I've retained the phrase "Mom Dad se sikha" for two reasons.
1) If I will to my child the full sum of money (Laxmi) I have amassed over the course of the past 15 years of my business. He might use it in a year or two when he is an adult. But if I impart the wisdom (saraswati) I've gleaned over the previous 15 years. By doing so, he will be able to assist several families in addition to himself. The fact that everyone's life is unexpected and that he is too young to understand it all. So it makes sense to start sharing right away. I hope he reads when he gets older.
2) To earn a living for the following 25 years, we spend 25 years in school. age range of 25 to 50. What about people 50 to 75 years old? Do we make an effort to learn about money during those 50 years?
So that I wouldn't have to rely on school to support myself, my parents provided financial education at home, including lessons on the stock market, savings, and financial independence.
"Don't put money or effort where you lose mental serenity," they always advise. Therefore, when I was unhappy with my engineering work, they encouraged me to leave.
Many people invest money in the stock market in order to grow their wealth and find mental peace, but what do they actually get? Tensions brought on by the trump tweet, the SGX nifty, broker margin requests, sebi regulations, etc. Don't invest in the stock market if you experience peacelessness after doing so. You can only find tranquilly via education.
People are initially unhappy because "they didn't put money in the market," and once they do, they are unhappy because "their money is in the market." This reminds me of a man telling me, "My biggest problem in life is my kid not getting married." When his son got married, he said to me, "His son's marriage was his problem."
Let me begin by offering my advice in the most straightforward manner I am able to.
( Top 5 myths of Stock Market )
Myth #1
PRICE TO EARNINGS RATIOS TELL YOU WHETHER STOCKS ARE CHEAP OR EXPENSIVE
P/E ratios are simple to locate. P/E ratios are typically published in stock report. They appear to be a common topic of conversation while discussing stocks. Thus, using P/E ratios to compare equities must be a wonderful idea.
Right? Wrong!
Let's say you have two options.
Purchase a cow A for INR 5000 that produces milk worth INR 500 (i.e., an earning) (i.e. Price)
P/E for COW A is 5000/500=10
Purchase a cow B for INR 20,000 that produces milk worth INR 1000 (i.e., an earning) (i.e. Price)
P/E for COW B is 20000/1000=20
Someone will buy cow A, based on PE ratio. If another factor comes to light, such as the knowledge that cow A is an old cow and cow B is a young cow. One could pick cow B. If more criteria are made public, the decision can also change.
Would you choose to purchase KARNATAKA Bank over HDFC Bank if you were told that KARNATAKA Bank had a P/E of 3 and HDFC Bank has a P/E of 19? You might, but you shouldn't feel at ease choosing that course of action. Why? because you require further details.
Because of this, most investors—even professionals—don't even start to consider a stock's underlying worth! They use inane techniques like comparing P/E ratios.
Myth #2
YOU MUST ASSUME HIGH RISKS TO MAKE GOOD MONEY IN THE STOCK MARKET. MARKET IS NOT CASINO
A woman recently said to me, “I’m just scared to death of stocks. I can’t afford to lose my hard earned money.” The perception of high risk in stock investing is not totally without merit. Many investors have lost 6 substantial sums of money in the market.
The Great Crash of October 19, 1987, the Bear Market of 2008, the Flash Crash of May 10, 2010, the recent Corona crisis of 2020, and the drawbacks of High Frequency Trading are contemporary market events that have also contributed to the casino-like perception of stock investing. This is regrettable because "stock investing is one of the best opportunities the average individual has to build significant wealth." It only needs some dedication and a few basic methods. In comparison to investing in real estate, antiques, or your own business, it can really be much safer. Here's how to invest profitably while minimising risk:
1. Invest in stocks whose profits growth is steady and predictable.
2. Invest in equities with profits growth rates that are higher than the present inflation and interest rates, or at least equivalent to them.
