How to invest your first INR 1 lakh? | Stock Market for Beginners - YouTube

You must understand your options,

so there are multiple ways in which you can invest in these aggressive, defensive

stocks, hedging strategies, you must identify those options.

So predominantly you have three options these days.

Hi, everyone, welcome to today's video.

So today we are going to take a look at how can absolute beginners in the stock

market invest their first one lakh rupees in the stock market.

It's a very simple video.

I will not complicate anything.

I will explain it in a very basic easy to understand language.

And I will explain this entire process in six steps.

Nothing fancy, just six steps.

Please listen to it till the very end,

only then it will make sense.

Otherwise you will learn half the things, go away

and make bad investments in the stock market.

So let me walk you through a very simple framework and a process and some

methodologies of how you can go about investing one

lakh rupees, your first one

lakh rupees in the stock market.

Now, before I explain step one, let me explain step 0 that you need

to first make one lakh rupees or create that one lakh investment pool.

Only then you will be able to move to step one.

So please make that happen.

If you want me to make a separate video

on how you can grow your incomes, please comment.

I will definitely do it.

But there should be enough interest from the community for me to make that video.

So for the purpose of this video, I'll assume that you have one lakh rupees ready

that you would like to invest in the stock market.

So let's move on to step one.

Step one is that you need to understand what your investment goals are.

This sound super complex, super financy.

But please bear with me,

I'll explain it in a very simple language. For example,

so if you are someone who is on the left

side of the spectrum, who is very happy with FD type

of returns, for example, you say that hey Akshat I own hundred rupees.

I invest it in my bank, in an FD

and I make hundred and six rupees

by the end of the year because FD returns are six percent.

So I make hundred and six rupees and I am very, very, very, very happy with that.

Your investment goal is what? Your investment goal is to make six percent

returns right. On the right hand side of the spectrum,

there are people who keep commenting on my YouTube videos.

Bhaiya teach me how to invest in bitcoins?

Teach me how to invest in bitcoins because I want to make 50 percent returns.

So there are people on the right hand side of the spectrum

also. You need to decide that how much return you are happy with.

Now, you would say that hey Akshat very dumb question.

I am happy that 500 percent return, tell me

how to make 500 percent return. But OK, let me qualify my statement.

So essentially, when you expect higher returns, you have to take higher risk.

For example, people who keep commenting bhaiya, bitcoin mein ivest karna seekhado,

those people want to make 50 percent

return, 100 percent return, 500 percent return.

But they are taking higher risks also.

So the bottom line is that No.

One, please understand what your

investment goals are in terms of percentage returns.

Number two, how much risks you are willing

to take, the higher the returns the higher the risk.

Now you might say that, hey akshat,

can you tell us what our investment goal should be?

OK, so my investment goals are that I want to make somewhere between fifteen

to twenty five percent returns every year, depending on the market.

That is the return that I have been able

to consistently make for over the years and I am very happy with it.

Let me explain why this 15 percent rule works wonderfully.

So now let me explain you by going on to my screen.

So let me tell you what rule of 72 means.

So 72 means,

so rule of 72 means that if you

divide seventy two by X, X is the percentage return that you expect.

Right.

Or the percentage return that you're making.

For example, if you're putting your money in an FD, FD returns are six percent.

So it will take roughly seventy two

divided by six, 12 years for you to double your money.

Right. This is very important.

If there is an investor like me who understands how to grow money at 15

percent rate, then what do I need to do here?

Then I need to divide seventy two by 15,

then it approximately is 4.75ish years.

Right.

So it takes me 4.75 years only to double my money.

That's one. Right.

There is a massive difference between investing in FDs where your money

grows at six percent, vis-a-vis investing at 15 percent returns.

That's one. Second

is that to make this fifteen percent

return, I don't have to take massive amount of risks.

I'll explain this going forward.

But bottom line,

what I want you to understand from point one is very simple,

that you need to understand how much returns you are trying to make.

Right.

Essentially, if you are investing in assets where

you're making somewhere around 12 percent returns, which is not super complex

in the Indian market, this is a done that you should be happy with.

This is the benchmark that I would give you.

This wraps up point one.

Now rule number two, please diversify your assets.

Now diversification of assets means

that you're investing that one lakh rupees into different sectors.

For example, real estate sectors, banking sector, energy sector, IT sector, etc.

So you're diversifying your money across

different sectors and you are diversifying your money across different stocks.

