RESUME APPLICATION PAY PREMIUM
Fund Performance

Fund Performance

Knowledge Center

Knowledge Center

About Us

About Us

Tools and Calculators

Tools & Calculators

Quick links

Mobile (Download app)
  • Webpages
  • Documents
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment

For NRI Customers

(To Buy a Policy)

(If you're our existing customer)

For Online Policy Purchase

(New and Ongoing Applications)

Branch Locator

For Existing Customers

(Issued Policy)

Fund Performance Check

RESUME APPLICATION PAY PREMIUM

What do you want to do?

Quick links

Mobile (Download app)

Download HDFC Life App

Buy plans, track your policy, make renewal payments & monitor fund performance with HDFC Life App, Download Now!

Apple Logo Go to Google Play Store

What are the Investment Ideas for Beginners

Having an investment plan to create wealth for future financial objectives is crucial. You should start investing as soon as you have a regular income stream to achieve this. How to start investing can be a challenge that many beginners face. Seek advice from your friends and family who have been investing for some time for investment ideas for beginners. You can also approach financial advisors who can give simple investment options to begin with.

Several investment options for beginners are available in the market that help systematic and regular investments in various plans to build a corpus for a bright financial future. This article is a walk-through of beginner investment strategies that simplify your investment plan for a financially secure future. Read on to get an idea of the various saving plans available on the market for beginners.

CALCULATE PREMIUM TALK TO OUR ADVISOR
Features and Benefits of HDFC Life Sanchay Par Advantage

GET A FREE QUOTE

We respect our customers' privacy and do not spam them.

I authorize HDFC Life and its representatives to contact me through Call, Email, SMS or WhatsApp. This consent overrides my registration under DNC / NDNC (this would mean we would contact you even if you are registered on any Do Not Disturb list).
Investment Options for Beginners

What are the Best Investment Options for Beginners?

Investment Options for Beginners
December 06, 2024

Table of Content

 

What are the Best Investment Options for Beginners?

Generally, youngsters are newbies to investment. They have the advantage of time and can afford to invest in long-term investment plans that fetch better returns. Here are some reliable investment ideas for beginners:

  • Fixed Deposits

Banks and other financial institutions accept fixed deposits, i.e., deposits for a fixed period and provide interest at a rate fixed at the time of opening the fixed deposit. This is one of the best investment ideas for beginners, with a lump sum amount to spare. The principal is secure, and the returns are guaranteed.

For those who find the stock market basics difficult to understand, this investment tool is the best option. Here are some pointers about a fixed deposit:

  • Fixed deposits provide assured returns, and the principal amount is protected.
  • The tenure of a fixed deposit ranges from 6 months to 10 years. You can choose the period to align with your financial goal. You cannot withdraw the amount until the maturity date. However, premature withdrawal is permitted but with a penalty.
  • The interest rate on fixed deposits decided at the time of opening remains till the end of the term.
  • You can either withdraw the interest monthly, quarterly, half-yearly, or yearly. The option to reinvest the interest and withdraw it on the maturity is also available.

  • ULIP Plans

In this policy, the investment risks in the investment portfolio is borne by the policyholder  

ULIPs, i.e., Unit Linked Investment Plans, are one of the best investment ideas for beginners. These saving plans have a lock-in period of 5 years. They are unique plans that provide the advantage of life cover as well as investment. A part of the premium paid towards the plans is allocated for life insurance, and the remaining is invested in market-linked assets of your choice, such as equity, debt, or balanced funds. The performance of ULIP funds depends on market conditions.

ULIP is among the best investment plans for beginners as it provides financial security for your family as well as helps your money grow. The duration of the plan can align with your goals, i.e., it can be either long-term or short-term. In addition, the premium paid towards the plan is eligible for tax deduction under Section 80C of the Income Tax Act 19611. This will reduce your tax liability to some extent.

  • Mutual Funds

It can be challenging for a beginner with little knowledge and skill to make informed investment decisions. A mutual fund is the safest investment option for newbies who lack an understanding of the stock market basics and have little time to choose the right securities. Apart from this, monitoring the investments and deciding when to exit need a lot of expertise and time, which small investors may not have. Creating a diversified portfolio is the solution to manage the risks. This needs significant capital, which a small investor might not have.

A mutual fund is one of the best investment ideas for beginners, especially for small investors. It is a financial tool that accepts funds from various investors and invests in different equity and debt instruments with the help of fund managers who are experienced professionals. Each investor is issued units based on their contributions.

