In the last blog I talked about some basic things about stock market. Like How To Invest In Stock Market – what are the basic things required to enter into the stock market. You need to know about Nifty 50, Sensex 30, demat account , Types of brokers and what not. I will suggest you go through the previous blog then come on this one so that you may understand the whole concept thoroughly. Now the real question is you need money to invest ! right. Now How much money you require to get started into the stock market.
Money is not an issue you can start off with Rs 500 as least as possible in stock market. The thing here is the more money you invest the more likely you will get the return. But the given condition you need to invest in good company rather than going for the penny stock.
Now what people do is they think they will just invest Rs 500 to start with and end up buying stock a penny stock like nse idea. Do you really think it is good company to invest? No of course not. In the end they will lose the that Rs 500 to a smart trader (operator) and they end up saying.
Ye to Jua hai Jua. Ye stock market toh hai hi
Nashediyo ka khel !!!!
– An Idiot Investor
Well seriously bro ? you don’t even buy vegetables from an another vendor – “subzi chotu ki dukan se hi leni hai woh hi ache rate par deta hai.” and you buy stocks with your hard earned money because someone gave you a tip to buy that one. People don’t do even research before buying any stocks. That’s the problem here.
Learn how to Invest In stock Market
First of all study the markets. Then you come up with a conclusion that which stocks you have to buy. You need to understand first what is trading and what is investment.
- Trading means you will buy and sell shares on frequent basis with the help of indicators , candles and technical chart.
- Suppose I buy 1000 shares of nse Infy at Rs 30 and as soon as the share gains upto Rs 1 I sell those shares on that particular day probably known was Intraday Trading.
- Maybe you will sell tomorrow or day after tomorrow and that is known as BTST – Buy today sell tomorrow.
- You don’t believe in long term investment in stocks and as as soon as you get some profit you will sell those shares.
Lets take about Investment now!
- In investment you keep your money invested into that company for longer periods.
- Maybe 2-3 years of time period.
- You don’t sell those shares as soon as you get some profit.
- You enjoy the dividends paid by the company – company gives some profits which they have earned in that quarter or year to their share holders.
- Don’t sell the shares even if you are in 10-20 % loss
- You don’t observe or see the market everyday.
- You invest your money in the company and you believe in the growth of the company.
Trading is like – 100 meter race while Investing is like marathon.
You have to to decide what you want to be ? but mark my word I have never seen a Rich trader. People like Warren buffet , Radhakrishna Damani , Rakesh JhunJhunwala have created their wealth on longer horizon of time.
Tips On How to Invest In Stock market
Now Here is a example how you can start your investment in stock market. with Rs 10000
First of all stop buying penny stock !! Concentrate on Large Cap Stocks only as beginner. Now why I am telling you this is large Cap companies are established companies. They won’t go Bankrupt easily. They will pay you good dividends time to time. Only the problem the prices is quite high. But still it is more safe to invest in large funds rather than buying a penny stock like Rnaval share of Anil Ambani.
Moreover Large cap stocks will easily give return of 10-15 % On yearly basis. That is more than Fixed Deposit , or Bank Interest.
Disclaimer – The prices are taken from 29th May 2020
Here is portfolio for you to invest Rs 10,000 every month [ Sip ] in stock market. Don’t go at once. Invest slowly in markets.
- 1 X Reliance Industries at Rs 1464
- 3 X Axis Bank at Rs 384
- 3 X ICICI Bank at Rs 331
- 2 X Infosys at Rs 691
- 1 X TCS at Rs 1972.35
- 5 X ITC ar Rs 197.35
- 1 X Hdfc Bank at Rs 951
- 1 X HDFC at Rs 1658
If you add up the numbers the total sum will be around Rs 10,557 slightly more. Now this is an example of how to diversify your portfolio in the stock market. There are companies belonging to banks, FMCG, IT , OIL , Telecom. So even if one sector is doing bad suppose the banking sector then IT , FMCG will cover it for you. To be precise you have to make balanced portfolio in the stock market. Remember one thing don’t try to be rich quick.
Moreover these are heavy weights in the Nifty 50. They have more weightage in Nifty 50 than other companies listed in Nifty 50. So if they move so will the index of Nifty 50. As a beginner only invest in big companies then after spending around some time in stock market you can look upto mid cap companies then small cap companies.
Long Term Investment Plan
Large Cap – Market capitalization is over 1 lakh crore – eg – nse infy , nse hdfcbank , nse icici etc. These are relatively safe to invest comparing Mid cap or small cap companies
Mid Cap – Market capitalization is over 8000 crore – eg nse voltas , nse muthoot finance , nse mindtree etc . Safer than small cap companies but have a certain amount of risk comparing to Large cap.
Small Cap – Market capitalization is less than 8000 crore – eg Vip Indutries , Safari Industries etc.
The more risk the more gain. Small cap companies are more volatile comparing to Large cap and hence if they get converted into mid or small u can become a crorepati overnight. So as a beginner I suggest you don’t go for small cap companies instead go for large cap. The return will be around 10-15 % per year but as a a investment it will be safe.
Now you can call nse infy a multibagger stock. See how the chart is going up with increase in time. See I just want to convey one message to you all. Don’t go for the short term investment plan. Go for long term investment plan in stock market.
You can check out this video for more!!
In the next blog we will talk about how to trade in stock market , what is multibagger stock , Invest in mutual funds. Tell me below in the comment section which companies do you think will be next multibagger in next 10 years.