Begin Investing

If you are anxious to get your investments started, you can get started right away without having a lot of knowledge about the stock market. Start by being a conservative investor with a low risk tolerance. This will give you a way to making your money grow while you learn more about investing.

Savings Account: Start with an interest-bearing savings account. You may already have one. If you don’ t, you should. A savings account can be opened at the same bank that you do your checking at or at any other bank. A savings account should pay 2 to 4% on the money that you have in the account. Even savings accounts paying 6% per annum interest are not uncommon.

It’s not a lot of money unless you have a million dollars in that account but it is a start, and it is money making money.

Money Market Funds: Next, invest in money market funds. This can often be done through your bank. These funds have higher interest pay-outs than typical savings accounts, but they work much the same way. These are short term investments, so your money won’t be tied up for a long period of time but again, it is money making money.

Fixed Deposit are also sound investments with no risk. A fixed deposit account allows you to deposit your money for a set period of time, thereby earning you a higher rate of interest in return. The interest rates on Fixed Deposits are typically higher than those of savings accounts or Money Market Funds.

You can select the duration of your investment, and interest is paid regularly until the Fixed Deposit reaches maturity. Banks and Non-Banking Financial Companies and Corporates offer fixed deposit plans. It is possible to cumulate the interest or have the interest payout option. Interest payout can be either half-yearly, quarterly or monthly. However, the effective interest yield will be lesser in case of fixed deposit with interest payout as against cumulative fixed deposit. Even in the payout option, monthly payout fetches lower yield than quarterly and quarterly payout fetches lower yield than haf-yearly payout. When the fixed deposit reaches maturity, you receive your original investment, plus the interest that the deposit has earned.

In case of senior citizens, extra interest rate up to 0.5 per cent per annum is offered over and above the normal interest rate.

Tax Saving Fixed Deposits: Various banks are offering different tax saving fixed deposits scheme with high interest rates plus abundant saving of taxes. Tax-saving is no longer the secured domain of Public Provident Fund and National Savings Certificate. Tax-saving Fixed Deposits offered by banks are also eligible for deduction under Section 80C. The deposits are subject to a 5-Yr lock-in period. Introduction of tax-saving Fixed Deposits offers risk-averse investors the opportunity to broaden their horizons across mechanisms while conducting the tax-planning work out.

If you are just starting out, one or all of these three types of investments is the best starting point. Again, this will allow your money to start making money for you while you learn more about investing in other places.