Why do we need to start investing?
If you think that just by saving your money, you can fulfil your long-term life plans, then you might be mistaken. Saving indeed is important, but usually, just by saving, you can’t achieve what you need to have for a comfortable, secure future. It can be challenging for you if you don’t invest your money wisely to achieve your financial goals, enjoy a good life, and have sufficient emergency funds.
When you start investing, your money grows over time, which helps you counter inflation and gather wealth. It is always very important to find different investment options, such as stocks, bonds, or real estate, to find what aligns best with your financial objectives and risk tolerance.
If you are wondering about how to start investing? in 2025, it will require a strong strategy and a focused trading mindset. let’s look at some investment strategies for beginners
Check out these 5 steps that will help you to start investing this year.
1. Create Clear Investment Goals
Setting clear goals might come as the first step in starting your investment journey. Just like any other life decision, it is important to have clear but effective goals. To do this, you can apply the SMAT criteria.
Specific :
Always start investing with specific goals. Don’t say, “I want to invest,” rather than say, “I want to save 10,00,000 for a down payment on a house. This makes your investment journey more practical.
Measurable:
Make sure that you are tracking your progress. For this, you can establish milestones, such as saving ₹10,000 every month toward your goal.
Achievable:
Before you start investing Always choose realistic goals. Keep in mind your current financial situation and whether your goal can be reached with your available resources and planning.
Relevant :
Make sure your goals align with your broader financial aspirations and life plans. For example, investing for retirement should be relevant to your long-term financial stability.
Set a deadline for your goals. This creates urgency and helps you stay focused. For example, “I aim to reach my ₹10,00,000 savings goal within 18 months.”
By structuring your investment goals using the SMART framework, you can create a clear, actionable plan that guides your investment decisions and keeps you motivated along the way.
2. Find Out Your Investment Capacity
Before questioning “how to start investing,” try to ask, “What is my investment capacity?” because not all of us have similar investment capacities; we all face financial barriers and conditions. Everyone has a unique financial situation; factors like income, expenses and personal financial goals influence this. So, If you earn a certain amount of money each month, you should assess how much of that income you can realistically allocate towards investment after covering your important expenses.
While thinking of starting to invest, think of using the 50/30/20 rule for investment. This rule suggests that one should allocate 50% of their income to the necessary expenses, 30 percentage to other spending and 20 percentage to savings and investments.
An emergency fund is equally important. This fund serves as a financial safety net that keeps you in the right peace of mind and security, so when there are unexpected expenses or financial setbacks, the emergency funds protect you.
3. Develop a Risk Tolerance Strategy and Determine Your Investment Style
The game of investing is all about assessing and managing risks. Before you start investing, it’s crucial to understand your risk tolerance and how much risk you are comfortable taking. Additionally, recognizing your investment style plays a vital role in crafting a successful investment plan.
Investors can generally be categorized into three main types:
1. Conservative Investors:
The conservative investors preserve their capital by lowering the risks and following slow growth. They prefer low-risk investments, such as bonds or dividend-paying stocks and are less likely to engage in volatile markets. Their primary goal is to protect their initial investment while achieving decent returns.
2. Moderate Investors:
These investors try to balance the risk and reward ratio; they are willing to accept risks for the potential of higher returns; they usually have a diverse portfolio that includes a mix of stock and bonds, and they aim to be mindful of potential losses.
3. Aggressive Investors:
These investors don’t have problems with high levels of risk and seek significant returns through investments in high-growth sectors or stocks. They understand that with higher risk comes the potential for greater volatility, and they are often willing to endure short-term fluctuations for long-term gains.
By identifying your risk tolerance and investment style, you can create a tailored investment strategy that aligns with your financial goals and comfort level.
4. Get to know about the type of investments
There is not a single way to invest money, but if you want to understand how to invest money, you must understand the types of investments as well.
Here is the list of types of investments.
Equity/stock or shares:
When you invest in stock or shares, you are simply buying a small share or stock of the company. The investor makes money when the price of the stock goes higher, where the company pays a dividend to the shareholder, but the price of the share goes higher; sometimes, the price goes lower, and the company might not pay you the dividend.
To learn more about the stock market, you can check out our other blog too
Click here to learn everything about the share market from scratch.
Bond:
When you buy a bond, you are lending money to the government or a company. The bond is set for some time; this period is called a “term.” Like any other form of interest, the bond issuer will be paying you interest.
When the term is finished, you will receive your money back along with the interest.
Bonds are not just about interests. You can make more money by selling the bond for more than you purchased it for. The value of the bond goes up when the rate of interest goes down; in this position, you can make money by selling your bond for more than what you have purchased it for.
The risks related to bonds come from the fact that the rate of inflation sometimes might be more than that of the interest paid by the bond. So, your investment will not be coming up with the cost of your living. Another risk of bonds is that, sometimes, the companies are not able to repay the loans; here, you might lose some or all of your money.
Mutual Funds:
A mutual fund is like a team of professional money managers; these managers pool money from many investors to buy a variety of assets, like stocks and bonds, and manage them together. Investors get a piece of the fund.
If the fund’s assets grow, the investor earns profits.
The risks related to mutual funds heavily depend on the type of mutual funds in which you are investing the money.
Something to understand here is not only what the costs and fees are but also how they are paid and how they affect your return. Most funds are offered in different series or classes, usually for different types of investors.
Exchange-traded funds:
The ETF is similar to the mutual funds in terms of buying, as they too are like pools for investments; the difference between mutual funds and exchange-traded funds is that the ETFs are traded on exchanges like stocks, are mostly passively managed, and can be purchased and sold throughout the day. In contrast, mutual funds are traded once a day at their Net Asset Value (NAV) and are often actively managed.
