With endless avenues available in the market, it is common for first-time investors to feel puzzled when it comes to investing their money.

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Hence, it becomes essential for them to have an understanding of each instrument and a good knowledge of the risk that comes with it.

Although traditional instruments offer safety, if a beginner has long term goals, it is better to invest in a way that it helps to beat inflation and generate decent returns, experts opine.

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What percentage should you allocate to each investment?

According to Abhinav Angirish, founder of Investonline, beginners should always choose schemes that complement their financial goals.

"The idea is to make money work at all times. A good mix of investments can protect the portfolio from volatility. Successful investing depends upon the right asset allocation and sticking with the investment plan," he says.

Here are some popular investment options first-time investors can choose from:

Fixed deposits (FDs)

According to Palka Chopra, Senior Vice President at Master Capital Services, fixed deposits are the safest option to park savings. “First-time investors should definitely lock some portion of money in a FD and choose a proper duration for it,” he recommends.

Mutual funds (MFs)

As per Chopra, mutual funds are an excellent investment option for everyone irrespective of age and income as they offer ease of investing, variety of funds and professional management. However, one must understand the risk factor associated with it and choose the right fund as per investment horizon.

For example, Angirish explains that equity and debt funds are best suited for building a stable corpus, while liquid funds are ideal to park money for the short-term.

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Equity

Those who look forward to investments with high returns over the long term can invest in the stock market directly.

"It is considered as one of the most volatile investment options. However, direct equity can earn profits like no other scheme, provided investors are well-informed about the market," says Chopra.

Insurance

Insurance could be a life insurance or health insurance. One can get the policy at lower premium when he/she is young and relatively healthier, according to Chopra.

Investors can also buy term insurance plans to meet the future financial goals without any financial stress.

A unit-linked insurance plan (ULIP) is likewise a type of life insurance that combines insurance and investments. A part of the premium the policyholder pays is safely tucked into a life fund and paid to the family, in case of his/her demise. The other part is invested in the market.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a post office savings scheme in India. PPF is an ideal option for first time investors because it offers multiple benefits such as low-risk appetite, tax benefits and a steady interest on the money deposited.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.