Guide to Investing for Beginners
Investing is the first step in growing wealth. The art of making smart investment choices, understanding the intricacies of portfolio diversification, or having a fair understanding of the market is not as confusing as it sounds. Making prudent investments is something a new investor can easily do with a bit of education.
Equity, bonds, commodities, and cash equivalents. There are so many product classes available to invest in, and the process of deciding how much money to invest in which products is called asset allocation.
Your Investor Profile to investing is what a driver’s license is to driving. You don’t start without one. If your investment products don’t fit your profile, the potential risk is an imbalance in your overall asset allocation, meaning you might be putting too many or too few eggs in the wrong baskets.
Inflation vs Savings
The key to levelling out the purchasing power of your savings is allowing your savings to grow faster than inflation in the economy. This is where a disciplined investment plan with a balanced asset allocation, time horizon and risk profile comes to the rescue.
Bonds provide a worry-free stream of income and are among the most valuable tools in your investment kit. Because they pay interest regularly, they are a good choice for investors - such as retirees - who prefer a constant stream of income.
Time Deposits and Mutual Funds
While time deposits guarantee a fixed return in the decided time period, mutual funds offer market linked performance, thereby offering a potential of a higher return, subject to market risks. Assess the amount of risk you’re willing to take on and remember to invest as per your risk profile and in line with your goals.
Yield is the expected return on an investment, or in the case of bonds – interest received from holding a security.
A yield curve shows yields by maturity. Typically, it depicts average yields on short, medium, or long-term maturity investments on a given day or week of trading. Therefore, it’s very important to take note of exactly which yield you’re looking at when making your investment decision.
Wealthy people have one secret that helps them stay ahead – they manage their assets well. Surprisingly, efficient management of wealth is actually more important than earning it. But it’s not as easy as it sounds. Managing wealth efficiently can be tricky, complicated, and sometimes volatile. Many people spend their whole lives figuring out how to do that effectively, that’s where a wealth manager comes in.
Index funds are a type of mutual fund that replicates the return of an index. An Index fund consists of stocks from a variety of companies whose stock prices reflect the value of an index. For example, fortune 500 companies, emerging markets or real estate. Indices are often used as broad indicators of how a select set of companies or a market or a sector is performing that the index is representing.
The value investing approach believes that the market is not always efficient. This means that a price quoted may not always be reflective of the fundamentals or intrinsic value of an asset. When an investor chooses to buy an asset that’s priced lower than its intrinsic value, this is called value investing. Simply put, the idea rests on selecting currently undervalued stocks that may increase in value in the future, ultimately yielding growth.
Leveraged investing is when you set out to gain a higher profit by investing borrowed money. Higher profits come in when your return on investment is higher than the interest paid to a lender. Although it can reap higher rewards, as we’ve learned, higher rewards often come with higher risk.
WEALTH MANAGEMENT SOLUTIONS
With a Citigold relationship, you get a dedicated team of financial experts, tailored wealth-building strategies, global investment opportunities, and a myriad of exciting world-class benefits and privileges to complement your lifestyle needs.
Frequently Asked Questions
Frequently Asked Questions
Why invest? What benefits do I get with a Citibank Investment Account? What investment options are accessible through Citi Online? How do I start with investment?