How To Start Investing In India: A Simple Beginner’s Guide (2025)

With rising inflation, a shrinking value of money, and growing financial responsibilities, relying only on savings would not cut it anymore. If you want to build long-term wealth, the earlier you start investing, the better.

The good news? It is never too early, or too late, to learn how to start investing. Whether you're in your 20s or 40s, taking that first step can set you up for financial security and growth.

In this blog, we will break down how to start investing in a simple, beginner-friendly way, so you can make confident decisions and grow your money the smart way.

Why Should You Start Investing Early?

Starting early provides a significant advantage in investing, majorly due to the power of compounding over the long term. Compounding occurs when your investment makes returns, and then those returns begin to earn more returns as well. Beginning early provides your money with plenty of time to accumulate over the years, even without you putting in much effort.

For example, consider an SIP (Systematic Investment Plan) of INR 5,000 for 5 years in any fund. Assuming the investments grow at a rate of 12%, your invested amount can grow significantly:

• In 5 years, it can become INR 4,05,518
• In 10 years, it can grow to INR 11,20,179
• In 20 years, it can reach INR 45,99,287

This shows the power of compounding and the importance of staying consistent over time, especially when you start investing early.

Essential Steps To Start Investing In India

This step-by-step investment guide is designed to help beginners take confident action, whether they are planning for short-term goals or long-term wealth. So, let us take a look at the steps of how to start investing:

1. Set Clear Financial Goals

Before starting the process of how to invest, it is always wise to know why you are investing in a business or any other scheme. You could be working towards immediate needs, such as emergency funds, or medium-term goals, such as purchasing a car, or even long-term plans. 

Knowing your goal enables you to choose the correct manner of handling your money that suits your time horizon and the risk you are willing to undertake.

2. Understand Risk And Diversification

All investments come with a certain degree of risk. Stocks, for example, can experience significant fluctuations in value since they are market linked, while fixed deposits tend to offer more stable returns, though at a generally lower rate. 

Diversifying investments across different asset classes, such as stocks, debt instruments, gold, and real estate, is often considered a way to manage risk and potentially protect your finances in varying market conditions.

3. Choose The Right Investment Accounts

You will require a PAN card and a bank account to begin investing in India. You will also need a Demat account if you plan to invest in equity stocks. Ensure the Know Your Customer (KYC) process is completed in full. 

Various broking apps make it easy to set up these accounts quickly and make online investing relatively easy nowadays. You may open an account with any one of these platforms and start your investment journey.

4. Explore Investment Options In India

If you are exploring how to start investing, there is a wide range of options like equity, mutual funds, bonds, fixed deposits (FD), etc. Depending on the aim, goal, and period of the investment, individuals need to choose wisely. For example, those aiming for long-term growth and who are comfortable with market fluctuations may consider investing in equity stocks or equity-oriented mutual funds. On the other hand, individuals seeking lower risk, capital preservation, and steady income might prefer fixed deposits or bonds, which offer more stable but generally modest returns.

5. Start With Small, Consistent Contributions

You can also start with a minimum investment amount. In India, mutual funds can be started with just INR 500 per month¹. Being consistent is very important in investing. No matter if the market goes up or down, one should keep investing regularly. Over time, even small amounts can accumulate significantly due to  the power of compounding.

6. Keep Learning And Reviewing

Investing is not something simple you do only once. Continue learning through various sources such as news channels, economic newsletters, and credible online blogs. Double-check and re-tweak your portfolio slowly every few months. Major life adjustments, such as landing a new job or increased family obligations, typically necessitate altering your investment strategy rather significantly.

Best Investment Options For Beginners In India

There are various investment options available where you can start your investment journey. If you are wondering how to invest, let us take a look at some of the most common choices:

1. Mutual Funds

For those exploring investing for beginners, equity stocks and mutual funds are common starting points. Mutual funds may act as a better option because new investors who do not have experience with how to invest may face losses if they directly jump into stocks, as direct equity can be highly volatile. 

A mutual fund is a pool of money collected from many investors. It invests in a diversified range of assets, including equity stocks, bonds, and other instruments. An investor may start with a large-cap mutual fund, as large-cap companies are usually well-established and have strong financials. 

Historically, over a span of ten years, large-cap mutual funds have averaged returns in the range of 12.46% as of 13 May 2025².

2. Corporate Bonds

Corporate Bonds are a type of fixed-income investment, usually issued by private companies. For those exploring investing for beginners, bonds can be a safer and more stable option compared to equities. There are various ratings given to a bond. 

There are various rating agencies such as CRISIL, ICRA, Fitch which evaluate and assign these ratings. In general, bond ratings start from AAA and may also go up to D³. The higher ratings, the safer the bonds tend to be and vice versa. For example, the returns for AAA-rated bonds usually start around 5% and may also go around 8.5%, and for the case of AA rated bonds, the returns will be starting around 8.5% and may go around 10.9%. 

In the case of unsecured bonds , the returns can be even higher, and may reach even 15% to 20%. Unsecured bonds are riskier because they are not backed by any collateral, unlike secured bonds. This means that if the company fails to repay, investors may not get their money back. Bonds give fixed returns either monthly, quarterly, or yearly.

3. Fixed Deposits 

Fixed deposits (FDs) are considered as one of the safest investments where you deposit money in a financial institution for a certain time and earn a fixed interest.  