The profits are shared among the investors in proportion to their investment. Management fees are charged to manage the funds. Fund managers, with their vast experience and knowledge, conduct thorough research before investing in these funds.

Therefore, the best investments for new investors are in mutual funds.

  • National Pension Scheme (NPS)

Investment in the National Pension Scheme is considered retirement planning for beginners. You can see the aggressive growth of your corpus in NPS. Typically, you invest systematically ( a minimum of Rs. 6000/- annually) in the scheme. NPS provides two investment options to the investor: active choice and auto choice. Active choice comprises three assets, i.e., Government Securities, Equity, and Non-government debts.

The investor has the option to choose any. In auto choice, the contributions are allocated between the three assets depending on the subscriber’s age. The Pension Fund Manager selected by the investor manages the investment folio depending on his/her investment choice.

The choice of assets determines the returns from NPS. On attaining 60 years, 40% of the accumulated amount should be utilised to purchase a pension scheme from an insurance company. The remaining can be withdrawn in a lump sum or reinvested in another annuity. Insurance companies issue annuity or pension policies that provide a guaranteed regular income for a lifetime or a specific period. However, no insurance coverage is available for these products. With an option for creating a substantial corpus and a steady income stream, NPS is considered one of the best investment plans for beginners.

  • Public Provident Fund (PPF)

For beginners seeking low-risk investment ideas, the best option is the Public Provident Fund (PPF). Steady and guaranteed returns, competitive interest rates, and tax benefits1  are the attractions of the scheme. Some of the features of the Public Provident Fund are:

  • You can open a PPF account either in post offices or in banks. The maximum tenure is 15 years and can be extended in blocks of 5 years.
  • Subscriptions towards a PPF account are eligible for tax deduction under Section 80C of the Income Tax Act 19611.
  • The PPF interest rate is regulated by the Government of India and is reviewed every quarter. It is generally higher than the interest rate on the savings account.
  • With a tax rebate on the accrued interest, PPF is among the popular investment plans for beginners.

  • Bank Deposits

Among the various investment ideas for beginners, bank deposits suit the ones with low-risk appetite. The types of bank deposits are fixed deposits and recurring deposits.

A fixed deposit is a one time investment plan, whereas a recurring deposit is for those who can invest a fixed amount on a regular basis (monthly or quarterly). The returns on fixed deposits and recurring deposits are much lower when compared to mutual funds for beginners and the stock market.  

How to Start Investing Money for Beginners?

As a beginner, it is very important to first understand your financial goals. Once you have clarity about what your future financial needs are likely to be, you can start researching beginner investment strategies and explore some low-cost and simple investment options.

Explore some of the best investments for new investors, like mutual funds, index funds, or ETFs. It is ideal for creating an account with beginner-friendly online investment platforms that allow a small initial investment that is easy to continue every month or periodically. Remember that understanding compound interest, keeping a diversified investment portfolio and investing consistently is the key to building wealth over time. 

Factors to Consider Before Investing Money for Beginners

Financial literacy for beginners is very important. If you are wondering how you can achieve it and how to start investing for good returns, here are some factors and investment tips for beginners that you must consider before you start:

  • Set Your Financial Goals:

When gathering investment ideas for beginners it is important to define clear, achievable goals. Now whether you start with saving for retirement, or accumulating a corpus for a house, or education, a plan aligned to your goals is the way to go. This will always help you choose the right investment strategy.

  • Know Your Risk Tolerance:

Whether you want to start with real estate investing for newbies or want to have a simple savings plans for beginners, having a clear idea about your risk appetite is a must. Deciding your comfort level with different investment options for beginners eases decision-making. Where on one hand, conservative investors may prefer bonds, risk-takers may be inclined towards stocks through share trading.

  • Decide The Investment Timeframe:

You must have clarity on your investment horizon so that you can plan your strategy accordingly. Low-risk investment ideas such as Saving Plans or a fixed deposit work well when catering to short-term goals. However, when it comes to long term goals, learning stock market basics or investing in mutual funds for beginners or a ULIP (for insurance cover and investment benefits) makes more sense. There are risks involved but the returns are also higher.   

  • Build an Emergency Fund:

It is wise to have a readily available emergency fund put aside for contingencies before you start  investing. An ideal amount would be a number equal to 3–6 months worth of expenses. These can be made available in a savings account or invested in a liquid, accessible fund.

  • Review Your Financial Health:

When investing money for beginners across different instruments it is only wise to have a clear assessment of current debts, income, and expenses. Best is, to pay off high-interest debts at the earliest to avoid financial strain when one starts investing.

  • Understand Investment Types:

Different investment instruments have different risks and rewards associated with them. When you are starting your investment journey, you must gather information on the different options available and familiarise yourself with them. Understand stocks, bonds, mutual funds, real estate, and more for informed decision making.

  • Diversify Your Portfolio:

As a beginner into investment, it is best to spread your investments across different asset classes. This helps to minimise risk. A carefully diversified portfolio also protects you from market volatility, besides ensuring steadier returns.

Conclusion

Understanding compound interest, stock market basics, budgeting, and managing investments are all part of financial literacy for beginners. Whether you are a beginner or an experienced investor, your investment choices can have a significant impact on your financial health. The investment ideas for beginners set out in this article can help.

Beginners with a low-risk appetite can choose government-backed schemes or bank deposits with guaranteed returns. For those seeking higher returns, creating a diversified investment portfolio is the best option. You can use online investment platforms to invest wisely and regularly and head towards a robust financial future.

FAQs on Investment Ideas for Beginners

Q. What investment is best for beginners?

Beginners should focus on low-risk, diversified instruments that do not require exceptional investment skills. Some of the investment options for beginners that are easy to understand and manage are fixed deposits, national pension schemes, public provident funds, unit-linked investment plans, etc.

Q. What is the best thing to invest in first?

The best thing to invest in first depends on the risk tolerance and the investor’s financial objectives. Fixed deposits are a great option if you have a lump-sum amount to invest. If you can invest a fixed amount regularly, then a recurring deposit is another safe option. ULIPs are investment plans for beginners that provide the advantage of investing in diverse instruments while providing life cover.

Q. Are there safe investments for new investors?

There are safe investment ideas for beginners. Fixed deposits, recurring deposits, National Pension Scheme, Public Provident Fund, and ULIPs are safe options. Real estate investing for newbies is another alternative where rental properties can be a source of regular income. Long-term capital appreciation is another advantage of investing in real estate.

Q. What are the different types of investments?

Some of the savings plans for beginners are fixed deposits, National Pension Schemes, Public Provident Funds, Stocks, Bonds, Mutual Funds, Real Estate, and Unit Linked Investment Plans

Q. How should I invest my first salary?

Start by creating an emergency fund with your first salary that will come in handy during emergencies. You can also start investing in tax-saving plans like Public Provident Funds, ULIPs, Tax-Saver deposits, etc. After that, you can get investment tips for beginners from financial advisors to create a robust investment portfolio for a stable financial future.

Q. How can I start investing with little money?

Investing in mutual funds and ETFs through SIPs is a good way to start your investment journey with little money. These instruments allow fractional investment and do not require much corpus to start with.

Q. What can I invest in to start making money?

Simple options like index funds, ETFs, or high-interest savings accounts are some great low-risk entry options when you are on the journey towards building your investment knowledge.

Related Articles-

Reference links:

1. https://cleartax.in/paytax/TaxCalculator?utm_ref=itr_2024_organic_content_page_top_banner_filing_itr_marketing_banner_tax_calc

2. https://economictimes.indiatimes.com/wealth/invest/a-beginners-guide-to-investing-all-you-need-to-know-to-get-started/articleshow/81885368.cms?from=mdr

3. https://www.bankrate.com/investing/best-investments-for-beginners/

4. https://www.investopedia.com/articles/basics/11/3-s-simple-investing.asp

Talk to an Advisor right away

Not sure which insurance to buy?

Talk to an
Advisor right away

Talk to an Advisor right away

We help you to choose best insurance plan based on your needs

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

LinkedIn profile
Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

LinkedIn profile
Reviewed By Reviewed By:

Here's all you should know about life insurance.

We help you to make informed insurance decisions for a lifetime.

 

What is Financial Planning?

What is Financial Planning?

Factors affecting financial planning include income, expenses, inflation, and life events. Learn how these factors influence your financial strategies and decisions.

What is Investment Insurance?

Short Term Financial Goals

What is Personal Finance?

Master personal financial planning with expert tips on budgeting, saving, investing, and tax strategies for a secure future and long-term wealth growth.

What is Personal Finance?
HDFC life
HDFC life

HDFC Life

Reviewed by Life Insurance Experts

HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER

We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Popular Search

Popular Searches

Disclaimer

1. Tax benefits are subject to conditions under Sections 80C, 80D, Section 10(10D) and other provisions of the Income Tax Act, 1961.

18. Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.

The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.

This material has been prepared for information purposes only, should not be relied on for financial advice. You should consult your own financial advisor for any financial matter

The name of the company, name of the brand and name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. 

ARN - DM/12/24/18879

down-arrow