This article is for those, who is thinking to save but doesn’t know where to start. I want to present this topic in short form and long form.
Investing Journey – Short form
- Step 1 : Create your demat account from any broker (Eg Zerodha) of your choice
- Step 2 : Start with mutual funds
- Step 3 : Select balanced funds like Parag Parikh (don’t consider this as an investment advice) and start your SIP. The amount you are investing should not be from the funds which are needed in near future. Always do the SIP with funds which are not required for another 3 to 4 years
Don’t expect the SIP to grow crazily. According to the history, the annual returns you can expect is 12-15%. This way you can start with mutual funds and then go to Individual stocks basis on your analysis.
Investing Journey – Long form
This can be done in many ways. Below is only my thought on what I felt can be the ideal path
- Start with – what is stock market?
- Once you are familiar with the above, understand fundamental and technical analysis, check out my article on how to do fundamental and technical analysis
- Stock market will go up, if everyone thinks that next quarter results of all sectors on an average increases. So not every time, all sectors grow. Which brings us to understanding of which sector will likely to grow in near future. For this you need to understand macroeconomics – meaning which reforms government is planning or is there anything that is trending that is happening. As an example, after covid, India is placed as China + 1, and we are asking all foreign companies to setup their manufacturing facilities here. When it happens, then manufacturing sector as whole will grow, there by all the publicly listed companies in that space will also grow, which in-turn will drive the stock price.
- Understand what is happening around as well is also important, you can find good companies in your day to day activities itself. As an example, right from when you wake up, you use a product which is from HUL, (you can do this as an exercise of the products which you are using through out your day and map it with a company), you can figure out a good company by yourself.
- Lastly follow management commentary of a company, which will be announced along with results. Which tells us whether the promoter is honest in keeping his word.
Final thoughts
No matter which ever path you take, it will take minimum 2-3 years time for you to understand the markets as all the global markets are interconnected.
Now that we have seen this, please check out the salary recommender tool here to know how much is recommended to save and how – Salary Recommender Tool