For those looking into investing for beginners, an FD may act as a suitable choice who prioritises safety over high returns. The average returns usually start around 7–8% as of 13 May 2025⁴. Also, in the case of bank FD, an amount up to INR 5 lakh is insured⁵. So if the bank fails, you can still get up to INR 5 lakh back.

4. Alternative Investments

Investors may also consider investing in other alternatives like gold or real estate, which fall outside traditional asset classes like stocks and bonds. Real estate in emerging cities has the potential for growth, though it typically requires a large amount of capital.  

For those exploring how to invest in gold, options like gold mutual funds or ETFs are available, which may act as a hedge during market downturns.

How Much Should You Invest As A Beginner?

The amount of investment totally depends on one’s investment goals and plans. If someone needs a higher amount in the future or has big goals, they may need to invest more aggressively.  

For example, if someone plans to buy a house in 5 years and needs a significant amount for a down payment, they might choose to invest in higher-risk assets like stocks to potentially earn higher returns. Similarly, if someone is saving for their children's higher education in 10 years, they may consider to invest in equity mutual funds to take advantage of long-term growth potential

However, there is no fixed percentage that one must invest. Financial advisors suggest starting with 10% to 15% of your income for savings. As your earnings increase, aim to raise this to 20%–25%. This habit may promote long-term financial health and stability. Gradual adjustments make it easier to stay consistent without feeling overwhelmed. The more you may invest, the better it could be. 

Common Mistakes to Avoid When Starting To Invest

Now that you have understood how to start investing, that alone is not enough. Many investors keep making some common mistakes. To help you avoid them, let us take a closer look at what they are:

1. Waiting Too Long to Start: In investing basics, people often delay investing until they think they have saved enough, but surprisingly, even INR 500 is enough to start investing in a small way⁶.

2. No Goals: Investing without a clear goal often leads to blindly chasing short-term trends in the market. It is important to set personal goals, like buying a house or building wealth, so your investments stay focused on your specific financial needs.

3. Forgetting Inflation: The average inflation rate in India is around 5%, but food inflation is often higher, sometimes reaching up to 10%⁷. So, simply keeping money in a bank account may actually reduce its value over time, as it loses purchasing power. 

To grow your wealth in real terms, it is important to understand how to invest in options that offer returns capable of outpacing inflation over the long term.

4. Putting All Eggs in the Same Basket: This is investment basics, spread your money across different investments instead of putting it all into one risky stock or unknown market. Diversifying your investments helps manage risk and gives your portfolio more stability over time.

Conclusion

How to start investing is quite straightforward and not as confusing as it may seem for beginners. Even someone completely new can build long-term wealth with clear goals, the right tools, and strong discipline. Stay focused on your objectives and diversify your investments wisely, allowing time and compounding to grow your returns. You do not need to be rich to start investing. Understanding how to start investing wisely is the first step toward building wealth through smart decisions over time across different assets.

Looking to grow your wealth steadily and securely? Explore Grip Invest’s range of bonds and take the first step toward a more stable financial future today.

FAQs On How To Start Investing

1. What is the best day in the month to start an investment?

Investing early in the month often leads to better budgeting and timely SIP contributions almost every time. Many investors prefer to invest within five days of receiving their salary, helping them avoid spending the investable surplus. In the long run, consistency matters more than timing when it comes to building wealth steadily over many years.

2. Can I pause or stop a SIP anytime if needed?

SIPs are very flexible. You can stop or cancel them at any time through your investment platform or directly on the website of the mutual fund. Generally, there is no penalty for halting, but frequent stopping can spoil your long-term plans. It is a good idea to resume your SIPs as soon as your financial condition improves.

3. Do I need a financial advisor before starting investments?

Not necessarily. Many beginners successfully invest through online platforms and apps offering guided plans. However, if your goals are complex or you are unsure about risks and products, consulting a certified financial planner can provide clarity and a tailored investment strategy aligned with your income and future goals.

References:

1. Association of Mutual Funds In India, accessed from: https://www.amfiindia.com/mutual-fund

2. Money Control, accessed from: https://www.moneycontrol.com/mutual-funds/find-fund/

3. CRISIL, accessed from: https://shorturl.at/wpnTW

4. Money Control, accessed from: https://www.moneycontrol.com/fixed-deposit/fd-interest-rates/

5. Reserve Bank Of India, accessed from: https://www.rbi.org.in/commonman/english/Scripts/FAQs.aspx?Id=272

6. Association of Mutual Funds In India, https://shorturl.at/1dkg9

7. Trading Economics, accessed from : https://tradingeconomics.com/india/food-inflation

Want to stay at the top of your finances? 

Join the community of 4 lakh+ investors and learn more about Grip Invest, the latest financial knick-knacks, and shenanigans in the world of investing.

Happy Investing!

Disclaimer - Investments in debt securities/municipal debt securities/securitised debt instruments are subject to risks including delay and/ or default in payment. Read all the offer related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading.
This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip does not guarantee or assure any return on investments and accepts no liability for consequences of any actions taken based on the information provided. For more details, please visit www.gripinvest.in

Registered Address - 106, II F, New Asiatic Building, H Block, Connaught Place, New Delhi 110001