How to invest in Share Market for beginners

One famous saying in Share Market is "Don't put all your eggs in one basket"

What does it mean in Share Market?

It means your investment should be Diversified otherwise suppose you have invested all your money in one company then you are exposed to maximum risk. Because we all know what happened to 'Yes Bank'.

DIVERSIFICATION in two ways:

1. Sector wise

2. Size wise (I mean company size)

Now let's see how should we diversify Sector wise:

1. Sector wise: To make it fun let's assume that you got Rs. 100000/- from your father and he told you to make the most of it in whichever way you want to. Then straight away you should enter into Share Market to get the maximum return.  You can diversify it in following way. In this way your money is diversified among five sectors, which reduces the risk of your portfolio and increases the probability of maximum return.

Finance-  HDFC Bank, Kotak Bank, HDFC life, SBI Card -Rs. 25000/-

FMCG- HUL, Britania, Marico, VBL, Tata Consumer, Jubilant Food –Rs. 25000/-

Miscellaneous- Reliance, Pidilite, Relaxo, Titan, Asian Paints, IEX- Rs. 25000/-

Information Technology- TCS, Infosys, Tech Mahindra, Affle-Rs. 20000/-

Chemical- Deepak Nitrite-Rs. 5000/-

2. Size wise: Suppose you have Rs. 100000/- then you should diversify it in the following way

Large Cap Companies (famously known as Blue chip stocks): Rs. 60000/- 

Mid Cap Companies: Rs. 30000/-

Small Cap Companies: Rs. 10000/-

Why maximum investment in Large Cap Stocks?

Because it protects your Capital in the time of crisis. Large Cap Stocks are comparatively slow but steady in terms of growth.

Mid Cap Stocks give more return in comparison to Large Cap Stocks but riskier. 

Small Cap Stocks have high potential of growth but when any crisis comes they are the first one to decline and have the steepest decline.

So if we analyse them Return wise:

  Small Cap Stocks > Mid Cap Stocks > Large Cap Stocks

And if we analyse them Risk wise:

  Small Cap Stocks > Mid Cap Stocks > Large Cap Stocks 

If you have any query you can ask it in comment box. I would love to answer.

*This is not a Stock recommendation. Here we do an analysis, you should do your own research or consult your financial adviser before making any decision. 

Share Market and Tata Group

Hello friends,

In this post I will try to make a connection between Tata Group of companies and Share Market. Because this blog is all about Investment and Financial Management. So I will try to explain, how we can create wealth by purchasing Tata Group Companies Shares. 

We all are aware that Tata Group has a major contribution in building of our nation. I am a big Admirer of Tata. But it doesn't mean we will blindly invest in any Tata group companies. 

As I always say before purchasing a Stock do a little research on your own. You can do it on Tickertape  www.tickertape.in . 

Let's do a little Analysis (with fun facts) on different Tata Group Companies.

1. TCS - Tata Consultancy Services : TCS is Cash Cow of Tata Group. TCS is present in 46 countries with it's 250 offices across the globe. This year TCS has generated around 59% of total revenue of  Tata Group. It's one of the largest IT service provider of the world. Now let's see it's chart:

TCS share price has moved from Rs. 120 in Aug, 2004 to around Rs. 4000 in 2022 and they are buying it back at Rs. 4500 so soon it will climb to Rs. 4500. Apart from increase in Share Price TCS has given Dividends multiple times.

It means if you had invested Rs. 100000 in 2004 and waited till 2022 patiently for the magic of compounding to play it's role. Then your 1 Lakh invested in 2004 would have become around 37 Lakh in 2022. I am not counting the Dividend here.

Following is the financial trend of TCS:

If India grows digitally (which is very much on track), then TCS has to grow. Those of you applied for a Passport, would have seen that PSP - Passport Seva Program is a new benchmark in e- governance and considered a laudable achievement for Digital India. It has simplified the method of getting the Passport for common people. Like this TCS is involved in many more big projects. 

In the last 10 years TCS has given around 16% CAGR (Compounded Annual Growth Return) and expected to give the same or more return.

*This is not a Stock recommendation. Here we do an analysis, you should do your own research or consult your financial adviser before making any decision. 

2nd Company in this study is Tata Motors

2. Tata Motors: Founded before our independence in 1945, Tata Motors has entered the passenger vehicle market in 1988 but real turn around has come for Tata Motors, when they have launched the first fully indigenous passenger car INDICA.  Second mile stone was when Tata Motors became the parent company of Jaguar Land Rover and we all must be proud of it. Following is the chart of Tata Motors share:

Though it has been a bumpy road for Tata Motors in terms of financials, which affected it's share. But new Management specially Mr. N. Chandrasekaran Chairman of Tata Sons' recent statement that they will make Tata Motors debt free in three years and his future plannings in e-vehicle segment give us silver lining. It is reflected in share price of Tata Motors, you can see since 2020 onward it is on up trend. 

Now the question arises should we invest in Tata Motors. We all are aware that Mr. N. Chandrasekaran Chairman of Tata Sons is a Statesman in Corporate Community, under his leadership TCS has reached the unimaginable heights, TCS has become the world's most Powerful brand in IT Services. Now   Mr. N. Chandrasekaran's focus is on Tata Motors. He wants Tata Motors to be the first mover in e-vehicle segment. That is why Market is giving an applaud to Tata Motors.

Tata Motors has two major advantages in e-vehicle segment first it's batteries would be manufactured by Tata Chemicals and the Charging Stations would be provided by Tata Powers.            

 

Share Market for AAM AADMI

Hi,

Everyone

This blog is all about Investment and financial management for AAM AADMI. 

Before starting anything I would like to say a few thing about money.

Money provides you all the basic thing which you need to live a respectful life. Money buys you food, clothes and home (famously known as Roti, Kapda aur Makan in India). Money pays your kids education fee. Money pays your medical bills and what not. Money makes you explore the world the way you want to. 

Why I said all this about money because I want you to understand that money is not an evil in itself as it is known in our society. Money is neutral as a knife. Doctors use the knife to save the people but a murderer uses the same knife to kill the people. 

Before beginning the journey I want to set the direction very clear so that the journey should be as enjoyable as reaching the goal. Here I want to emphasize one thing that even for doing a small thing as boiling the water you need to have desire to take the pan, pour the water into it and put it on flame to boil it. So, if you want to make money then you have to have a burning desire, clear direction and definite goal.     

Your goal could be anything from as small as having good food, good clothes to as big as trip to Europe. 

Now the question arises how can one earn that extra money to fulfill all his desires.

My answer to this question is SHARE MARKET.  

But Share Market is risky!

Share Market is NOT risky if you have a little patience.      

To show how much potential Share Market has I will give one example BSE:SENSEX started in 1979 at Rs. 100/- and now it is touching around Rs. 60000/- (OCT, 2021)which means if you have invested just Rs. 100000/- in 1979 then it would have become Rs. 60000000/- (6 Crore) it clearly shows that no other investment can give you this much return. Below is the BSE: SENSEX Chart:

  Now let's see what are the other benefits of Share Market:

      

    1. Your money will be working for you 24x7 for 365 days.

    2. You will become wealthy through the effect of compounding.

    3. It will save your Taxes. 

    4. It will protect you from Inflation.

    5. It will give you financial freedom. 

If you have any query you can reach me through the comment below.