For example, if you are investing in, let's say, technology stocks,

then don't just simply pour all your money in TCS stocks.

Diversify that. Right.

A simple rule for diversification that I would leave you with is,

that never invest, never, ever invest more than five to 10 percent

of your entire capital in one single stock.

Right.

Never invest more than 10 percent of your money ever in one single stock, no matter

how confident you are that that stock is

going to up, unless you have insider information.

So especially for beginners, follow this rule of diversification

because this will help you stay in the stock market in the long run.

If you stay in the stock market for 10,

15, 20 years, you will gather so much learnings and so much experience that you

can use that experience then to make money subsequently.

But if you make a very foolish move

that you put all your 1 lakh in one stock, let's say ITC or TCS,

and if that company does something bad, all your money might get wiped out.

OK, so follow this rule of diversification.

I can't stress enough on this.

So the key takeaway here being that if you

have 1 lakh rupees, so you need to buy how many stocks?

Roughly 10 to 15 stocks.

That's it. Don't go above that and don't go below that.

Now, you would say Akshat, OK, which stocks should I buy?

So let me explain you the fundamentals.

And this is not an investment advice.

So this brings us to point number three.

Please go and buy 40 percent stocks, which are called as defensive stocks.

So what are defensive stocks?

Let me quickly show it to you.

I've explained this concept earlier also, but I'll explain it very quickly again

for people who have just started watching my videos.

So defensive stocks are stocks which do not fall massively when the stock market

crashes or there's a correction in the stock market.

And again, it does not grow massively when the stock market is booming.

For example, HUL, Hindustan Unilever is one such stock.

So let me quickly explain you the chart.

So if you take a look at the data

for the last five years, you can see that it has reasonably gone up.

Right? So it has reasonably gone up.

That's it. Right.

It has hardly shown any massive dip. When the did it show a massive dip?

It was somewhere here. What was this time? This was the corona

2020 time.

Corona 2020 crash came and a lot of stocks corrected.

But how much did

HUL correct by? It did not fall massively.

Right?

It was moving at somewhere around 2400 levels and it fell to somewhere around 1800 levels.

So not a massive correction compared to some of the other stocks.

For example,

if you compare it to aggressive stocks like Bajaj Finance Bajaj Finance corrected

by sixty five seventy percent, but HUL corrected by 25 30 percent.

So these are defensive stocks.

What are some of the other defensive stocks?

These would be companies that make

commodity like goods that we keep on consuming despite any sort of pandemic.

These would be companies like Dabur, Nestle,

ITC because we keep on using their products on everyday basis.

Now, how can you identify defensive stocks?

That's a very interesting question. So essentially,

one of the key ways in which you can understand defensive stocks or identify

a defensive stock is that their growth is stable.

That is a very important concept.

For example, if I show you the numbers

for HUL here, if you take a look at the growth of HUL,

you will see that the growth has literally like I mean, it's literally mirroring.

It has been growing by approximately 3000 crores every single year.

For example, take a look

from 2010 to 2011, roughly three thousand difference.

Similarly, three thousand difference.

Similarly, three thousand difference.

Similarly, three thousand difference.

So essentially, what I'm trying to say is

that this is a very stable looking company.

So the growth rate is also very predictable.

So this is a highly defensive stock

and you must have 40 percent such stocks on your portfolio. You might say

Akshat, Ok understood the concept of defensive stocks.

Now, can you tell me which defensive stocks should I buy?

Should I go and buy HUL right now?

Because HUL is trading at a very high price.

So I am out of HUL. I am not buying it as of now.

Whenever a dip comes, I'll repeat it again,

whenever a dip comes, you should buy it.

And here is another important rule for you to notice.

So I'm showing you the chart

of Nestle. So Nestle is one such defensive stock and it's a very big company,

a very stable company, very stable revenues, profit margins, etc.

. Now, if you take a look at the chart

of Nestle again, like upward sloping curve, it hasn't gone down.

Generally, it has been rising.

Now, if you take a look at the last one year, what can you notice?

You see this line, right?

This this is called 200 day

moving average.

OK, now, here is the rule that whenever

a defensive stock falls close to the 200 day moving average line, for example,

30th April 21 was when Nestle fell to around 16309 levels.

You should have bought it.

I bought it right because it was below the 200 day

moving average line. Right.

So if it is trading around this 200day moving average line,

200 day moving average literally means that if you take the average

of the last 200 days, what is the average price of that stock?

