Financial education is one of the most important things a student should know. Financial education refers to the teaching about money, investment, stock market, mutual funds and many things related to finance. Every student should be taught about handling finances and how to start investing. But the bitter truth is students are not taught about this. They have to learn this from their parents. So, it would be best if you educated your child about investment and finance. Educate them about different aspects of investment and money. Taught them they can start investing. Tell them about stock markets, stocks and how he can invest in them.
Basics of investment.
The word investment contains investing in many assets, consisting of assets like stocks and bonds, real estate, mutual funds and many more. All the assets are different from each other. The risk factor, the investment criteria, expected returns, time frame are different in all these assets. So, knowing about every asset is very important before investing in any of them.
Investment in the stock market.
Investment in the stock market is one of the most popular ways of investment. Inequity investment, publicly traded companies offer investors an equity interest in the company by purchasing shares in the stock market. Companies generally sell shares in the market to raise capital which will help them to expand. Investors earn profits by purchasing stock at a low price and then selling them when they go up. They also gain from dividend which is given to the investors by the company. Stocks are traded on the stock exchange. Every country has its stock exchange. The prices of stocks keep on fluctuating. This happens due to many factors. The most important factor is how well the company is performing. It depends on the efficiency of the management, financial system, and other factors, including competitors’ performance, government actions, and how the overall industry is performing. And all these factors affect the price fluctuations of stocks in the market.
Investing in real estate.
Real estate investing means purchasing property for making profits. It includes building, land or infrastructure. Some examples are agricultural land, building, house, commercial plots. There are many types of real estate. Some of the types are as follows:
It consists of houses, flats, buildings, bungalows used for residential purposes.
It consists of properties such as a building. These are rented out and are used by businesses.
It consists of properties that are used for making factories, warehouses, manufacturing units.
This consists of properties that are used as a restaurant, shopping malls, retail stores.
This investing is considered very safe because the value of land never depreciates. It keeps on increasing. But it requires a huge investment. Purchasing a piece of land requires a lot of money. Also, if you want to buy a property like a residential building, it demands a lot of money. It has low liquidity means it can’t quickly convert into cash. It takes time to get some money after selling any property.
A mutual fund is an investment in which the investors’ money is invested in many assets like stocks, bonds, and other assets. This is operated by a money manager, who manages the funds and invests the money in different assets. There are many mutual funds like balanced funds, equity funds, money market funds, income funds, exchange-traded funds, index funds, fixed-income funds and many more.
How to start investing in the stock market.
Here are the steps that you should follow to start investing in the stock market.
- Documents required
Documents required are any id proof like residence, documents about your earning and a passport-sized photograph.
- Opening a Demat account
It is an account that holds shares in the name of the investor. It is opened online. It is opened with the help of a depository participant.
- Trading account
A trading account is an account by which you can buy or sell stocks on the stock market.
- Bank account
You will also need a bank account linked with your trading account. From this account, all the flow of money will happen. If you buy stocks, then money will go from the account, and if you sell stocks, then money will come into the account.
When you have completed all these formalities, you must start your journey as an investor.
Investing tips for beginners.
These tips will help you to start your journey as an investor.
- Select the type of investment
The first step is to select the type of investment you want to invest in. As discussed above, many types of assets like stocks, bonds, mutual funds, real estate, etc. You should study every type of investment and then decide the best type for yourself.
- Study and analysis are very important.
Study and analysis about the market or funds are very important. Like in the stock market, it is important to study the companies well. Research about their financial structure, the efficiency of their management, future plans. It is important to study the financial reports like balance sheets, profit and loss accounts, cash flow statements, fund flow statements of the company.
- Calculate the risk
There is always some risk factor involved in investment. So always calculate the risk involved in the investment. So, to minimize the risk, you can diversify your investment. It would be best always to compare different investment schemes and always compare the risk and expected return.
- Don’t give up
Investment is full of risks. You will bear losses, it’s a fact, but you should never give up. It would be best if you kept on trying. Believe in your analysis and study, and you will get success in it.
It is important to know about investing and managing your finance. Generally, students are not taught about the basics of investing in schools. But financial knowledge is vital for your child. So, it would be best if you taught your child about finance and investment.