understand more about cryptocurrency.
If you want to get started, join Kucoin, World’s top cryptocurrency exchange. Get a bonus right away by using the code (1y5P777) while signup. A total of 40% discount on all your trading fee for a lifetime.
Goal 2: Spend Rs. 65 lakh on a home over the next 16 years.
Given that your time frame is long-term, this objective is much more attainable.
To do this, I advise you to begin a step-up SIP in mutual funds. I’ll explain.
You can start a step-up SIP in mutual funds for 6000 rupees per month and grow your investment by 10% per year. You Can use the type of portfolio which is described below. Now, a step-up SIP essentially means that you start investing 6,000 per month in 2021. You will essentially increase your SIP contribution starting in 2019 by 10%, which means that starting in 2022, you will be making $6,600 each month. You will also be investing 7260 per month starting in 2023, and so forth.
As you can see, doing so can assist you in reaching your desired corpus.
You can choose the portfolio shown here:
Axis Small-Cap Fund:1k
Flexi Cap Fund of Parag Parikh: 3.
Strategy for the HDFC Sensex: 2k
Step-up SIP has the following benefits over traditional SIP:
The amount of the SIP contribution would be increased to reflect the growth in your yearly salary. So it won’t pinch and will be simpler to accommodate.
You might end up having a greater corpus than what is shown above, even if you start with a lower sum and grow your SIP each year.
Goal 3: I will have Rs. 1.4 crore when I retire in 22 years.
Therefore, as of right now, we have 3k remaining to deploy out of the 12k (that you mentioned), and we also have 1 lac more to work with (in the bank).
3.5k SIP and 60k Lumpsum invested in the funds listed below:
Emerging Asset Mirae 20k lump sum, 1K SIP for Bluechip Fund
HDFC Sensex Plan: 20k lump sum, 1.5k SIP
20k lump sum, 1k SIP for Parikh Flexi Cap Fund.
If you follow this plan with discipline and have it regularly monitored, it will help you build your corpus (twice a year). There are some risks in equity-based funds. However, because you have 25 years to invest, you can greatly reduce or offset that risk, increasing your chances of seeing larger returns.
So far, we have invested 12.5k in SIPs and 1.8 lacs in your goals, leaving you with 40k in your bank to help you in times of liquidity or emergency.