"Investing Approach: Long-term, Low-Risk Strategies"

Money Goal: What is your investing approach?

 

Hey everyone!

 

Instantaneously, Week 8 arrived. The Easemydeal Money Resolution has reached its conclusion. How quickly the days pass by!

 

We'll discuss investments to wrap up this series. We like to think that we saved the best for last: a brief overview of equities, mutual funds, and perhaps even cryptocurrency. However, investment is a very broad topic, and as you are aware, our space is restricted. Therefore, we won't provide an explanation of the various investment types. Instead, we'll get a bird's-eye view of some of the items that will be beneficial to you as you begin your investment journey.

 

How long will the workout last?

 

a half-hour.

 

Yes, the journey will be brief.

 

Ready? Here we go with Resolution !

 

Don't just do something because it's cool.

 

Everyone can recall their very first. It was Aarti for me. Industires Aarti.

 

I bought it as a rookie investor in 2014. I had just completed my master's program and was having a job interview with a financial management firm. I wanted to impress the people there by using my recently acquired expertise in equities research. Aarti got my attention when I was looking at stocks that were being discussed on online forums. After doing my research, my "spreadsheet" informed me that the stock was undervalued. After three months, the stock had increased by 50%. I swore at myself.

 

Isn't it a fantastic tale? My first multibagger stock: a genuine story.

 

And tales are what stock investing provides for us. People are drawn to the stock markets because of that. A compelling tale and the allure of rapid cash!

 

But consider this. I left out certain information from the article. the section on luck! Because I knew nothing about Aarti Industries even when I purchased the stock. I had little knowledge of the specialty chemicals market. I was fortunate and made money.

 

Also, I only provided one instance in which my abilities—read: good fortune—were evident. I omitted from telling you how I suffered losses in other equities I had acquired over the years. And most individuals will resemble me. They'll entertain you.

 

It's tempting to jump in and try our luck as well because we only hear about the fantastic stock picks that our friends (or those on Twitter) make. We aspire to coolness. And it's all right! The one thing you must keep in mind is that your stock market exploits should not jeopardize your retirement savings, your child's college aspirations, or your parents' healthcare coverage.

 

So, here are a few things to remember.

 

Become informed. I advise you to read Zerodha's Varsity. If you want to learn how to understand a company's balance sheet and P&L statements, this is a fantastic place to start.

 

You'll have to cope with dreadful immediate losses. An owned stock may occasionally decline by 50%. Your fortune is lost by half. If you

 

2. Boring is OK

 

Warren Buffet and Howard Marks are frequently cited by those in charge of managing money at mutual fund businesses. They will explain how Peter Lynch or Benjamin Graham have influenced their approach to investing. It will be everything you want to hear as an investor.

 

But the fact is this. Those advertisements shouldn't signify anything to you. I have news to share with you, my friend. When they "pick" major stocks, 86% of Indian fund managers fall short of benchmarks like the S&P BSE 100! Over a 5-year span, too. You can already see how difficult it will be to choose a straightforward mutual fund, let alone choosing equities.

 

The "perfect" fund may not exist, so perhaps avoid looking for one. You don't have to invest in the best-performing stock from the prior year. Choosing not to invest in a "Global Metals and Mining Fund" is acceptable.

 

Your financial decisions should be driven by one question: Will I toss and turn at night wondering if I chose the "best" fund manager? The other option is to just purchase an index fund for the stock market. These funds merely purchase any stocks that are included in an index, such as the Nifty 100. No fund manager is attempting to impress you with their outstanding stock selections.

 

Consider index funds as the reserved members of the financial community. They lack flash. They don't wish to mingle with others. They simply want to focus on their work and keep their heads down. And you require those to achieve your long-term objectives.

 

We're not talking about "safe" index funds, just so you know. They also buy stocks. So keep in mind that it should only be spent for your long-term objectives.

 

What about investing for short-term goals, you might be asking.

 

Okay, so investing in fixed income through mutual funds ought to be simple. It should ideally resemble purchasing index funds for the stock market. But it's not. For starters, there is language to understand, such as how the concept of duration may effect returns. And despite our best efforts, we are all accustomed to fixed deposits. With an FD, we can simply invest after selecting a maturity that fits our objective. There is security. There is constancy. The interest is there.

 

Regrettably, fixed income mutual funds operate differently. Even while index-like fixed income funds have already appeared, the situation is still somewhat complex. Thus, it would be advisable for you to take your time with your study. Or hold off till we write a thorough article about them.

 

3. There is no room for greed at your dinner table.

 

Cryptocurrency investments made by your neighbor are paying off handsomely. Your acquaintance invested in a stock after receiving a tip, and now they are sitting on a lot of money. And here you are investing in mutual funds, which is a dull thing to do. You believe that your investment life needs some spice. You watch for a cryptocurrency-related tweet from Elon Musk. Or you can request a stock recommendation from a friend.

 

But here's how I want you to consider the danger of giving in to these pressures.

 

If the wager succeeds, you might put a deposit down on the vacation home of your dreams. Sunshine and butterflies abound in life.

 

3. There is no room for greed at your dinner table.

 

Cryptocurrency investments made by your neighbor are paying off handsomely. Your acquaintance invested in a stock after receiving a tip, and now they are sitting on a lot of money. And here you are investing in mutual funds, which is a dull thing to do. You believe that your investment life needs some spice. You watch for a cryptocurrency-related tweet from Elon Musk. Or you can request a stock recommendation from a friend.

 

But here's how I want you to consider the danger of giving in to these pressures.

 

If the wager succeeds, you might put a deposit down on the vacation home of your dreams. Sunshine and butterflies abound in life.

 

But what happens if things worsen? Then you'll not only have to give up on your early retirement plans but also be ready to work another three years at your 9 to 5 job to make up for the money you lost.

 

Are you satisfied with the compromise?

 

No? Then perhaps you shouldn't invest all of your savings in cryptocurrencies. So long as you have to.

 

I have a secret for you.

 

It's not truly a secret, though. But if you follow this advice, it will be difficult to fail in achieving your goals—at least the long-term ones:

 

Purchase index funds

 

Make your investing automated. Create SIPs. and annually raise the SIP

 

ignore the markets (it's difficult, but try it)

 

When your ambitions are within reach and you want to shift your money to safety, only sell.