The Art Of Investing
Don’t invest in share market. You will lose all your money. It’s like gambling. Avoid it.Basic Average Indian Household Mentality
You might have heard a lot of statements like the one mentioned above. Ever realized why people say so?
Reason is: People listen to stories of others, both good and bad ones. But what they remember are always the bad ones and carry it along with them.
Individuals want to live a good life with proper job, steady flow of cash and manage their income in such way that spending should not be a problem. But being dependent on one source of income is not solution. People must realize that job stability is not always confirmed. If you are employed, it is possible that something might happen and your company might sack you. After Covid-19, everyone must realize this and think about a passive income source that would help you in times like these.
So instead of saving every month, people must invest it somewhere. A question arises that what is the safety guaranteed for my investments, which is very practical. Your investments are never guaranteed unless invested in government securities or banks. But the rate at which these investments grow every year, is very low. Indeed, safety is guaranteed, but for better returns, you would have to invest hefty amounts.
If starting early, one should definitely invest in stocks. The intention must be to get good returns in the long run. But greed is what drives people to get rich quickly. The result is that they end up losing what they have invested. This bad story is now passed on to other people.
When you are investing in a company, you must think as if you are the owner of the company and the reason why you are investing your money. You must follow the company’s vision, business idea and its future plans. If you think that the company will survive and expand its business in the market (in long term), then you should invest your money. Because as the company starts making profit year after year, its share price value goes up and there is an increase in the value of your investment. Finding good companies is not rocket science. Anyone can start following financial news for 1 month and come up with 10 companies to invest. Rate of return would differ but capital would be protected. The calculation of future value and additional risk should always be consulted with an expert.
If you think that you dont have money to invest or your income is too little for investing, then there is something wrong in the way you are managing your money. Either you are making additional expenses or you are losing track of your money. To avoid this, simply separate 10% of income and keep it aside. Now remaining 90%, you consider it as your actual income and start making entries of your spendings. Within 2-3 months, you will realize that you have started tracking your expenses automatically and then, you can invest more portion of your income.
A person can start slow, but over a period of time (15-20 years), the slow growth would result in a massive wealth tree. This growth can be given only by markets and not by any bank.
Take this example:
Investing Rs 1000 for every month for 20 years at 15% average annual growth would result in a sum value of Rs. 1311707. The amount which you would receive from bank investments is half of what you get from markets.
I have a point of view that if you’re planning/wish to invest right now, it can be the best time considering the Covid situation. Not only our routine but this virus has affected the markets and the financial health of the country as well. But, because of this the securities prices are also knocked down which gives you the ability or we can say opportunities to park your money with less investment.
If are ready to invest, but need a quick help on choosing the correct investment avenues, write me up here and I will be happy to connect with you.
Thank You for Reading!