How do I make money consistently? - YouTube

So today we are going to speak about

the simplest strategy to make money in the stock markets.

This does not require you to have any expertise in terms of stock market

investments and what Mutual funds are, what Smallcase are, what direct equity investing is?

If you follow this one single tip

and one single strategy, you will make money in the stock market.

What is that strategy?

That strategy is

called as rupee cost averaging.

Now, you might say that we have heard of this term.

It is called dollar cost averaging, not rupee cost averaging.

Since we are doing it for the Indian market,

let's call it rupee cost averaging if you like it, press the like button.

Very quick shout out to our knowledge partners Smallcase for this video.

Thank you so much. Without their support,

this video would not have been possible.

So let's jump right into the topic for today.

And I'm going to speak about rupee cost

averaging in 4 specific points. By end of this video,

it will be clear to you what is rupee cost averaging, how to do rupee cost averaging

in the right fashion, which instruments to use,

and what are some of the things that you

should vs not do when it comes to rupee cost averaging/dollar cost averaging.

So let's get started.

Now, first, let us understand that what exactly is rupee cost averaging?

It simply means that you pick up a certain budget, for example.

It could be ten thousand rupees, it could be 20 thousand rupees.

It could be five thousand rupees.

It could be one thousand rupees or anything,

any number that you're comfortable making

an investment in, you pick a date on which you will make this investment.

So let's say that you are investing five thousand.

You pick a certain date of every month or weekly

also you can do that every Monday

I'm going to invest one thousand rupees in the stock market.

OK, so two things.

One, pick an amount that you want to do. Five thousand,

one thousand, number 2 pick a date, or a day. It could be every

Monday or it could be every 5th of the month or it could be every 25th of the month.

So what you are doing is very simple,

that you are actually automating your investment, automating your investment.

Automating means that I have a system every Monday stock market,

one thousand, five thousand or ten thousand goes into the stock market, done.

Where it goes? We'll discuss that subsequently.

But essentially you're automating your

investments and you're getting into the habit of making investments.

Now, you might say that, hey, Akshat, this looks like very risky.

I don't know. I don't feel very comfortable around it.

Can you please explain why this method will work?

OK, glad you asked. So let's say this is the nifty fifty lifetime chart

and if you can say that, hey, if you're making investment,

let's say monthly basis, what you're doing is that whether

the market goes up, whether the market goes down,

you're putting in your putting in money. You're putting it in a periodic manner.

Be it every Monday, be it every 15th of the month, be it every 25th of the month.

You pick a date and you pick an amount and you keep making this investment.

So in the long term, what is happening is that this nifty 50 is actually going up.

Right. So what are you doing?

You're actually averaging

nifty.

You are averaging Nifty.

So in the long term, your money will increase,

your money will increase, and it will mirror what? It will mirror

nifty returns. If you are doing rupee cost averaging in NIFTY, it will mirror nifty returns.

So you might say that hey Akshat, OK,

this looks fine, but can you explain like another advantage why this method works.

OK, so let's say that we are making periodic investment.

There is no timeline to this period.

It can be once every month, it can be once every week.

It can be once a year.

It can be once every decade. It doesn't matter.

But my recommendation is that at least one

periodic investment every month at least, periodic investment every month.

OK, so back to this nifty chart.

Now, let's assume that there are three investments that you make of

equal amount. You make one investment here when the market was low. Market fell down

you said ok hey let me make investment, you made it.

Let's assume that you invested 10000 units here, then the market stabilized.

You said that, OK you know what?

Let me make another investment.

So you invested the amount here when the market was low.

Now, let's assume that this is a one month

period and after one month you invested another amount. One month period

you invested another amount of 10 thousand.

Now, this is one month again.

And let's say that you made another investment somewhere here.

Right. So what is happening is that you invested

in the market in a periodic fashion. When the market fell, you invested

ten thousand.

So will you buy more units here compared to this?

The answer is yes, because the market is low.

So therefore you buy more units of stocks or more units of Nifty.

Let's assume that you were able to buy five units of Nifty.

So discount all the pricing and all that.

I'm just explaining it to you mathematically.

So let's assume that you're able to buy five units of Nifty here.

Now, the market has stabilized.

Now you are investing 10000 rupees only.

So will you buy more than five units or fewer than five units here?

The answer is fewer than.

So you might end up buying 3 units.

Now the market is even higher

here. So do you buy more units or fewer

units compared to the previous data, so fewer units.

So essentially so you invested or you

bought more units when the market was down.

So this is the magic and this is the reason why it works,

if done consistently over time.

So if you're making small, small periodic equal investments over

a large period of time, you will reap the averaging benefits.

You will end up buying more units when the market is falling and you will end

up buying fewer units when the market is rising.

So please keep this in mind.

This is what rupee cost averaging or dollar cost averaging means. This will give

you returns without even tracking the market.

You don't need to use any brain in terms of automating your investment.

So moving on to part 2, very quickly

recapping, what are the advantages of dollar cost averaging or rupee cost averaging?

Number one, it is the simplest strategy so you can easily execute it.

That's one. Number two, it gives you long term

compounding benefits because you end up buying more units when the market is down

and you buy fewer units when the market is up.

So by default, your returns will increase from that perspective.

And number three,

you're keeping the emotions out because many times we try to time the market.

We say that what, the market is up.

Let me just hold my investment.

Let me just put it in the bank.

Let me not do anything with it. The market will fall after a few months,

then I will invest. Great.

But timing the market is very, very tough.

What's the guarantee right?

