If you're a beginner, this guide will help you get through the basics of investing and teach you to track your investments effectively. By the end, you'll have a clear understanding of how to start your investment journey and monitor your finances.

Remember those summer evenings when you’d come home exhausted from playing outside, and your mum would hand you five rupees to buy your favourite 2-minute instant noodles? That little snack was just the right amount to keep you full until dinner. Fast forward to today, and while those noodles still cost the same, they don’t seem to fill you up like they used to. Why? Because the company has quietly reduced the quantity to handle rising costs. So, in reality, your beloved childhood snack has become pricier without you even realizing it

Just like those noodles, everything around you has become more expensive due to inflation. In India, the average inflation rate hovers around 4-5% per year. To reach your financial goals, simply saving money isn’t enough. You need to beat inflation, and that can be achieved through investing. Investing is one of the most effective ways to grow your wealth and achieve financial independence.

Understanding Investments

What is Investing?

Investing is a powerful tool for growing your wealth, primarily due to the principles of compound interest and the time value of money. Yes, the concepts you learned in school are the core behind creating wealth.

When you invest, you earn interest on your initial amount, which then earns interest itself, compounding over time. This exponential growth is the essence of compound interest. The time value of money means a rupee today is worth more than a rupee in the future because it can be invested to earn returns.

Investing involves allocating money into financial assets like stocks, bonds, mutual funds, or gold with the expectation of generating a return over time. Unlike saving, which is typically done for short-term goals, investing is focused on long-term growth

Investing for Beginners

Once you understand what investment is, you are ready to move on to the next step of your investment journey. Here are some simple, easy-to-implement steps to help you progress in your investment journey.

1) Setting Financial Goals

Setting financial goals before investing is important because it helps you choose the right investments and match them with your comfort level for risk. Clear goals let you track your progress and adjust as needed, making your investing more effective. Goals also keep you motivated and disciplined, ensuring you stick to your plan even when times are tough. For example, if you're saving for a house down payment in five years, you might mix safe and growth investments.

2) Learn and Grow

There are many free resources, including books, online courses, and financial news websites for beginners to learn investing. Understand the different types investments and governing bodies. This will help you to choose the right investment option for your goals and take the right steps in your investment journey.

Types of Investments

Among the different types of investment options following are the most sought after:

Stocks: Stocks represent ownership in a company. When you buy a stock, you own a small part of that company and share in its profits and losses. Stocks can be bought and sold on stock exchanges, and their prices can go up or down based on how well the company performs and other market factors. Stocks are generally riskier than bonds but can offer higher returns over time. 

Bonds: Bonds are like loans. When you buy a bond, you're lending money to a government, city, or company. In return, they promise to pay you back the amount you lent, plus interest, at a later date. Bonds are considered safer than stocks because they offer regular payments and return your money when the bond ends

Mutual Funds: Mutual funds collect money from many people to invest in a mix of stocks, bonds, or other assets. Managed by professionals, they offer diversification and are easy to buy and sell. Different mutual funds meet various investment goals and risk levels

ETFs - Exchange-Traded Funds (ETFs) are funds you can buy and sell on stock exchanges. They include a mix of assets like stocks, bonds, or commodities, and they aim to match the performance of a specific index. ETFs offer easy diversification, are cost-effective, and can be traded throughout the day like regular stocks.

Indian Regulatory

SEBI - The Securities and Exchange Board of India (SEBI) is in charge of the securities market in India. It protects investors, helps the market grow, and ensures fair trading. SEBI oversees stock exchanges, stops dishonest practices, and enforces rules to keep the market fair and transparent.

3) Consider Your Risk Tolerance

Deciding how much risk you're okay with before you invest is important. Look at your money situation, what you're saving for, and how you feel about things like stocks going up and down. Short-term goals usually mean playing it safer, while long-term goals might let you take more risks. You can use online tools or talk to a money expert to figure out your risk level. And check in now and then to see if your feelings about risk have changed.

4) Choose the Right Investment Platform

Picking the right investment platform is important for managing your money well. Look for platforms that are easy to use, don't charge too much, offer lots of different investment options, and provide helpful tools. Consider what you want to achieve with your investments and how much risk you're comfortable with. Check out reviews, compare platforms, and ask for advice to find the best fit for you. Choosing the right platform can make a big difference in reaching your financial goals.

5) Start Small, Start Early

Starting small and early makes investing money for beginners easier. When you start with small amounts, you're not risking too much, and you can learn gradually. Beginning early gives your money more time to grow through compound interest, making a big impact over time. To get started, begin investing as soon as possible, even if it's just a little bit each month. Set up automatic transfers to make investing easy, and keep your strategy simple. These steps can help you reach your financial goals, no matter where you're starting from.

Tracking Your Investments

Just investing your money isn't enough to build wealth. You need to track your investments regularly to see good results. Tracking your investments is important for a few reasons. First, it helps you see if they're doing well and meeting your goals. If not, you can make changes. Second, it lets you make smart decisions based on how your investments are performing. Lastly, it keeps all your financial info in one place, making it easier to manage and stay organized. So, tracking your investments helps you stay on top of your money and make better choices for your future.

You can use tools like Spreadsheets or investments tracker like Mojek Money App to bring all your investments in one place and track your portfolio effectively.

Conclusion

In conclusion, investing money for beginners may seem challenging at first, but with the right knowledge and approach, it can be a manageable and rewarding process. Begin by setting clear financial goals, learn about investments taking small, consistent steps. Analyse your risk tolerance and make a plan to keep your risks minimum, and regularly monitor your investments through investments tracker to ensure they align with the goal you have set them for. With patience and persistence, you can achieve significant financial growth and stability.