What is the right time

to start investing?
The best time to invest was yesterday. The next best time is now.
This essentially means that the right time to begin investing is ‘as soon as you
can.’ Ideally, you should begin investing right from the time you receive your
first pay check.
Start off small, but start early

A common misconception is that investing is only possible when you

have a lump sum amount saved up. But that’s not entirely true. You
could start by investing small amounts. It doesn’t matter if these small
amounts are only a tiny fraction of your income. What’s more important
is that you start your investment journey early in life.

To see just how much of a difference it can make, let’s look at what
Pranav and his colleague did.
Scenario 1

 Remember 25-year-old Pranav? He wishes to retire at around 55 years of

age.
 His debts now settled, he starts investing Rs. 10,000 each month in a
scheme that offers a 12% rate of return.
 When he retires 30 years from now, he will end up with approximately Rs.
3,52,99,138.
 That’s around Rs. 3.5 crores! Amazing, isn’t it?
Scenario 2

 Now, let’s look at his colleague: 35-year old Dev. He’s only just started his
investment journey. And like Pranav, he also wishes to retire at 55.
 However, his investment period has dropped down to 20 years.
 To compensate for the shorter duration, Dev invests Rs. 20,000 each month
(instead of Rs. 10,000 like Pranav).
 Even then, Dev will only end up with Rs. 1,99,82,958, which is almost Rs. 2
crores. 
Golden Rules of Share Market
Investment
 Stay away from the herd mentality
 Make wise choices
 Have a sensible investment strategy
 Make a Portfolio with a Wide Range of Assets
 Keep your expectations in check
So, when should you invest?

The most favourable conditions for investment

One of the most favourable conditions for investing in a stock is when its
prices are low. Buying a stock when it is on a high puts you in a precarious
position since the prices may correct once you’ve bought it, which may leave
you with heavy losses. That said, when you invest in a stock whose prices are
at a low, there’s still a chance for that stock to go down further, but the impact
would most likely be minimal. And the stock has a greater chance of bouncing
back up, leaving you with handsome profits.
Other factors to be considered for investment 

You’ll never know when the right time to buy a stock is unless you actively track
its movements. Start off by looking for any news or announcements that can
affect its price. Announcements such as dividend payouts are considered to be
favourable and can lead to a rise in the stock price. Also, keeping an eye out for
technical indicators can also help you predict the price movements. We’ll see
more about technical indicators in the forthcoming modules.
Align your investments with your
goals
Before you mobilise your funds for investment, think about your financial goals.
It is always a good idea to chart out a timeline and classify your goals as short-
term or long-term targets. This gives you the clarity needed to plan your
investment strategy better. 
Then, pick and choose your investment options according to your short-term and
long-term goals. 
For instance, to meet your short-term goals such as buying a new car or a new
bike, it’s better to invest in a highly liquid short-term investment option like an
Equity Linked Savings Scheme (ELSS). 
To satisfy your long-term goals such as sponsoring your child’s education or
marriage, it makes more sense to invest in a long-term option.
Invest according to your risk
appetite
Your risk appetite is a really good metric to determine the investment options
that are right for you. Analyse your risk tolerance comprehensively before
moving on to the investment phase. 
There are plenty of online calculators that you can use to determine your risk
profile. Your age, financial standing, your knowledge of investments and other
financial obligations are some of the many factors influencing your risk
appetite. 
If you’re a conservative, risk-averse investor, you’re better off investing your
money in government-funded schemes and fixed deposits. If you’re okay with
taking risks every now and then, you could invest in mutual funds. On the
other hand, if you’re an aggressive investor who thrives in risk, the right option
for you would be equities and commodities. 
Diversify your investment portfolio

 The old adage goes like this - Don’t put all your eggs in one basket. This rings
particularly true with respect to investments. It is never a good idea to invest all of
your money in a single investment option, because if your investment does not
perform well, there’s a high chance that you could end up losing your capital. 
 By diversifying your investment portfolio, you can reduce this risk significantly. You
could diversify your portfolio in many ways. One way to do this is to include different
kinds of investments, such as low-risk and high-risk options. You can also do this by
including investments across various sectors. 
 For instance, if you’re investing in equity, you could include stocks from industries like
banking, healthcare, travel and tourism and FMCG. This way, the risk is distributed
more evenly across various industries, thereby lowering your chances of losing your
investment capital.  
A quick recap

 The right time to begin investing is as soon as you can, so your investment
can grow over a longer period.
 Start by investing small amounts systematically.
 Once you’ve cleared your high-interest debts, you can focus on investing a
greater portion of your income.
 Invest consistently over the course of your earning years, so you can meet
major life goals.
 Align your investments with your life goals.
 Take your risk profile into consideration.
 Remember to diversify your portfolio.