Beginners Guide for how to Invest Money in 2025 - Risks & Returns

Investing has become a popular concept in today's world. It's a smart way to understand how money works and how people can generate income by making their money work for them. In the past, many people were hesitant to invest due to high risk factors, but today, there are numerous platforms and low-risk options that make investing more accessible and safer than ever.

How to Invest Money

1. Fixed Deposit (FD)

If you're someone who cannot afford to take any risks with your money, or you simply want to keep your funds safe while earning a modest return, a Fixed Deposit is an ideal option. With an FD, you deposit a lump sum amount in a bank or financial institution for a fixed period. At the end of the term, you receive the principal along with interest—typically around 7%. The biggest advantage of an FD is that you know exactly how much you'll receive at maturity, making it a secure and predictable investment.

2. Recurring Deposit (RD)

A Recurring Deposit is a great choice if you don't have a lump sum to invest but still want to save regularly. This plan allows you to deposit a fixed amount every month, making it perfect for salaried individuals or beginners. It carries very low risk and usually offers an interest rate of around 8%. RDs help inculcate the habit of disciplined saving while growing your money steadily.

3. Mutual Funds

Mutual Funds are an excellent way to start your investment journey. When you invest in mutual funds, your money is pooled with that of other investors and managed by an Asset Management Company (AMC). These funds invest in a combination of stocks, bonds, and other securities.

You, as an investor, receive units of the fund based on your contribution. The value of your investment changes with the performance of the fund’s underlying assets. Mutual funds come with varying levels of risk, so you can choose based on your risk appetite.

Here are the types of mutual funds based on market capitalization:

Large Cap Mutual Funds: Invest in top, well-established companies with large market capitalizations. These funds carry the lowest risk.

Mid Cap Mutual Funds: Invest in mid-sized companies. These carry moderate risk but potentially offer higher returns than large caps.

Small Cap Mutual Funds: Focus on companies with smaller market capitalizations. These are high-risk, high-return options and are suitable for aggressive investors.

4. Stocks

Stocks represent ownership in a company. When you buy a stock, you essentially own a small part of that company. Stock investment can be highly rewarding but also involves significant risk. You can invest in large cap, mid cap, or small cap stocks, depending on your risk tolerance.

To invest in stocks, you'll need a trading account. If you're a high-risk taker looking for potentially high returns, the stock market can be a good option for you.

5. Digital Gold

Digital Gold is a modern and convenient way to invest in gold without physically storing it. Many people prefer gold because it has historically provided strong returns. With digital gold, you purchase gold online and hold it virtually—without worrying about storage, safety, or making charges.

You can invest in digital gold through a Systematic Investment Plan (SIP) or with a lump sum amount. It can later be converted into physical gold or jewelry if you choose. Digital gold offers flexibility, safety, and the potential for good returns.

Conclusion

Today, investing is no longer limited to the wealthy or risk-takers. With a wide range of options—from safe deposits to high-return stocks—anyone can start building their financial future. Choose an investment plan that matches your goals, risk tolerance, and financial situation, and start your journey toward financial growth.