Investing legends like Warren Buffet are not made overnight. Do you know when he started investing? At the age of 11! At that age, we were probably worried about when we can get that new video game to play with our friends, money and future were not even in our radar.
Now, we could feel FOMO or realize that not everyone's the same, maybe you’re 21, 31, or even 41. The key is to understand the importance of investing and once you do, start investing as early as possible.
Since we are talking about starting early with your investments, let’s explain why it’s good for you.
• The power of compounding
Albert Einstein once called it the "8th Wonder of the World”. With the power of compounding, the interest you earn on your investments earns interest on itself and this amount is compounded regularly—helping you multiply your earnings.
• You have time on your side
Money can’t buy time, but time can earn you money and help in accumulating wealth for your future. One of the advantages of investing early is that you gradually become a financial expert, thanks to all the early, mundane mistakes. Where most people will make these mistakes and lose a fortune, you will have already learned these at a minimum cost early on. You will have learned the art of value investing and how to minimize your risk and losses.
•Develop a good habit
Investing regularly for the long term, say via SIP, is a disciplined way to attain your financial goal and making your money do the work for you every step of the way. While you do this, you will be developing a good spending habit early on (by using the method of ‘save first, spend later’) and build a wealthier future for yourself. It’s a long-term plan, and the clock is ticking away.
•You can give yourself a raise
Whenever you get a raise, treat your future self as well by giving a raise to your investments as well. As an early starter, you’ll be at an advantage as even a small increment is worth far more in the long run, especially when the standard/cost of living in India is getting higher every year. The more years you keep giving your investments a raise, the more relaxed you will be after retirement. (And, it’s never too early to plan for your retirement)
Investing in stocks and owning a piece of the top companies in India has been a dream for many. I have been one of those dreamers just like you. But, as much as i wanted to invest, it was so complicated and hard process to follow, here comes Groww which is one of the best investing platform in india where you can invest in stocks, mutual funds and even gold.
These are the best ways of investing on groww
Selecting Mutual Funds
A portfolio is a collection of mutual funds put together for a specific investment goal.
Let me take an example of a mutual fund portfolio.
Before you start investing, it is essential to be very clear about what your goals are.
Goals can be as simple as:
Accumulate Rs 1 crore
Save for a world tour
Quit my job in 10 years
Invest in mutual funds portfolios for your specific goals. They have many advantages:
Low minimum amounts
Withdraw anytime (except tax saving mutual funds)
Homework: Visit Groww and check out the various mutual funds available. Read the details. Also, jot down your thoughts on why any two mutual funds are different.
Been hearing a lot about investing in ETFs? Let's understand it together.
Let’s start with what an ETF is.
ETFs or Exchange Traded Funds are like mutual funds that are traded on the exchange like stocks.
With an ETF, you can buy and sell a basket of stocks without having to individually select different stocks for trading. Which is why it has evolved as one of the most popular forms of passive investing in India.
Unlike the NAV in mutual funds (where it is calculated at the end of the trading day), the price of each unit of the ETF is determined by the price movement of the indices plus demand and supply in respective ETFs.
For example: Nifty BeES (India’s first ETF) tracks the movement of the Nifty 50 Index. That means the fund manager buys and sells stocks from Nifty 50 and hence, the returns are similar to those of the index.
What makes ETF so popular amongst investors?
You can buy and sell ETFs throughout the trading day like stocks to benefit from the index price movements.
Every ETF comes with a bunch of stocks from different companies and sectors so you can diversify your stocks portfolio in one go. ETFs also allow buying and selling of fractional shares that helps in diversifying further.
The expense ratio of an ETF is usually lower than most regular mutual funds (especially actively managed mutual funds).
Since ETFs are traded on the exchange like stocks, you can also buy and sell ETFs anytime, just like stocks.
Types of ETFs you’ll find on Groww:
Complete your investment account on Groww in just 2 mins
What is KYC?
Before you invest they need to verify specific details about you - this includes your identity, your address, and your bank account details. This verification process is called Know Your Customer (KYC).
Why do they need KYC?
SEBI has made KYC mandatory to invest in stocks and mutual funds in India.
What is required ?
PAN card (Photo)
Address Proof (Back & Front)
5-second video of you holding your PAN
Groww started to make investing accessible and transparent in India. All products at your fingertips. With complete transparency.
Here is a quick update on what is available on Groww.
What is available on Groww
Investment Rules / how to invest
A simple google search for ‘best investment ideas’ will give you thousands, nay, millions of results. But, can you trust them all? Of course not!
Today, we have compiled 3 thumb rules of investing for you. These are presented as rules usually, but we want to tell you that you can tweak this rule as per your requirements and expectations. As an investor on Groww, we believe that no one else can make a financial decision for you better than yourself.
You know yourself best and only you can do justice to your hard-earned money. So, let’s get to the learning part now.
Monthly SIPs starting at as low as Rs.500. Explore investments on Groww →
1: 100 minus age rule
A beginner’s guide to asset allocation, the 100 minus age rule is one of the simplest rules to help you decide on the percentage of equity and debt allocation in your investment portfolio.
Why does it work?
Equity (stocks, mutual funds, etc.) is comparatively high-risk than debt (bonds, gilt funds, etc.). However, equity in the past has given higher returns in the long term than debt.
The younger you are, the higher is your risk-taking capacity as you can stay invested in the market for a longer time and average out even through occasional volatile markets.
As you grow older, there is a higher probability that you would need the money sooner. In this case, a majority of your investments can be invested in debt so that you keep growing your money without the short-term risk associated with equity.
Note: Real risk appetite may vary from person to person.
2: Rule of 72
3: 50-30-20 budget rule
How to maximize your savings?
Download statement: Check your last 3 months’ bank statement to evaluate your expenses.
Understand behavior: Get to know yourself and your spending habits better and budget accordingly.
Be consciously frugal: Avoid expenses that are tangible (which are under your control) and your “fun” spends.
Evaluate big expenses: If your house rent is eating up a huge percentage of your income, consider moving to a lower-cost house.
Repay on time: Ensure that your credit card/loan repayments are done on time to avoid paying interest.
Get insured for the future: Explore insurance plans to save you from heavy expenses in the future.
Learn about investment options: Keep yourself informed and educated about investment avenues to ensure that your savings keep growing and don’t sit idle. Consider investing 20% of your income and diversify for the long term.
Get ready to own stocks in your favourite companies. Join Groww to experience stocks like never before with everything you need in one place.