Segregated Funds :
Segregated funds are like an amalgamation of life insurance and mutual funds. They provide the potential in terms of growth, like mutual funds, and also provide the benefits of health insurance. The benefit of the segregated fund is that, even if you lose money, an amount of money will be provided to you; this is usually around 75% to 100% of your invested money.
The disadvantage of the segregated fund is that it is usually more expensive than the mutual funds. (Canada started this type of fund)
Other Types of Investments in India
ULIPs
The unit lists insurance plans as a sort of blend of life insurance and an investment plan; these plans provide security for your loved ones in any unfortunate event, and they also help you grow your money with market-linked returns. You can invest in equity or debt based on how much risk you are willing to take.
PPF (Public Provident funds)
The Public Provident Fund, or the PPF, is a scheme that is backed by the government and offers a long-term, tax-free return. It is a safe and popular investment option.
Investors can contribute a minimum of ₹500 and a maximum of ₹1.5 lakh annually, with contributions eligible for tax deductions under Section 80C of the Income Tax Act.
The interest rate on the PPF is reviewed quarterly by the government, ensuring that it remains competitive with other savings instruments.
The PPF account can be extended in blocks of 5 years after the initial 15 years, allowing for continued investment and growth. people who are thinking to start investing should consider this Goverment scheme for sure.
National Pension System (NPS)
The NPS, just like the PPF, is also a government scheme, but the NPS focuses on your retirement. The NPS is designed for your long-term savings, and it offers a vast range of investment options based on different risk profiles.
The benefit of NPS lies in its flexible and voluntary nature. It is open to all Indian citizens of ages between 18-65 years. People have a say in choosing their contribution, like the PPF contributions made to the NPS, which also qualify for tax reduction; even the maturity amount received at retirement is also tax-exempt.
Fix deposits (FDs)
Fixed deposits are one of the safest deposits in India; the returns of the fixed deposits are pre-determined, and the returns are not affected by the investments. The FDs allow you to invest a lump sum amount for a specific period and hence earn a fixed return on it. The FD account prevents premature withdrawal, but this can also act as an emergency fund, as you can break the FD in for a return of a charge on the premature withdrawal.
5. Learn How to Put Funds in your Stock Account
To put funds in your stock account, you first need to understand the different types of stock accounts you will need for investments.
In India, three types of accounts are needed to start investment.
- Bank account—This is where you send money for fund transfer, and this is the place where you will receive the funds after the process.
- Trading account—the trading account is a SEBI-registered account; this is the place where the investor can buy or sell the orders.
- A Demat account is the place where the investors hold the shares in dematerialised form.
NOTE: Nowadays, platforms like Angel One provide a “2 in 1” account, which combines a Demat account and a trading account into a single entity. Learn how to open a Demat account on Angel One.
Putting funds in your Demat accounts is very easy with platforms like Angel One You can do it easily by going to the Add Funds in the account settings. You can use the type of payment method you prefer; you can also use UPI for it.
6. Choose the Best Stocks
This can be tricky for beginners, but with proper research and practice, you can learn it. Beginners who are thinking of starting to invest are always advised to choose stocks that are stable and have a good long-term record. Beginners should do good research and avoid risky and gambling-like situations.
Understand the types of Stocks
Stocks can be broadly categorized into two main types: common stock and preferred stock.
Common stock:
It is a stock with ownership in a company and typically grants voting rights and the potential for dividends.
Preferred stock:
It is a hybrid security that offers priority in dividend payments and asset distribution but often has limited or no voting rights.
Stocks can be further classified by market capitalization (large-cap, mid-cap, small-cap), growth potential (growth stocks), and dividend payouts (income stocks).
For beginners, here are the types of stocks to consider:
- Blue-chip stock:
This type of stock means the shares of well-established companies that have a good history of reliability and performance; these companies are leaders in the industries. Investing in blue-chip stock is among the good investment strategies for beginners.
- Dividend stock:
These are the shares of the companies that return a part of the profit they made to the shareholders in form of dividends. They can usually provide a steady income.
- Growth stocks:
These are the types of shares from the companies that are expected to grow at a rate that is above average rate compared to their industry or the overall market.
- Defensive stocks:
These types of stocks are the stocks that are unaffected by market downfalls like economic shutdowns. These are companies such as utilities, consumer staples, and healthcare.
- ETFs:
Exchange-traded funds are very common for beginners; these are the funds that are traded on the stock exchanges, similar to individual stocks. They hold a group of assets, which include stocks, bonds, and commodities. This type of stock is cost-effective, provides transparency, and helps to diversify your investments.
FAQs related to starting investments in 2025
Saving money is all about controlling your expenditure and keeping a portion of money for your future. This could be anything a goal or in case of any emergency.
Savings are done in accounts that are safer and have easy access. However, these accounts have minimal growth potential.
On the other hand, when you are investing, you are making money with money If your investments grow in value the investments compound. Over time this can lead to significant growth. Thus for secure goals of you and your family, investment always serves as the best option.
The best time to start investing is right now! Many people think and wait for the “right time’ to start investing, But that is not the rule of investing ,timing in investment might seem important in the shorter term but in the end the time is what all matters.
Diversification is simply having your investment in multiple places, it is a risk management strategy that is done to reduce the impact of any single investment’s performance on the overall portfolio. This is always the best risk management strategy for beginners who want to start investing.
Before thinking to start investing it’s important to focus on learning first. The internet can be a valuable resource for this purpose. Reading finance-related blogs, such as ours at StofinIQ, can provide you with detailed and straightforward insights on various investment topics and other financial matters.
If you prefer learning through videos instead of reading, you can check out YouTube channels like Neeraj Joshi, which offers free educational content on investment and finance.
