Recommendations and opinions of friends and family matter, but your decision should not be swayed by the rumors. PCEX Member presents here a step-by-step guide on performing thorough research before investing in crypto.
Check Official Website
An official website could be your go-to place for general, legal, economic, transaction, mining, and support.
The fundamental information includes the origin of the cryptocurrency, the people behind it, who control the network, how it works, real-world use-cases, and similar information.
Next, know whether it has got approval from legal regulators in your country or anywhere, how the cryptocurrency network protects your interest, and so on.
Under Economic value, you should know how the coins are created, economic value, what determines its price, what limitations it has, and much more. You can also know about the exchanges where you can buy or sell the cryptocurrency.
Know how transactions are confirmed, how much is the delay time, transaction fees, and similar details.
If you want to act as a cryptocurrency miner, the official website may help you learn the mining process, limitations and incentives.
Cryptocurrency security helps you learn the security aspects.
Most of the cryptocurrency websites have the Help section to allow users to see support from the available resources, community, and FAQs.
Check Independent Secondary Resources
Independent resources mean anything that is not published by the cryptocurrency network, and where there are strict editorial guidelines. Popular sources are CoinCapMarket, CoinGecko, and CoinList. Most of them are online, so it’s easy for you to assess the worth of the coin. You can know indicators like price, price trends, market capitalization, volume, and circulating supply of the coin. You can also get a brief introduction to cryptocurrency.
Find Reliable Exchanges
It’s important to know reliable crypto trading exchanges where you can trade in the cryptocurrency. Pick an exchange with high liquidity, low transaction fees, easy payment and trading options, high security, global presence, and agility. PCEX Member is one of the best cryptocurrency trading exchanges in India. It allows buyers to use INR as fiat currency and perform all the actions needed in a quick and easy manner. The trading platform also has a knowledge bank with resources by experts to help you invest wisely and make the best of the market volatility. It also provides technical analysis knowledge to help you reduce risk and hedge your investment.
Know Trading Signals
Trading signals are insight and recommendations on buying, selling, and trading cryptocurrencies to maximize profits. They are offered by experienced traders and skilled analysts with extensive backgrounds in crypto trading. Find reliable sources of such crypto signal groups or communities to know what is good and what not-so-good for you. However, before buying a paid subscription from a trading signal website, make sure you validate their authenticity by their existing subscribers. You may also check the recommendations of your friends and family regarding the same.
Social communities are a great way to know about the performance of a crypto asset and the investor’s sentiment about particular crypto assets and instruments. Bitcoin Forum- Index, Telegram, Discord, Reddit, and CoinDCX’s telegram channel are some of the popular online forums or communities that you should join to know where the market is headed to.
Go for a Cryptocurrency Wallet
The selection of a wallet (hardware or software) to store the public and/or private keys for cryptocurrency transactions is a good idea to safeguard your asset from online fraudsters. Apart from storing the keys, a cryptocurrency wallet can provide a host of functionalities like encryption, signing-in/signing-out, etc. Review the pros and cons, known or unknown vulnerabilities associated with a wallet.
Go for a mobile (iOS, Android), or desktop wallet (Linux, Windows Mac). Mobile wallets are portable and convenient; ideal when making transactions face-to-face. They can use QR codes to make quick and seamless transactions.
It is not uncommon for an investor to ask this question- can I achieve my goal by investing in SIP. SIP helps you to invest regularly in mutual fund schemes starting with a minimum of Rs. 500. Keep your investments staggered in SIP mutual funds to achieve your goals over a period. A Systematic Investment Plan for beginners is a simple and easy investment solution provided by mutual fund companies.
How to start SIP?
Step 1 – Identify and assess your risk appetite
Before stepping into the world of SIP or investments in general, assess your risk appetite and based on your age, income and other criteria. It is essential for an investor to estimate their risk profile. For example, as you become older, you are burdened with many financial liabilities, thus reducing your risk appetite. SIP is a simple way where you can start your investments if you are an amateur. The key is to start early, at the start of one’s working life, as you can take higher risk, and with the high risk you get chances of high returns. But it is most crucial to analyze this factor to develop effective risk mitigating strategies.
