As per the Securities and Exchange Board of India (SEBI) data reported in March 2021, this massive boom of information encouraged 10.7 million people to open Dematerialisation (DEMAT) accounts between March 2020 and January 2021. And this is the highest it has ever been. Sadly, only a fraction of them are women. Likely because you don’t know where to start. This article outlines ten tips you can use now to get started so that women like yourselves can invest to secure their future and be financially independent.

1.Time is of the essence

There’s nothing like starting today. The ideal time to start investing is in your twenties. You can take a lot of risks as there are minimal responsibilities resting on your shoulders. The compounding effect will give you 2-3 times the return compared to if you had started investing in your thirties or later. Yes that’s shocking, right? Basically, this means get started now, it doesn’t matter if you missed out in your twenties or thirties or later, just start today.

2.Do not give in to “FOMO”

While you see everyone deep-diving into the investing end of the pool by investing in cryptocurrency or meme stocks, don’t let FOMO cloud your mind. This ‘fear of missing out’ can create havoc for those are not well-versed in investing and don’t do the proper due diligence. Crypto markets and meme stocks are highly volatile (and therefore high risk), and though the returns may surely look lucrative, but if and when it crashes, you’d lose everything – and you have to be prepared for that when investing in such things.

This is why we highly recommend you do thorough research before you put your hard-earned money into something that could benefit you in the future.

3.Understand returns

Different instruments have different returns. A general rule-of-thumb is that the greater the potential risk, the greater the potential return, and vice-versa. Depending on your risk appetite, pick your preferred instrument. You can do that by looking into the Compounded Annual Growth Return (CAGR) of a stock, bond or portfolio of stocks (mutual funds).

However, this doesn’t imply that the future is the reflection of the past. There could be setbacks depending on economic conditions and many other factors, but don’t let that scare you – if it’s for the long-term, don’t liquidate your holdings.

4.Diversification

This is the basic rule of thumb when it comes to investing, never put all your eggs in one basket. Always invest across industries and geographies, because if one industry suffers, your portfolio suffers as well. But if you are invested across multiple industries and geographies, while one industry is struggling, another might be prospering.

That’s a strong reason to consider investing in mutual funds. A mutual fund is a diverse pool of stocks/bonds/other instruments being managed by a professional money manager who is ensuring that the fund is diversified and stays balanced, and this will help you maintain a positive and above-average return over a long period of time.

5.Index Funds

As a beginner, and if you wish to remain a passive risk-averse investor that rides along with (mimics) the market, an index fund is your safest bet.

Every country has their own stock market index, we have Nifty and Sensex that is a representation of the top companies and sets the benchmark of our market. Investing in an index mutual fund, allows you to reap passive returns by replicating the index step by step. As the index grows your investment grows too, but keep in mind, as the market falls, so does the index fund.

6.Do not time the market

Do not wait for the prices to drop to purchase stock XYZ. Market runs are unpredictable and while you’re waiting for a dip, it could just surge and frustrate you further.

Instead, maintain discipline when it comes to investing and set a fixed date of the month, where you set aside an X amount of money for investing. This process is also known as an SIP aka a Systematic Investing Plan. A SIP can be achieved by investing via Mutual funds.

7.Avoid using debt for investing

Some people get too excited to invest and borrow money in hopes to making a fortune overnight. Or they invest in-order-to clear off their existing debt. That my friends, is the wrong way to go about it. You will just be piling on liabilities and the light at the end of the tunnel will continue to move further away. The goal is to multiply your savings rather than multiplying debt.

8.Buy and hold approach

Buy and hold is a passive investment strategy in which an investor purchases mutual funds, stocks (or other forms of securities such as ETFs) and holds them for an extended period of time, regardless of market volatility.

A buy-and-hold investor actively chooses stocks but is unconcerned about short-term market changes or technical indications. Many renowned investors, like Warren Buffett and Jack Bogle, recommend the buy-and-hold strategy to those seeking healthy long-term returns.

The purchase of Apple (AAPL) shares is an example of a buy-and-hold strategy that might have worked nicely. If an investor purchased 100 shares in January 2008 at $18 per share and held them until January 2019, the stock would have risen to $157 per share. In just over ten years, that's an almost 900% return. However, it is important to note that past performance is not an indicator of future results.

9.Avoid panic selling

When the market is down or your investments begin to lose money, you may feel compelled to sell. However, this is a surefire method to lose much more money. When everyone is afraid and the news makes it seem like the world is ending, it's a natural response to panic sell.

You must, however, resist!

The markets will always recover, and panic selling destroys your compound interest and costs you thousands of dollars in the long run.

There may be instances when you need to sell something or move money around, but this should be done sparingly. Stay the course with your investments and you'll reap the benefits in the long run. Remember, don’t buy high and then sell when it’s low – if anything, the market lows are a buying opportunity for long-term investors.

10.Investing is not gambling

Don’t play with your money as you would play at a casino, be mindful of your strategies and stick to them as long as possible. Costs of investing shouldn’t exceed the benefits. Watch the markets periodically and learn as you grow.

Women have never had a better opportunity to take their rightful place at the table. Women can have the confidence and skill to become financial change agents by learning about investing and practically implementing them as well.

Use your financial power to fuel the change you want to see in the world by learning about money. Like we mentioned earlier, there is no better time to get started than today!

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully