Stocks, FD or Mutual Funds? Radhika Gupta's 3 basics for smart investing

When it comes to saving, investing and managing money, confusion tends to build up. This leaves the risk-taking process in pause as they don't understand where to start from. Radhika Gupta, CEO of Edelweiss Asset Management recently shared her three golden rules for smart investing. She emphasized the need for a foundational understanding before committing to any financial product. These rules will help you get a clear idea with your money managing skills.

Three rules for smart money investment for beginners

The first rule Radhika highlighted was to understand the difference between saving and investing. Many investors dive into selecting assets without fully grasping the basics, which she compares to a beginner swimmer, “Most people start their money journey by jumping too quickly into what to buy. A little bit like trying to swim without knowing how to breathe and float.” According to Radhika, understanding the difference between saving for short-term needs and investing for long-term wealth accumulation is critical to making informed decisions.

Her second golden rule revolves around the act of balancing risk and return. Every investment option whether stocks, fixed deposits, or mutual funds carries inherent risks and potential rewards. Radhika explains, “The basics of risk and return what they are, what they mean, and how to calibrate them for what you want. Every asset class finally is just a story of risk and return.” Understanding this rule will balance investing money to align their portfolio choices with financial goals and risk tolerance. It will also prevent impulsive decisions driven by short-term market fluctuations.

Finally, she cautions people against mixing insurance with investment. The CEO underscores the importance of keeping protection and wealth creation separate, “The importance of protection and separating it from investing. Both are needed but mixing them is deadly.” By combining the two, it can compromise both the coverage needed for emergencies and the growth potential of investments.

For more updates, join/follow our WhatsApp, Telegram and YouTube channels.