My current state is that I am broke. I am stalling my payments. I have loans to pay. Being an entrepreneur I have people to pay for. This constant state of struggle has stressed me out. Luckily instead of bursting out in the wrong decision I turned to something better. As you may know then I have recently started my journey into becoming Financially Independent. And as a first step I have invested all my money in the stock market.
There are six basic and simple steps to secure your finance. In this post, I have explained how much important it is to invest in insurance and mutual funds. Having said that still, I invested all my money in the share market. Here is my reason.
I felt that investing in share market was easy, to begin with. Yes, there is a learning curve understanding the jargons of the stock market. But after that choose the stocks is somewhat easy. To begin with, let’s take a look around us and the products we use. Many products like Britannia, Bata, Exide Batteries, Parachute Hair Oil, Airtel, Hammam Soap, IRCTC, SunTV, and PVR Cinemas are all available in stocks. And these stocks are no small companies. So investing in them for the long term will sure give me good returns. Similarly, you might have your choice of well-known brands. Do a small research to see if they are debt-free and if they are doing good.
Warren Buffet and many other investment veterans say that when you are investing in any business is like taking part in their values. If you like what they do and if you think they have a future for the next 30yrs then you should invest irrespective of what anyone says. Its because you trust the business. All business goes through good and tough times. But in the long run if its a good business then it will surely do good. So investing in the stocks is not difficult. It just takes some passion for business and trust them to do good in the long term. It is like seeing a baby grow. You just give them food and sit back and watch it grow. I have written an article on how to invest in stocks directly here.
If you do not want to go through this process of choosing stock then investing in an index fund is a good idea. Index or Indices are benchmarks that determine if a stock market is climbing into profits or rallying into loses. An index contains top companies from different sector like FMCG, Automobile, Infrastructure, IT and so on. These companies are chosen by a panel set by SEBI. SEBI or Securities and Exchange Board of India is a government organisation which overlooks financial services in India. With these top companies inside an index fund, you can be sure that you travel along with the stock market safe. It is also considered one of the safe ways to invest in index fund because in history it has always given a good average return of 10%.
For me investing in the stock market was straight forward. It is transparent and I could see what I was getting into. But the insurance or mutual funds provided by the companies are not so. There are 100s of funds and plans to choose from. Since I was giving my money to someone else and this was my first time investing I was unsure. I still am. Going through the plans documents, assessing their risk, checking the history and seeing its growth is something that was going to take a long time.
Right now because of the COVID-19 pandemic the markets are down. Roughly every 10yrs the market falls. The last was in 2008 recession. And any financial expert will say that the market dips down, its time for the long term investors to get excited. I can make maximum profit if I buy a stock at its lowest value and leave it to grow. Its the perfect time to buy shares of all those companies which I love.
I am still going to diversify my portfolio. I am still going to follow the 6 simple steps for financial security. But I will be doing it by reading all the scheme related documents properly and understanding my risk. This is my hard-earned money. I cannot just throw it by panicking. Hence all my money is invested in the stock market right now. Hope you learnt something. And if you want to if it’s better to close your loans or invest first then please click here.
Disclaimer: Also I may have a position in the stocks that I have listed here. I never recommend or suggest buying any shares written here. It’s only for example and educational purpose.