It is indicated by this line.

So whenever the stock gets close to this

line, buy it. If it is way above, don't buy it. Right now, you might say that Nestle is way up.

But again, you need to see the scenario

in context of the current stock market trends.

So currently the stock market is slightly high, right?

It is at an all time high.

So, of course, you will hardly find any

shares that are trading below their 200 day moving average.

Very important point to note,

because the current Nifty is trading around sixteen thousand levels.

It is at an all time high.

Of course, all the individual stocks will also be trading at a very high price.

So but having said this,

I still feel that Nestlé is at a decent position to buy.

You can consider buying it.

If you're looking for a defensive stock to aggregate. You need to do

this type of analysis for almost every defensive stock, you need to pick defensive

stocks, do this analysis which are trading around the 200Day,

moving average line, this is the simplest way of buying stocks.

You can cannot go wrong and you will not lose money on these defensive stocks if

you are buying the stocks at around that 200 day moving average line.

So just to quickly recap, rule number two,

that just simply go buy defensive stocks, identify if they are trading around that 200day

moving average line, or if you say that you know what Akshat, that is a lot of work.

I don't have time, then I would suggest one Smallcase her.

It's called low risk small beta Smallcase.

And you can look at the stock rates and portfolios.

So it has some good pharma companies.

It has Asian paints, it has Brittania, which is a defensive stock.

Colgate, Dabur defensive stocks. HUL

I talked about it.

ITC is a defensive stock. So it has a bunch of defensive stocks

and it's a good Smallcase to buy from that perspective.

The good thing about Smallcase is

that the rebalancing is done from time to time because you might say

that Akshat I can see all these stocks, I can just myself go and buy.

You can do it if you're active in the stock market.

Otherwise you simply go invest

in the Small case and you will get the notification when this rebalancing

happens and you can rebalance your stock portfolio.

So you don't need to manually track all

the changes that are happening. Point number four,

go and invest 40 percent of your money in slightly aggressive stocks.

Now, again, please change it depending on your expected returns.

This is ties into point one that I was saying that you need to define your goal.

How much money are you happy with and how

much returns you are expecting to make and accordingly take risk.

But the advice that I'm giving on point number four is for investors who are

slightly risky like me and want to make around 15, 20 percent a year.

So you go and invest 40 to 60 percent

of your money, 40 percent if you are a beginner.

So go and invest 40 percent of your money in slightly aggressive stocks.

So what are aggressive stocks? So aggressive stocks are stocks

when the market is going up,

these stocks will do really well.

They will also go up very, very high.

When the market is doing poorly, these stocks will fall like crazy.

Right.

For example, take a look at banking sector stocks.

Let's analyze ICICI Bank.

You literally analyze any bank.

And let's look at the chart for the last three years.

So you see that how much was the massive fall. So from approximately 545

it fell to 286, almost 50 percent correction happened.

This is an aggressive stock. Now when the market recovered,

so you see this line recovering, it literally touched six hundred and fifty point.

So massive jump in the stock price when the market started recovering.

So you need to have these type of stocks also to make money in the stock market.

Sectors like Bank, Small Finance Bank, for example, I am personally heavily

invested in a small finance bank called as Equitas Capital.

It has already given me massive returns and I'll continue to hold it.

I will not advise you to go and invest if

you are complete beginner because it's a small finance bank, so it's even riskier.

So you must go and invest Large-Cap.

So large cap are big company stocks like HDFC Bank, ICICI Bank, HDFC AMC,

Hero Motocorp, all these are very, very good, aggressive stocks.

Let me show you one good stock

which is called as Hero MotoCorp.

Now, I feel that this is priced at a good valuation, so you can definitely check it.

And now why am I saying it? Now

you see that 200day moving average line, it's trading.

The current stock price is trading below the 200day moving average line.

You might say that hey Akshat, you know what this might be a bad stock.

Therefore, it is trading below its 200 day

moving average despite market touching its all time high.

So let's look at the finances of this company as well.

So, it's a big company.

It's a 58346 crore company.

It's a big, big company. If you look at the quarterly results,

so the quarterly results have been fairly

stable except for June and March, these two quarters, everyone suffered.

So this company also suffered.

But results have been fairly stable.

If you compare it to 2018 numbers 1400 profit here, they're making 1200 profit.

Net profit was 1360. Here

the profits are somewhat stable.

Now, what was the price in back in June 2018.

