5 popular investment strategies for beginners that you need to know

Have you just started a career, got your first job, or have turned your passion project into your full-time profession, then making small-time, easy-to-handle investments is what you need to do right away! But to start with it, investments can feel a little to overwhelming, but there are a few popular investment strategies for beginners, eliminates the risk factor and prioritises long-term growth.

What are these investment strategies for beginners that people need to know?

Passive Index Investing: If you are a first-timer, instead of trying to pick individual winning stocks, try investing in funds that track a broad market index, for example the Nifty 50 or S&P 500, providing an instant diversification across many companies. These investments are made with an idea that you would keep these investments for a long term, regardless of short-term market fluctuations. It's important to note that index funds, usually have lower fees than the actively managed ones. Reports suggest that over the years, passive index investments have delivered strong returns over the long run.

Go for ETFs or Exchange Traded Funds and Index Mutual Funds that help track major market indices.

Dollar-Cost Averaging (DCA): This isn't your standalone investment but rather a very disciplined approach where you invest a fixed amount of money, say every month (like you would do for your recurring deposits) regardless of how the market is performing. It often removes the pressure of constantly keeping a check on the market, trying to buy when the prices are low and sell off when they are high, which ends up being very difficult for many. What it does is that when prices are low, your fixed amount of investment buys more shares, and when prices are high, it buys fewer. It promotes a consistent saving habit too.

Set up a Systematic Investment Plan (SIP) in mutual funds or invest a fixed sum every month into your chosen stocks or ETFs through your brokerage account.

Value investing: This strategy involves researching about companies to identify whose stock prices are trading below their "intrinsic value." The idea is to invest into good companies at a discounted price, and trusting its worth. While it can be rewarding, it requires a thorough research (often a guided one) and a long-term mindset.

One can learn to analyse financial statements, and understand what can be the company's probable advantages. This is a more active strategy than passive indexing.

Growth Investing: This strategy focuses on investing in those companies which are expected to grow at an above-average speed as compared to the overall market. These companies will often reinvest their profits back into the business for expansion, rather than paying dividends. While growth stocks may offer significant returns, they can also be very volatile. If yo are a beginners, you need to understand that these companies may also have high valuations that will be based on future potential. However, if that growth doesn't materialise, the stock price will suffer.

Income Investing: Income investing or in other words dividend investing strategies generate a regular income stream from the investments you make. This often involves investing in bonds, dividend-paying stocks, or Real Estate Investment Trusts (REITs). This strategy provides tangible enough returns in the form of regular cash payouts, which can often sound very reassuring, especially if you are a beginner.

These payouts can be reinvested to compound returns or used for your living expenses. Companies that consistently pay dividends are often well-established and financially stable. Look for companies with a history of consistent dividend payments and strong financial health.

But it's always highly recommended for beginners to educate yourself or consult an expert, before you start investing.

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