3. Avoid investing more than 10% of your total assets in any one investment.
4. Limit your stock ownership to two shares per industry.
5. Avoid entering the market quickly. You should space out your investments.
6. To lower risk, use stop-sell orders.
The safest stocks to purchase have predictable, consistent earnings growth. They represent the best-run companies in the entire world. Within five years, the value of a stock portfolio with average annual earnings growth of at least 14% has a fair probability of doubling. In 20 years, it will have increased by 1,500 percent.
Your overall portfolio risk would be 10% if you purchased 10 stocks and used stop-sell orders to limit your loss on any one stock to 10%. Only 1% of your portfolio is at danger if you buy one stock. How many investments come to mind that offer stocks' upside potential while carrying so little risk?
Myth #3
BUY STOCKS ON THE WAY DOWN & SELL ON THE WAY UP
According to an old proverb, buying low and selling high are the keys to success in the stock market. Of course, that is an undeniable fact. The main issue is that many investors erroneously believe that if a stock's price is declining, it is at a low, and if it is increasing, it is at a high. They consequently purchase equities on the decline and sell them on the rise. There isn't much an investor could do that would be worse.
The belief that stocks will increase leads people to purchase them. This expectation is being met by a stock if its price is rising. It is defying that assumption when the price declines. So it makes sense to purchase a stock when it is appreciating in value. In addition, when a stock's price has surpassed an earlier high, that is one of the finest moments to buy it. There are no disgruntled stockholders holding onto their shares at this time. A smooth ride should be in store if the stock is reasonably valued.
Myth #4
STOCKS ARE A HEDGE AGAINST INFLATION
Stockbrokers and salespeople for mutual funds have been claiming that stocks act as a hedge against inflation for many years. They are and they aren't, I suppose. Depending on how you view it, maybe.True inflation hedges are assets that appreciate in value as inflation rises, such as gold, collectibles, or real estate. Inflation, however, is the stock market's number one foe. There are two things that occur when inflation increases along with interest rates. Investors first ask, "Karan, why should I buy in stocks when I can make all that money on high interest rate bonds?" The outcome of their exit from the stock market is a decrease in stock values. The next thing is
Therefore, stock prices decline as a result of their withdrawal from the stock market. The second issue is that corporate expenses are rising. As a result, both company earnings and stock values decline.
So why on earth would anyone claim that stocks are an inflation hedge? It's because they can grow their stock portfolios' value faster than inflation will consume it. All they need to do is invest in stocks with profits growth rates that are higher than the product of long-term interest rates and inflation. When they do that, the stock price will increase more quickly than the rate of inflation. By staying ahead of inflation, they will also be able to control it.
Myth #5
YOUNG PEOPLE CAN AFFORD TO TAKE HIGH RISK
This might be the cruellest and most dumb myth on the market. Everyone is aware that seniors shouldn't take risks. Since their earning potential is constrained, they must be extremely conservative. They simply cannot risk losing their money! Who made the decision that young people could afford to lose their money, though?The young should be the most careful with their money. They require money to begin a family, buy a home, furnish it, put money down for the future, and countless other things. Additionally, young people typically make less than average salaries. They have a pitiful amount of spare cash.
However, time is a precious resource that young people have on their side. They don't have to take a chance. They can put their money into tried-and-true businesses that consistently generate profits. Their investments will double every seven years at a growth rate of 10%. When their child leaves for college, that initial secure investment has grown by an eightfold factor.
You can afford patience when you have the time. In the market, perseverance pays rewards.
Stay connected
Next blog soon about
My 5 secret weapons of stock market
-1) Mentor:
How a good mentor can save 10 years
- How to find good mentor
- Simple step to find a person/friend is truly a stock market genius or fake. ?
- How to filter Gnani and Dhongi.?
2) Time: How to trade time in your favor
- How to develop Passive strategies in market?
3) Mindset: Power of thinking big and having bigger goals
4) Knowledge-
- Simple analysis of psychology and long term investment ( NO TECHNICAL OR FUNDAMENTAL ANALYSIS )
-Simple way to How to find demand and supply in stock market
5) Connections- As they say network is big networth
How to connect with more people to increase your Laxmi and Saraswati.
