As a Chartered Accountant I often get these comments “Oh you are a CA, you know all about financial markets. Can you give us a few tips on which stocks to invest in?”
Now to clear a few misconceptions. As a CA my main area of focus is accountancy. I did study a subject on “Financial Management” but only having the theoretical knowledge does not make me an expert. I haven’t really worked in a profile which involves trading in the stock markets.
Besides my busy job schedule keeps me occupied the whole day, I don’t really have the time to monitor markets in real time. To be able to take quick decisions of “buy” & “sell” to time the market.
So it’s all about “expertise” and “time”- both factors have a key role to play when it comes to investing in stock markets. Not everyone has the expertise and despite having the same there is no guarantee that it will always work for you. I have seen many known people who have been trading for years burning their fingers badly by taking wrong investment decisions.
But this does not mean all is lost- one can still participate in the stock markets which I believe is the best place to make investments today. This can be done through mutual funds where the fund manager would take on the task of managing the investments on your behalf. The best part is you can start an investment with an amount as much as Rs.100/- there is no such cap of having to invest Rs. 10K or any such amount. Investment
doesn’t need to be in thousands always.
I highly recommend SIP (Systematic Investment Plan) which can be opted as a monthly
investment strategy. A small amount invested each month accumulates into a significantly large sum over the years which can be utilised to meet financial needs which involve a large sum of money.
I recall when I started my first job, I made my investments in 4 Mutual funds. I chose reputed MF companies and diversified my portfolio. Large cap stocks with a proven track record and growth potential is something that I looked for.
At the end of 5 years when I had to fund the purchase of my house, I was pleasantly surprised to see the amount that had accumulated due to my investments. I liquidated them and used it for down payment – I was really proud of the sound investment decision I had made a few years ago. It made it possible for me to independently fund my house purchase rather than depend on other family members and it also reduced the amount of loan I had to avail.
While most of us are wary to hand over our hard earned money to someone else, with Mutual funds it is a safe bet. It’s best to choose a reputed fund which has a proven track record. Also the investment outlook should be “buy and hold” rather than liquidate when there is panic in the market. It’s important to remember that this is a long term investment made with a specific goal in mind- such as retirement, higher education of kids, fund a house purchase in a few years. The best way to make big companies work for us is to invest in them systematically through Mutual funds.
Make sure to diversify your portfolio, invest in different kinds of funds ranging from equity, balanced, debt and above all stay invested keeping in mind your long term goal.
Making windfall gains by having a short sight can prove costly.
So don’t wait any longer- have you just started working or have been around for a few years?
Or have you never invested in Mutual funds and now it feels that you are too late. You are never too late. Start building your wealth the smart way today #TarakkiKarein.
Featured image source- Clearfunds.com