For a few months till now, I have been having a lot of discussion with many of my friends on stocks, share price and about finance in general. See, a lot of people in India are not financially literate. In fact, India hovers at around 24% in financial literacy rates, which compared to 55 per cent in developed countries, is woefully insufficient. I too would consider myself among the unfortunate 76% illiterate in finance. But things have changed a bit in the past 1 year. Our life revolves around a lot of things related to finance and hence it is incumbent upon all of us to educate ourselves with regards to things related to money. I have previously written a post about how important it is to be financially literate, you can find it here.
Basic points to act upon while being in 20s and 30s
Lack of knowledge in money, loses money. We are unable to save, and even if we save, we are not able to invest it further to make it grow. Now, these are the points which hurt us a lot. We may not be earning much, but if we are aware of things which I am going to mention now will help to alleviate the money problems.
- Start saving. No matter how tough the situation is do save whatever you can
- From the part of saving, keep investing your money
- There are several places one can invest money on. Mutual funds, real estates, PPF, Fixed Deposit, Stock market, etc.
- To me stock market is best place to put your money in. Because for others we need more knowledge and in some case we need more money. In stock market, we may even start with 200 INR or less
- Play a long game. Invest for long term - don't even think about getting back the money before 10 years. Power of compounding will take effect and you will be surprised. Experienced people say that compounding is the 8th wonder of the world
Why to invest long term?
- No need to track the stocks regularly
- Tax benefits
- If you don't sell every now and then, you save a lot of transaction fees
- In the long run, worrying about loss fades away as its proven without a doubt that Indian market has grown over a period of time(factually beyond 7 years, it has surely given profits)
Once you make up your mind that you're going to invest in stock market, what do you do? Of course you need a demat account from where you can buy and sell your shares. There are several stock brokers which provide demat account, few of which I am listing below. Charges of having an account is different for different brokers (check out the cost online - freely available in several places including YouTube).
Zerodha
Samco
Upstox
5paisa
HDFC, ICICI, Motilal Oswal, etc. also provides demat account. But, I have preferred Zerodha for my demat account as the charges are very minimal to none. Complete tutorial to open stock investing brokerage account | Ankur Warikoo Hindi - YouTube
Once you have finalized the stock broker, next step would be shortlist the company in which you would invest. Again, there are several ways to shortlist that and I would highly recommend you to learn that on your own. Do watch some videos on YouTube, there many good presenter who have done a great job in making it easier for us common people.
Few tips to identify a good company which would grow in the long run and hence give good returns:
- The company should have been in existence for at least 10 years
- The revenue growth should be at least 10% year on year
- Market capitalization (price of stock multiplied by number of stock of that company) should be more than 100 crores
- The company should have good brand value
- The company should have a competitive edge
- Understand the business and make sure you are aligned with the company's vision and mission
You should also check for other fundamental details of a company before shortlisting a company. This video would be very helpful - Investing In 20s Simplified | Top 3 Tools For Fundamental Analysis Of Growth Stocks - Ep. 3 | 2021 - YouTube
There's a free stock market classes, do watch it here - Playlist by Pranjal Kamra
I have shortlisted few stocks, which I have invested in and also plan to invest in future:
- Hindustan Unilver
- TCS
- Reliance
- Infosys
- Mindtree
- IRCTC
- Pidilite
- Nestle
- Zomato
- Asian Paints
- LT
- DMART
- Titan
- Relaxo
- Deepak Nitrate
- Navin Fluorine
- Laurus labs
- Ultratech Cements
- Marico
These are just few among 1000s of companies listed in the stock exchange. As advised earlier, do your own research, get comfortable and invest long term.
Do reach out to me on Twitter if you have any questions.
2 yorum:
Nice article . Agreed with you.
Beautifully explained..
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