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In recent times, people have been increasingly turning to the capital markets, especially young salaried professionals. Instead of traditional methods of saving money, they are now trying to generate wealth from their savings. However, the biggest question a new investor faces is where to begin – should they directly invest in the stock market or opt for other, less risky methods? This decision depends on two crucial factors: risk tolerance and investment horizon.

How to set goals?
If you set your goals before investing, half your work is done. You need to determine whether your goal is short-term (1-3 years), medium-term (3-5 years), or long-term (5-10 years). Choosing investment tools based on your goals can prove beneficial. Let's understand which instruments might be best for you based on your investment period:

Short Term
For short-term investors, debt instruments can be a good option. This includes investing in a Fixed Deposit (FD) or Recurring Deposit (RD) scheme of a bank or Non-Banking Financial Company (NBFC). The advantage is that the investor receives a guaranteed return upon maturity.

Medium Term
If you have a low-risk appetite, you can invest in hybrid funds and balanced advantage funds for medium-term goals. Investors can allocate 50 percent to hybrid funds and balanced advantage funds. These generally provide stability and good returns. Additionally, 20 to 30 percent can be invested in large-cap funds. Meanwhile, it is advisable to invest 10 percent in gold. This is because gold prices often rise when the market falls, thus balancing the portfolio.

Long Term
Investors with long-term goals can opt for equity mutual funds. During this time, investors with a low risk tolerance should invest in large-cap funds, as mid-cap and small-cap funds carry higher risk.

Ultimately, investing is a personal decision that depends entirely on your financial situation. Seeking expert advice during this process can be very beneficial.

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