How do I start investing?

If you have decided you want to start investing in mutual funds and stock market, then you have indeed made the right step towards financial freedom. Over a long period of time, stocks and mutual funds have given outstanding returns. But before taking a step towards investing you should know about your income, your expenses, debts, savings.
Make sure you track your expenses and cut down all unnecessary ones. Most youngsters spend money on shopping, parties and other unnecessary things. Do enjoy yourself but make sure you don’t spend too much.
Pay your debt:
Having the burden of debt over your shoulders is not worth it. Pay off any credit card debt or any debt that you owe, it does not make sense to pay 40% on your credit card loan and earn 15% on your investments.

Emergency fund:

Just like investing, life is also uncertain. You need to have an emergency fund in place that covers at least 6 months of your expenses. If there is an uncertain event like a job loss, you won’t have to struggle to make ends meet in the short term.
Save enough:
There is no investing without savings. The first step towards successful investing in having a good amount of savings in hand, by which you can start investing money.
After following the above steps, you need to have answers to the following questions:
  1. Why are you investing? What are your goals?
  2. What is your investment horizon? How far is your goal?
  3. What kind of instruments should you invest in?
  4. How much time do you spend on investments?
  5. How much money can you invest?
Here’s how you do it
Goal: Wedding

Time: 4-6 years

Instrument: Equity mutual fund

(You can decide whether to invest in mutual funds or stock market, depending upon how much time you can spend on researching. If you don’t have much time, then invest in mutual funds as investing in stock market demands you to spend time analyzing stocks) Amount: 10,000 per month in SIP

Annual return being 12% of equity fund, you amass a wealth of 10.5 lakh after taking inflation into consideration.