You want to invest and you’re a first time investor. However, you’re thinking of how to start your investment journey such that it gives you a good start and a significant corpus after a period of time. For all such first time investors, this article will explain where should a first time investor invest?
Fixed Income Instruments | Where should a first time investor invest?
This is an investment option which is suitable for all the first time investors. Fixed income instruments are debt instruments. They offer pre-determined interest rates to the investors. Investors receive the total amount raised through fixed income instruments from the issuing entity or bank after a specific period of time. This is known as the maturity period.
Early investing is always advised. However, there’s caution as investing in any schemes requires a complete knowledge of the scheme you’re investing. You need to consider various factors like risk and return to calculate the returns you will be getting in a period of time. The returns from equity schemes like the share market are not fixed and depend on market scenario. Therefore, share market is subject to high risk.
Similarly, you need to look at the various available options & consider it carefully based on your situation. This will help you to invest in suitable options.
What’s your objective? Is building a sizeable corpus after a period of time to achieve certain goals?
If yes then fixed income instruments are the best options to invest especially for the first time investors who are assured of a fixed income.
Why not equities? | Where should a first time investor invest?
I am not saying you should not go for equities. However, as a first time investor you may not posses all the necessary knowledge of the equity schemes like stock market.
When you buy a stock you share ownership of the stock’s underlying firm. Stocks can give you higher return that fixed instruments. However, high risk is involved. The returns are based on market fluctuations. Therefore, you are not guaranteed of fixed returns or fixed income. Also, there’s a chance that you can lose all your investments if the stock market performs badly. This is not the case with fixed instruments where returns are fixed regardless of market performance.