5 Tips for Early Investment Journey: From Portfolio Diversification to Investing Strategy

5 tips for early investment journey: from portfolio diversification to investing strategy

Starting your investment journey at a young age can pave the way for long-term financial success and you can also enjoy the fruits of compounding power and watch your portfolio grow exponentially. With the right strategies and guidance, young investors can maximize their returns and build a solid financial foundation for the future.

One of the most crucial factors in building wealth through investments is starting early. The power of compounding works wonders over time, allowing your investments to grow exponentially. By starting early, you give your investments more time to compound, thereby potentially increasing your returns significantly in the long run. Sarvjeet Singh Virk, Co-founder & MD, Shoonya by Finvasia shared tips to help you kickstart your investment journey early.

Start Early: When it comes to investing, time is everything. Start as early as possible. This gives your money time to multiply and grow. No matter how small the amount is; investing regularly over a long period of time can lead to significant wealth creation over time. Investing for the long-term helps you benefit from compounding, where the interest you earn leads to additional returns over time. Investing in Mutual Funds via SIPs (Systematic Investment Plans) is one of the most sought-after options right now. This way, you invest small amounts regularly and reap the benefits of rupee-cost averaging.

Starting investments of just Rs. 10,000 per month, beginning at ages 15, 20, 25, or 30, reveals stark contrasts by age 60. Starting at 15 could yield approximately Rs. 12 lakhs, while beginning at 30 may result in only around Rs. 2 lakhs saved—a massive 81% difference, emphasising the power of early financial planning and the impact of compounding over time.

Diversify Your Portfolio: The number one rule of investing is – never to put all your eggs in one basket. The more you diversify, the safer you will be in case the markets get volatile. Invest in different asset classes like stocks, mutual funds, gold bonds, govt securities, indices, etc. Another way to diversify your portfolio is exploring different geographies. Just make sure you stay compliant and follow all applicable regulations.

Build your goals and invest: Don’t just invest for the sake of it. Have a goal in mind and plan your investments accordingly. Ask yourself – what are you saving for? Be it buying a car, planning a vacation, buying a house, marriage or retirement – strategise your investment accordingly. Since all these goals have different time-frames, you must decide the amount, time-frame and risk quotient accordingly. Panic-buying or selling doesn’t do anyone any good. Historically, the stock market has shown positive returns over extended periods despite short-term volatility. Consider investing in quality stocks of companies with strong fundamentals and holding them for the long term.

Stay Informed: Invest in only those asset classes or stocks that you understand and believe in. The internet gives you access to plenty of information like the fundamentals and history of a particular company, stock or asset class.

Review and Rebalance Regularly: Since the markets keep fluctuating and changing regularly, it’s important to review your portfolio also regularly. It helps you ensure that your investments are aligned with your long-term goals and risk-tolerance at that particular time. You may need to make timely adjustments to ensure that you are on the right path. It is advisable to look at your portfolio every 6 to 12 months.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of TN Network.)