How to start investing| North Loop Official Blog
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North Loop
26 Nov 2020

How to start investing

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The first thing that comes to people’s minds when they hear the word investing is fast cars, big mansions, and a lifestyle that literally defines the word luxury.

The common misconception surrounding investments is that they’re only meant for the cream of society and that investors would require a separate fund manager just to take care of their investments.

But investments are, in fact, almost as simple as ordering food or booking a cab- they can be done entirely from the palm of your hand.

How does investing work?

Investments not only help you save money but also helps multiply the same using the power of compounding.

This money can later be used to meet any short-term or long-term financial goals or can also be used at the of financial emergencies.

It is recommended that investors start investing from a very young age to make the most out of the power of compounding interest, which allows money to snowball over time.

The preliminary step for any first-time investors would be to manage their essential expenses, and once that step is taken care of, the next step would be to figure out what to invest in and how much to invest.

Moreover, first-time investors who start investing from a very young age have the scope to learn from their mistakes quickly and implement their own investment strategies to help meet their investment goals.

Start investing for free with North Loop and get personalized recommendations

The 50-30-20 rule-

A lot of financial advisors recommend a savings strategy going by a rule known as the 50-30-20 savings rule.

Under this strategy, fifty percent of the monthly income is allocated to all basic essential expenses such as rent, utilities, etc.

Thirty percent is allocated to savings/investments. Investing small amounts of money into ELSS, fixed/recurring deposits, and liquid funds are ideal.

The remaining twenty percent is allocated to fulfill all miscellaneous expenses.

Once you’ve mastered money management in this ratio, the next step would be to save some money and start investing.

Where to start investing and how to start investing?

Once you’ve saved up some money, the next step would be to invest it in a well-diversified portfolio.

Diversification helps spread out the risks investments are exposed to and also help maximize returns.

Individuals can start investing from as low as Rs. 500 into investment instruments such as stocks and mutual funds.

The minimum amount required to invest in stocks can be even lesser than Rs. 500 depending on the share purchased.

However, fixed deposits and gold have a minimum investment amount that varies from bank to bank.

Some of the most common investment instruments in India are mutual funds, stocks, fixed deposits, and gold.

If you’re confused about which instruments to invest in, we’d recommend you to first make a proper investment plan.

You would need to define your investment tenure, risk tolerance/appetite, and investment goals to find some clarity about what to invest in.

Mutual Funds and Stocks are market-linked instruments that have varying risk exposures and these instruments generally offer more returns than other non-market linked instruments.

Fixed Deposits are the type of non-market linked instruments that provide a stable set of returns over a long course of time. This instrument has a very low risk exposure and even the returns are relatively on the lower side.

Gold- This is also a type of non-market linked investment instrument which are relatively immune to inflation/economic downturns. However, the returns offered by gold and gold-based instruments are not as high as market-linked instruments.

How to start an investment portfolio?

1. Clearly define your investment goals.

2. Set up an account that accumulates and handles your investment-specific finances.

3. Choose your investments based on your risk appetite.

4. Determine the best combination of instruments.

5. Rebalance your portfolio as needed to meet your goals.

North Loop offers a wide range of investment options, such as Stocks, Mutual Funds, and Fixed Deposits for Indians as well as NRIs.

Under stocks, investors have the option to invest in over 3000 shares starting from just $1.

Under North Loop’s fixed deposits, investors can earn up to a 7% interest rate on Fixed Deposits.

North Loop also offers carefully selected mutual funds, providing round-up investing confined within an automated set of rules and goals.

Sign up to know more about North Loop investment options.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.