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Table of contents

Overview
Keep Enough Cash Handy (But Don’t Overdo It)
Investment in Equity Funds
How to invest?
Investing in Gold
Quick Summary

Overview

Investing in the equity market can feel overwhelming, especially when things seem unpredictable. If you are new to investing, it might feel like you are stuck in a financial thriller. But here’s the good news: with the right approach, you can build a solid investment strategy that works for you, no matter how the market plays. Whether the market is chill or chaotic, here’s a beginner-friendly guide to help you build a smart investment strategy.

Step 1: Keep Enough Cash Handy (But Don’t Overdo It)

Before you start investing, make sure you have got your basics covered:

  • Monthly expenses
  • Emergency fund (ideally 12–24 months of expenses, including EMIs)

You can keep this money in a savings bank account or park it in a Liquid Fund or Overnight Fund. It’s your financial cushion, keep it there when you need it.

Step 2: Spread Your Money Across Different Assets

Think of investing like packing for a trip, you wouldn’t carry only shoes, right? Similarly, don’t put all your money into one type of investment.

A balanced portfolio includes:

  • Equity (stocks or mutual funds)
  • Debt (fixed deposits, bonds)
  • Gold (yes, it’s still relevant)

Your ideal mix depends on your age, income, financial goals, investible surplus, assets & liabilities and how comfortable you are with risk.

Step 3: Be Realistic About Returns

Investing is a long-term game. Set achievable goals and don’t expect instant results.

Step 4: Diversify, But Keep It Simple

Diversification reduces risk, however, too much of it can make your portfolio messy. Stick to a few well-chosen options in each category.

Step 5: Don’t Fear Market Fluctuations

Markets go up and down and it’s completely normal. Instead of panicking, look for opportunities. Make volatility your friend.

Step 6: Match Your Investments to Your Goals

  • Long-term goals (3+ years): SIP in mutual funds
  • Short-term goals (< 3 years): Recurring deposits or short-term FDs

Consistency matters. Stopping midway slows compounding, and inflation eats into your money.

Step 7: Review Your Portfolio Regularly

Already investing? Great! Make sure to check in on your portfolio regularly. Always remember, your investment strategy should be based on your personal goals and should be an individualistic exercise.

[Also Read:  Balance your Financial and Physical Assets]

Now that you’ve got the basics covered, let’s dive into the different investment options

Investment in Equity Funds:

If you are young, earning well, and have big financial goals that are a few years away (think 3 to 5 years or more), and you are okay with taking some risk, equity investing could be your best friend. But here’s the catch; it’s not about jumping blindly. You need a plan.

Start by structuring your portfolio smartly. Choose a mix that works for your time horizon and goals. If you can stay invested for at least five years, aim for a healthy combination of:

  • Multi-cap funds
  • Large-cap funds
  • Mid-cap funds
  • Small-cap funds

You can even add aggressive hybrid funds for a little extra balance.

How to invest?

You have got two main options:

SIPs are a game-changer as they make investing a habit, are easy on your wallet, and take away the stress of timing the market.

Here’s what you can consider:

  • Liquid Funds - These invest in short-term securities and are great for parking money you might need soon.
  • Overnight Funds - Super short-term (think 1-day maturity), ideal for quick liquidity.

If you want something even simpler, fixed deposit (FD) is a classic choice. Just pick the right plan; monthly payout, quarterly, or cumulative based on your cash flow needs. FDs may not give sky-high returns, but they offer peace of mind.

Axis Bank offers the best in the class interest rates on bank FDs for both long and short-term investments.

Do not forget debt funds to earn market-linked returns and aren’t risk-free. Hence, one needs to be extremely careful when approaching debt mutual funds.

Investing in Gold

Gold isn’t just for jewelry; it’s also a smart way to diversify your portfolio. Why? Because when other investments struggle, gold often shines. Aim to allocate 10-15% of your portfolio to gold.

The best part? You don’t need to buy physical gold anymore. Go digital with:

  • Gold ETFs
  • Digital Gold

These options are easy to buy, store, and sell without worrying about lockers or fluctuating prices. Plus, they make your portfolio more resilient during uncertain times.

Make tax saving work for you

Saving taxes isn’t just about compliance; it’s a smart way to keep more money in your pocket. Here’s how you can do it:

First, figure out which tax regime suits you best, Old or New. Once you know that, pick tax-saving investments that fit your plan.

Some popular options include:

  • ELSS (Equity Linked Savings Scheme) - Great for equity exposure with a 3-year lock-in.
  • Tax-saver Bank FDs - Safer choice with a 5-year lock-in.
  • PPF (Public Provident Fund) - Perfect if you’re starting your career; it has a 15-year lock-in and offers triple tax benefits (on investment, interest, and maturity).

Invest early in the financial year to get the maximum benefit. And always check the lock-in period before committing, because once your money is in, it stays there for a while.

Investing isn’t about timing the market, it’s about time in the market. Stay consistent, stay curious, and don’t panic. Your future self will thank you.

Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.

Mutual Fund investments are subject to market risk. Please read all scheme-related documents carefully. Axis Bank Ltd. is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Any purchase of Mutual Funds by Axis Bank’s customer(s) is purely voluntary and not linked to availment of any other facility from the Bank. This content is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future returns. Readers are advised to consult a qualified financial advisor before making any investment decisions. Terms and Conditions apply.

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