As more people are gaining exposure about investing into capital markets, more attention is being paid on how to start their first investment. Most of them include millennials. Youngsters who have their savings and want to invest it. Some want to be aggressive investors while others want to be conservative.
Risk factor differs for every individual. As a rookie, one must always try to protect their capital and then go for profit. Risk-reward ratio comes afterwards once you know how investing actually works.
Covid-19 pandemic led the stock market to a crash. But this crash didn’t last long enough as markets are back on the recovery track. For investments, this might be the best time. So, as a beginner, how should a millennial plan his/her portfolio?
Here a few points to consider:
- Choose from Nifty 50 stocks
Nifty 50 is the benchmark index of National Stock Exchange. It consists of India’s largest 50 companies listed on NSE. Choosing from Nifty 50 companies reduces default risk for it can be said that these companies will grow at a good rate over a period of time.
- Buy Large Cap Companies
Large Cap Companies are often exposed to less volatility and market speculations. These companies are considered to be mature and stable investments. They offer good dividend payouts.
- Diversify your investments
Always try to diversify your investments. Don’t put all your capital into one single company. Pick up stocks from multiple sectors and balance your portfolio. This would make your portfolio less volatile and grow over a period of time.
- Avoid tips from other people
Educate yourself first. If investing in some company, get a background check done and know the history of the company. Avoid tips even from experts. Unless you are sure that your investment will generate profit, dont invest. You may take advice but not blindly follow them.
- Have realistic expectations
Stock market is not a money making machine. It takes its own time to give returns. Don’t let emotions take control over your decision-making skills.
The Bull Market has probably started. Here is Nifty’s performance for the past one year:
Nifty has recovered 3000+ points in last three months. The upcoming years would be great for investments. Start today!
Here is my personal investment portfolio which I would like to share.
This is an equal-weighted portfolio that I created on 26th June 2020.
On 6th July, I added BHEL to my portfolio.
Returns as of 7th July are:
Asian Paints +4.00%
Bajaj Finance +15.24%
Hero Motocorp +7.89%
Tech Mahindra +4.41%
Overall Portfolio = +6.52%
In conclusion, I would like to say that one should not directly jump into investing with half information. Know your risk appetite, set a goal and follow discipline. Be patient now and bear the fruits in the future.
Thank you for reading!
Finance graduate with a strong desire to understand the complexities of financial markets. I make financial judgments for my investments based on the information I gained during my academic education. I write articles about financial literacy for dstreetanalyser.com in order to promote financial literacy among the general public.