Step 2 – Recognize your specific goals
Once you have gauged your risk appetite, you need to evaluate your investment’s main purpose, which means what you are expecting from an SIP investment to fetch you over a period of time. In other words, you need to understand your investment objective and set your goals accordingly. SIP helps you plan just that.
For instance, individuals who intend to plan their retirement by routing their mutual fund investments through SIP may opt for an investment portfolio with diversification in various asset classes as per equity, debt, gold and others.
Step 3 – Choose a SIP mutual fund based on qualitative and quantitative factors
There are multiple Mutual funds schemes available for SIP in the market today, but make sure you choose the right SIP as per step 1 and step 2 given above. Risk appetite, financial goal, the performance of the funds, the credibility of the fund house, fund manager track records and most importantly, perform due diligence on the investment portfolio or you may seek help from an investment advisor. Always remember past performance or a star performer may not always prove to be the best fund!
Step 4 – Set a convenient timeline and date
The SIP allows you to opt for an auto-payment option eliminating the need to make periodic investments. However, you need to choose a convenient date before commencing the process. Please keep in mind that you may select multiple dates to route your investments through SIP each month as per your convenience, then decide a time horizon for your SIP investment. Typically, the SIP investment horizon is pre-determined based on your financial goal and investment amount. You can choose to use an SIP calculator to make your investment decision easier. You may choose an offline or online process for opting in SIP investment.
The following steps will resolve the question of how to start SIP investment for beginners via an online facility
How to invest in SIP online
Complete the KYC process – Using the SIP procedure given below
All the necessary ID proofs need to be submitted,.
Commence the KYC process
You need to then complete in-person verification
Register your SIP
Choose your SIP Mutual fund as per your suitability
Select the amount
Choose your SIP option like daily, weekly, monthly etc. set the date
SIP will start after a month of completing the process and verification.
Debt Funds or Debt Mutual Funds primarily invest the money in fixed-income securities like government securities, debentures, corporate bonds and other money-market instruments. These funds lower their risk by investing in such avenues. They have relatively low volatility and generate risk adjusted returns over time.
How do Debt Funds Work?
These funds invest in instruments such as Bonds and fixed income securities to generate returns for the investors. These funds buy these instruments and earn interest on the money. The yield that the investors receive is based on this.
The portfolio of debt funds needs to have specific maturity ranges. For example, a liquid fund can buy only securities which have maturities of upto 91 days. They do not offer assured or fixed returns, unlike FDs. Their returns can fluctuate. A rise in interest rate positively impacts on the interest income but negative impact on the bond or instrument price. And it’s the other way round when the interest rates fall.
What are different types of debt funds?
This category of funds are considered the least risky among the mutual funds. As the name suggests, they are highly liquid. The portfolio of this fund comprises instruments that have a maturity period of not more than 91 days.
Dynamic Bond Funds
In this fund, the fund manager changes the maturity of the portfolio depending upon the forecast of the interest rates. If the forecast indicates a rising interest rate, then the maturity will be longer. If the forecast is indicating a falling interest rate, then the maturity will be a shorter duration.
Short / Medium / Long Term funds
Short term Funds come with a maturity period of 1 to 3 years. The portfolio in these funds are structured such that their prices are not much impacted by the change in interest rate movements.
Medium Term debt funds have a maturity period of upto 3 to 5 years, and long-term debt funds have maturity beyond 5 years. These are riskier than short-term as their tenure is longer; hence more significant is the impact of the interest rate on the portfolio, which is also known as interest rate risk or duration risk.
Fixed Maturity Plans
These schemes are closed-ended schemes. But can be traded on stock exchange where they are listed.
Debt funds are ideal for investors seeking moderate risk as the risk of investing in debt mutual funds is generally lower than in equity mutual funds. Debt funds can be the right choice for anyone having a lower appetite for risk. You can invest in a debt fund if you have a surplus fund or want to diversify your investment portfolio, or think of making an emergency fund. Debt funds can also diversify the overall portfolio risk if your allocation towards the equities are on a higher side.
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