Challenges Faced by Investors:
Does anybody who is a first-time investor always have a few questions in their mind?
- Does the Stock Market mean betting?
- How do people make money in a small time?
- Do mutual funds involve lots of Risks?
- I don’t really understand the stock market very well?
Likewise, there are so many other typical challenges faced by potential investors in the stock market.
So, this entire blog is all about basic concepts and how to read the real facts of the stock market and other investment products which need to address your personal life’s well-balanced growth and unknown risk.
In our view, capital market and investing are all about seeing the unseen, knowing the unknown, trying the untried, and achieving the underachieved. However only to address this issue is to make sure how you change the way you look at your life and objectives.
What mistakes do people make while Investing?
The 1st biggest risk and mistake people make is that they never ask the question of what exactly they are buying when every single penny you spend.
Are you buying liabilities or are you buying assets for the future or for the next couple of days or for the next couple of months or years?
Normally people start their first job and on wards they start buying so many things which actually aren’t required also within a few weeks. It’s just social pressure and unsaid status to waste the money.
If someone has started the job at 23 then in the first 15 years what he or she is used to doing is buying the liabilities and up to 40s they use to pay the EMI of loans.
Without even calculating the kind of interest they give it to the lender, and then another 20 years they spend to build the assets and this is how people live the life up to 60 years and then retire.
Imperial Money feels this must be the other way round. In the first 15 years of your job first, build all the assets, and then later part you will be having time to enjoy those assets for another 40 years.
Now once you decide that you want to build the assets, at this very important moment you need the guide who will make sure that you will land up at the proper goal. At the same time, the entire journey of building the asset for your all-future goals would be smooth, safe, secure, and enjoyable.
So, find one good person who has deep knowledge of personal finance or who has been working in this industry for quite a while.
But the fact is! Most of the time we land up with product selling people who don’t even have that wisdom of investing. This is another big risk if you are not with the right, proper, knowledgeable person to reach your destination of life.
How to Manage Your Monthly salary?
Make sure you invest wisely around 30% of your income in the properly aligned products else you may not achieve the required asset-building program.
The remaining 70% of your earnings you can spend on all your requirements. Make sure on a yearly basis whatever the increments which you get that as well should also go the proper discipline way into the asset-building journey.
Whatever the portfolio you have quarterly basis it needs to get an overview and look into the asset allocation based on the value approach of that very time.
Do get an understanding of compounding and rupee cost averaging well. Because 1% plus or minus will lead to 50 lakhs to a crore positive or negative in long run.
Get to know the proper asset classes and long-term average returns of those asset classes well. The concept of real return must get known well.
Because inflation is our Enemy and you agree or disagree it will eat the pie of your earnings. So, make sure that every asset class in which you are investing should offer you real returns by excluding the rate of inflation from it.
Volatility is one very important issue that may keep you away from making money and building assets, but friends make volatility a friend of yours.
Just take an example of an ECG graph, if it is up and down on every second’s interval it means the person is alive, and if it is flat means the person is dead.
Now connect this with the market. If the graph of the market is going up and down it means it is life and it is flat means it is dead. So the graph of the market is always volatile, which means it is life, and you need to decide if you want to be with the dead asset class or the live asset class.
From 2002 till 2022 (20 years) out of all the stocks 209 stocks gave 25% plus CAGR means the wealth has been 87 times.
Now, look at the performance of the mutual funds too. Worst funds gave returns of 12.88% meaning 11 times. Average equity funds perform with 19.45% means 35 times the growth of every single rupee.
So when a reliable person means your fund manager is managing the show with just barely a small expense ratio delivered by AMC, We don’t understand why investors still don’t trust and believe in the philosophy of mutual funds.
So always cross-verify across categories and do the comparative analysis on the basis of asset classes that which asset class is safe, secure, liquid, and long-term growth-oriented for your investing vision.
Imperial Monet Pvt. Ltd. believes India is still the long-term bet of another 2 trillion Dollar economy to touch and if this happens then we feel Nifty or the Sensex will be at altogether different levels from here on-words.
If you are not in the asset class which has a proven track record and has made millions of lives wealthy, We feel this will be the biggest risk of this life.