So let's quickly check right back in June 2018

what was the price? So let's go here.

So back in June 2018, the price was trading at 3319

and now it's trading at 2919.

Right, despite the market attaining new height.

So I do feel that this is fairly priced, this is somewhat fairly priced.

And this can be considered. Again,

not an investment advice, but this is a simple methodology that you

can use to identify good aggressive stocks and add it to your portfolio.

Now, there's one final point that I would

like to tell you about investing in aggressive stocks.

So there are three things that you need to keep in mind.

So first and foremost, the aggressive stocks would have a very high market cap.

So on here you can see that Hero MotoCorp

has a market cap of fifty eight thousand crores.

It's a big company.

It's not a very small company in which we are investing. No.2

the debt should be low. Why? Because right now the market is very high.

Everything is going hunky dory.

Even if you buy high debt companies, it's OK.

But whenever the market falls, companies which have very high debt

that have taken on a lot of loans, they are the first ones to go under.

Right. So that debt should not be high.

So this also meet our criteria and then return on capital employed,

ROCE should be high.

Anything above 20

is considered to be decent.

Especially for automotive, manufacturing type of companies, so 25 ROCE

also means that how is the company utilizing its capital.

For example, if I go and give Hero MOTOCORP 100 rupees to invest on my behalf

how much money is it going to make?

So it is going to make 125 rupees because the return

it is generating through its venture is 25.3%.

So keep these three points in mind, if the company exhibits all these three

points in collection, it's a good company to invest in.

Now, you might say that Akshat, you know what?

We don't have time to again, go keep tracking 200 DMA

what should we do? So if you are pressed on time,

if you can't do your own investments, you can go and try to invest via Small

case. There is something called as sector trackers.

So what you can do is you can invest

little little money in each of these high growth sectors like banking tracker.

You can go and invest.

Another aggressive sector would be something like energy which is picking up.

So I also spoke about the EV sector in India, how it's growing, so you can take

a look at this auto tracker Small case and divided your amount into four parts and invest

via four different Smallcases because again, it will give you the option of getting

timely updates on when your portfolio is getting rebalanced.

So very quickly recapping so far,

no 1 try to identify your goals, how much return you are happy with.

No. 2 diversify your assets. Number three,

invest 40 percent of the amount in defensive stocks. Number 4 invest 40

percent of amount in the aggressive stocks.

Number five, build hedges.

Hedging means that now you've invested 40 percent in aggressive 40 percent

in defensive, other 20 percent used for hedging.

Hedging means that you buy commodity goods,

for example, buy commodities like gold or silver.

This will help you hedge even when the stock market is going down.

Silver prices were not getting hit. So that was a good part.

So that is what hedging means, that when the market goes down,

the commodity in which you have invested, it is not going down.

So that's a good part. Especially when you're starting,

you should always have a little bit of hedging done.

No.6, you must understand your options.

So there are multiple ways in which you

can invest in these aggressive defensive stocks, hedging strategies.

You must identify those options.

So predominantly you have three options these days.

No. 1

you can go and directly invest in stock markets yourself.

For this, you must must study stock markets first, understand the basics.

I've created a lot of videos about what bull run is, how to study economics,

how to implement finance, all those concepts.

Please do study it and that will help you understand.

But you also need a little bit of time in terms of keeping up to date

with the market news and incorporating that into your portfolio.

So that's one. Number two strategy is that go invest via

the mutual fund routes, because ultimately the money that you are

investing in your mutual fund, it is eventually used by a mutual fund

manager to either buy stocks and bonds and other asset classes.

The primary disadvantage is that if you are buying actively traded mutual funds,

some money goes into commission.

I'll probably make another video on mutual funds.

Do let me know.

Do comment if you would want me to do that.

But essentially, if you are investing in actively traded

mutual funds, no one, you will lose out money in commissions.

And number two, you will not really know where your money is getting invested.

And number three, you can go and invest via Smallcases.

I have made a lot of videos on Smallcase investing, if you would want me to make, I'll

make a complete detailed video on Smallcase investing as well.

That will give you more idea.

So I hope you would be able to incorporate and understand these six steps better.

That will help you invest your first lakh in the stock market.

Investing in stock market is a wonderful journey.

It will teach you a lot in terms of analyzing your investment,

analyzing different companies, and you will get to learn a lot from it.

So best of luck. Let me know if you have any questions.

Please comment, please like this video.

That would mean a lot to me. Thank you.

And I will see you the next time.