Become a Smart Investor today!

We all are very concerned about how we invest our money…and rightly so! At the end of the day, we want to see our money grow. However, at times, our sheer lack of knowledge doesn’t allow us to invest wisely. Sometimes, as the video also shows, we are adamant or superstitious and don’t want to learn the new methods of managing money. So, we go with the traditional forms of investments like Fixed Deposits, Public Provident Fund, without realizing that there are much better options out there with the same level of safety. Financial Markets have grown tremendously over the last couple of decades, and so have the investment avenues – even the safer ones.

My parents too invested in these well-known modes (collectively called Fixed Income or Debt Market) for many decades and also advised my sister to go with them when she started working early last year. However, with my management background and practical experience while working with some of the renowned Investment Banks in the world, I made sure she took the best way – that of investing in the Equity Markets (also called Stock Markets). You might say that that is a risky proposition! Well, only when you look in the short term! If you are a long-term investor and doesn’t worry about short-term hiccups, you would never lose in the market…like I never did! And, I have been playing in the Stock Market since 2003. You only have to do your research well, and hold onto your portfolio in times of distress…that’s what I did during the recent recession.

When it comes to investing in the Stock Market, I would say do not invest directly in the individual stocks on your own unless you have done thorough analysis of the company. This requires all kinds of Quantitative and Qualitative research about the firm. Even when done so, there might still be a chance that the share price might take a hit because of any unforeseen news about the company. Better would be to diversify your investments across stocks (shares) and the best way to do so is via Mutual Funds.

A Mutual Fund (MF) invests in a collection of stocks from a particular sector based on the theme of the Fund. For e.g. I have investments spread across Pharma, Banking, Auto and a few other sectors via Mutual Funds from Birla SunLife, Reliance, and a couple of other fund houses. If you are not sure about any particular sector, invest in a fund that diversifies your investment across Sectors. That way even if one sector is not performing well (say because of Government regulations), your portfolio will not go down much because of the better performance by other sectors. You can also choose to invest in a fund that mimics the standardized fund that trades in the market (like NSE Auto, NSE IT etc). There are many options available based on your interest…you can reach out to an Adviser from the Fund House you chose to invest in.

An important aspect now arises as to when to invest, since you never know if the market is at the peak or bottom. There are many factors driving the markets, from economic policies to the political climate to international regulations, and many others, which keep on changing every minute. An ideal way would be to invest over time, so the averaging effect comes into play. That essentially means that your investments when the market was at peak and bottom will average out, thus not impacting you much. This form of investing is achieved through Systematic Investment Plan (SIP). Majority of my portfolio is via SIP in the funds mentioned earlier. Every month, my Demat account (you need this to invest in markets, banks and fund houses provide it) takes off the specified money from my account and invests in these funds I have purchased.

So, that’s how I have played smart and made money over the years. For best returns, if you are young like me, keep majority of your investments in Equity Markets and a small portion in Debt Markets.

The starting point is to know the basics, or #JanoTohMano as the video says. Once you are ready, a fund house like Birla SunLife can help you out with the rest.

34 thoughts on “Become a Smart Investor today!

  1. I think it’s wise to invest in stocks or mutual funds after taking the time to understand them and study them closely. That’s when we get more information and more confident. Hurrying up with investments may not be a good idea.

    Destination Infinity

    Liked by 2 people

  2. I have zero investments and whatever I had went kaput in the recession. .

    The biggest problem I find is where to invest.. why can’t someone tell invest here .. I can understand the risks etc are there but still need someone to say put some money In this or that..

    I mean everyone want to make money so why can’t a person who has had experience and made some money tell me bik put some money in this fund.. easy peasy..

    Liked by 1 person

  3. I have been a banker for more than 30 years and knowing the subject in depth am surprised to see that some person dont have investments worth for appreciation. In fact all investments have potential to grow but as an investor we cant afford to close our eyes after investing our hard earned money. A large number of companies offer high returns as compared to the banks and its not difficult to chose the best in view of their past performance and credit rating. Some Mutual Funds are paying handsome returns since inception and we can put our money to grow safely in these funds

    Liked by 2 people

  4. I never paid attention to investments and tax planning until a few months back when I had to look up at options. There are so many ways to confuse potential investors but yea, we need to study each and every option and carefully consider the pros and cons. My parents have invested in stocks as well so I was able to relate to it. Thanks for explaining it so clearly!🙂

    Liked by 1 person

  5. Your post reminds me that I have been spending a lot these days. But the difference now is that I am aware and am guilty that I am spending, unlike two years back, when I had no inkling about the value of money.
    I have a bank account where I save money for the time being. Maybe after marriage, I would go further and start investing. Thanks for the brilliant write up. It did enlighten me on few shady areas.

    Liked by 1 person

  6. The worry I have these days is that stock markets are being manipulated way too much by big traders with the power of algorithms, money and collaboration. So, in theory, equities may give higher returns but the risk has increased way too much for retail customers. To my way of thinking, raising money from retail investors is easy money for the big boys to play with. Best to stay away till sanity returns to the world of finance, business and politics.

    Liked by 1 person

  7. This is really nice post. I am at the beginning of my career and I have yet to invest money in MF but I feel that it is worth the risk if you can do a little bit research and study the market before making the plunge so the risk won’t be a blind one.

    I have invested in debt markets till now, will see about MF & Stocks too…🙂 Thanks for writing about this.. Now i know there’s someone who can I can talk with about this things😀 hehe

    Liked by 1 person

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