The market has been trading right now.

We are sitting in end of July, the market has been trading

at approximately fifteen thousand eight hundred levels.

Is there a guarantee that it will fall

below 15000 levels if you wait for three more months?

If the market goes down 16 and a half thousand, then what? Then you have missed investing

in the growth of fifteen thousand eight hundred to sixteen thousand five hundred.

So this becomes a massive problem for you.

So keeping the emotions out and not timing

the market works really well if you are doing dollar cost averaging or rupee cost averaging.

This brings me to Section three in what instruments you should do

dollar cost averaging? So No.

One, let's consider bad stocks or

penny stocks.

So let's consider bad stocks or penny stocks.

No, please don't do dollar cost averaging

here or rupee cost averaging here, because what you do, what you would end up

assuming is that hey this stock is really good.

It is falling down. So let me put money regularly on this.

And if you would have made regular

investments on this stock, is it giving you growth? The answer is no.

It is still becoming and coming to zero eventually.

So the first key tip where you should do dollar cost averaging is that you must

do rupee cost averaging on stocks that are fundamentally, fundamentally strong.

Please, please, please make a note of this.

Don't go and buy a stock just because it is falling.

You might end up trying to catch a falling knife. When the knife falls and you try to catch it

you might cut your hand, so please don't do it.

This does not mean that you should not buy fundamentally sound stocks when it is falling.

Let me illustrate it by using another example

of Bajaj Finance. Now if you take fundamentally strong stocks.

For example, let's say that you are making regular investments

in Bajaj Finance and all these red dot indicates that you actually ended up

investing money on regular fashion in a fundamentally good stock.

Then in the long run, what is happening? In the long run,

the average still stays positive because this is the trend line.

You're buying more stocks in this region because of the concept that I had earlier

explained to you that if you are investing ten thousand rupees

in Bajaj Finance every month or every week during this period,

you would have ended up buying more stocks compared to this period.

So on an average, your return is high. So key principle

of dollar cost averaging is that you must only do dollar cost averaging

on fundamentally sound things, fundamentally sound stocks.

If you are doing it on bad stocks, it's really bad.

In fact, what you should do is that if you

are trying to do rupee cost averaging on good stocks.

You must buy even more amount. So rather than investing ten thousand rupees,

if every red dot indicates ten thousand, you must invest 20000, 30000, right.

When that stock is falling.

So that way you get even higher returns.

Why would you be doing it?

Because you know that this is not following knife, right?

This stock will come up when the circumstances improve.

So I have used this strategy on Bajaj Finance and made a lot of money.

So therefore I'm sharing it with you.

I tend to make regular investments.

Whether the market is up,

whether the market is down, I will always buy and I will always sell,

because in the market there are always good moneymaking opportunities.

Now, the second way in which you can do

rupee cost averaging is that if you do it in Smallcases. But here,

please note down and please make a note

that only do it for low risk portfolios. Why low risk portfolio because these low

risk portfolios and low volatility things, low volatility portfolios,

in the long run they will go up only. The second way in which you can do

dollar cost averaging is that you can go

and invest your money in periodic basis in industry, theme wise.

So if you believe that five, 10,

15 years from now, the rural demand is going to go up

and the rural sectors in India are going to exhibit massive growth,

then you can invest in the Smallcase called as rising rural demand.

So you're making a thematic investment on a periodic basis.

You can make a big investment on a periodic basis.

All you need to do is that go on invest now and you can do monthly SIP.

You can just literally press this button and you're done.

All you are betting on is that you're

betting that, hey, the rural demand going forward will go up.

I'm bullish about this particular industry sector.

Therefore I'm making monthly small bets on it.

Similarly, if you feel that I can go and invest my money in electric vehicles

sector, I see that sector or that theme growing massively in popularity in the next

10, 15 years, go and do rupee cost averaging on it.

That can still benefit you.

So all you need to know is very simple

that hey, where the growth is going to happen.

You are just picking up that area and investing your money. Now the final way

is that you can literally buy passive mutual funds.

These are nifty 50 funds

nifty 50, sensex funds, Sensex based mutual funds.

You can buy it from any company, HDFC, Bajaj, etc.

and just invest in index funds.

So every week or every month,

every month, you are making a periodic investment in the entire India's economy.

This is what is happening via passive mutual funds.

So I've showed you three ways. Number one, stocks.

What are you doing via stocks? Please don't try to catch the following knife.

Only invest in fundamentally sound stocks that you are confident about,

that is method one. Method 2 is that you can pick up a theme

that rural demand or electric vehicle and make Smallcase investments via that.

And number three, you can make investments

in passive mutual funds, literally investing in Nifty or Sensex.

Any of these methods would work for you.

Which method is better? Which method is worse?

You have to decide. But these are three options that you have.

Now depending on your risk profile, how much money you are investing,

you can bifurcate it in any of these three methods and start making your investments.

Now comes the final question and the fourth part of this video.

Then how am I playing this out?

Am I making monthly investments?

Am I making weekly investments?

Am I making lumpsum investments?

So I'm currently doing all three because

the market now is stabilizing or is going up.

That is the assumption that I have. So market is

not going to fall massively from this point on.

I'm going to continue to make periodic

investments, via Smallcases via Mutual funds.

I've identified a few select stocks that I'm going to keep investing in.

They are trading at a decent price as of now. If you want,

I'll reveal those three stocks, but please don't take that as an investment advice.

Do comment if you would want me to make

a separate video on that topic and I'll do the same.

So I hope you enjoyed the video and I will see you the next time.