Basics of investment

Basics of investment

Basics of investment

Investment refers to allocating money or resources with the expectation of generating profitable returns over time.Investment refers to allocating money or resources with the expectation of generating profitable returns over time. Investors should assess their risk tolerance and financial goals before investing. Careful research, staying informed about market trends, and seeking professional advice are crucial. Basics of investment options include stocks, bonds, real estate, and mutual funds.Basics of investment help you to meet your long term needs and large financial goals.There are certain levels of risk attached to all types of investments. The higher the risk, the greater are the chance of higher returns.

Basics of investment


Why to Invest?

In old days, somewhere around 1920s, price of most of the things remained more or less constant. However this scenario started changing from 1950 onward and prices of things started rising gradually. But since last few years, the rate at which prices have been increasing is much faster.So we need to clear basics of investment, if we know basics of investment then we easily invest.

let me explain this with an example.

when i was a teenager, petrol price used to cost around 20 rupee per liter. Today the value of the same petrol would be around Rs. 100 per liter.There was a time when people  used to work for a salary ranging between Rs 250 to 400 per month. Now for same work they are paid Rs 25000 to Rs 35000 per month.This means that, if the price of everything goes up, the income also goes up.

This increase  is due to inflation and to beat this inflation we need to know about basics of investment to invest our money so that it generate returns in excess of inflation rate.


Inflation is the rate at which the cost of living increases and the value of money decreases. In other words, money will not buy the same amount of goods or services in future as it does now or did in the past.Suppose annual rate of inflation is 7% and bank interest is 3% per annual.It means that the real return you get from your savings is -4%. You get negative return.

Golden Rules of Investments:-

  1. Start saving as soon as you start earning.
  2. Keep enough contingent money aside before investing.
  3. Start investing as soon as possible.
  4. Invest for long term.
  5. Never invest in anything you don’t understand.
  6. Review your investments periodically.

consider an example of two friends A and B. Both of them start working at an age of 24 years each. A starts investing at an age 0f 26 with Rs 25000/- every year. Assume he gets a return of 15% on his investments every year, when he retires at an age of 56, he will have 16,78,85,338/-(almost get 17 crore ). That is the power basics of investment.

list of various investment

  • Bank Fixed Deposits
  • Public Provided Fund
  • National Pension Scheme
  • Other Post Office Saving Schems
  • Gold and Silver
  • RBI Bonds
  • Mutual Funds
  • Shares
  • Tax Saving Schemes
  • Commodities
  • Equity
  • Real Estate


  1. What is the  Golden rule of investment?

Golden Rule Basics of investment:- Your portfolio of stocks should be diversified.The risks can be reduced by a great extent by maintaining a well diversified portfolio of stocks from various sectors of the economy.

2.  When should I start looking to invest?

The ideal time to start investing is as early as possible. The power of compounding plays a important  role in growing money all time.

3. What is investment?

Investment refers to the act of allocating resources, typically money, with the expectation of generating profits or  some other financial benefit in the future.

4. How much money do I need to start investing?

It’s essential to assess your financial situation, goals, and risk tolerance to determine an amount that suits your needs. Whether you start with 100 rupee also.


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