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Top 5 Investment Strategies for Beginners | Investment Masterclass - YouTube
Channel: CA Rachana Phadke Ranade
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Hey folks, CA Rachana Ranade here and I welcome
you all to another interesting lecture which
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is on how to pick your investment strategy.
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Now, whenever I use the word strategy, many
people actually get confused as to what is
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the exact difference between a goal and a
strategy.
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So in simple words, if you want to understand,
let's say this is my goal it's like a manzil,
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that's like my destination right, but, what
is a strategy?
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Strategy is how I decide to reach this goal.
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So, strategy tells me how to move through
all the hurdles in the most effective way
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to reach my goal.
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So, do we have a strategy only for investment
purpose?
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No, we can have a strategy at in any walk
of our life so for example, if I want to choose
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my career, for that I have a strategy, kids
may have a strategy to how to study and how
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to score more in exams, people can have a
strategy to win different games right.
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So, similarly, we can have a strategy for
our investment purpose as well but, if I am
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talking about an investment strategy, is there
any law behind it?
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No.
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It's just a guide of how you can choose your
investment strategy.
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So, what can be the different parameters based
on which I choose my strategy, there can be
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multiple parameters like what?
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It can be like my risk appetite, so depending
on my risk appetite, my investment strategy
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will change right.
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It can also depend on your goals, so, whether
it's a short-term goal, whether it's a medium-term
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goal, depends on that, depends on all these
points what my investment strategy can be.
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It can also depend on your term horizon, whether
it's a long time horizon, short term horizon,
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what.
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So there are multiple parameters in short
based on which you will choose your investment
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strategy.
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One more very important point is that your
investment strategy can be different than
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my investment strategy.
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One more important point is that your investment
strategies can depend on your goals, means
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what?
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Assume that you have goals like your child's
education, your child's marriage, buy a car
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or buy a house, for all these, I can have
multiple strategies so there is no rule that
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your investment strategy has to be won for
all your goals, no, it can depend, but before
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I choose my investment strategy, I have to
do a KYC?
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KYS.
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I just said KYS and not KYC.
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By the way, what is KYC?
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KYC is know your customer or know your client
but, that is done by businesses to understand
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their client.
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I personally believe that first it should
be KYS, know yourself.
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Who are you?
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If you understand who you are, based on who
you are, your investment strategy can be decided.
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But, based on what parameters?
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So first of all, you have to understand age
okay, so if my age is whatever okay I'm younger,
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then I have a better risk taking capacity
right, so my strategy can be comparatively
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higher risk strategy.
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If I were 60 years of age, my income earning
from that point of time can comparatively
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reduce.
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Active income can reduce, in that case, my
risk taking capacity will be comparatively
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less, my strategy will change accordingly.
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So if you are at a younger age, your investment
strategy can be a bit aggressive, that's just
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one parameter though.
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Second parameter can be a time horizon, if
I have to choose for a long term goal okay,
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my time horizon is high, for example my child's
marriage, ideally he will marry is what I
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believe but, anyways let's say it's a 20-year
time horizon from date.
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In that case, do you feel that I can take
a better exposure for equity as compared to
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debt, yes, definitely, because equities can
be a good long-term investment rather than
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a short-term investment.
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So depends on the time horizon as well.
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Any other point, yes.
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It's number of dependents, so for me, who
all are dependent on me?
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Right now, only my child is dependent on me,
but if I had a lot of dependents, something
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like, ghar mein boodhe maa baap hai, kammo
ki shaadi hai,all that right, In that case,
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my risk taking capacity would have been lower.
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Because I have only one dependent on me right
now, I can take a higher risk, I can choose
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my investment strategy accordingly.
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Number four point can be, how is my income?
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My income is fixed or my income is unstable,
if my income is fixed okay, if my income is
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fixed which is not but it's okay, if it is
fixed then I have a higher risk taking capacity
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but for me, even if I don't have a fixed income,
I know that there is some xyz benchmark and
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I do have kind of a higher staking capacity
right, so depends on your income as well and
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the last one is your risk profile.
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How is your risk profile?
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For me, I have done my risk profiling and
my risk taking capacity is above average,
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so based on all these parameters, I know who
I am, I have done a KYS and that's how I will
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choose my own investment strategy.
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Well, I have done this exercise of KYS.
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I know myself and I know that I am a stockaholic,
if you are then you can also check out my
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collection by clicking this I button.
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So the previous part I talked about risk profiling
typically there are three types of risk profiles,
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one is a conservative, one is a moderate and
one is an aggressive risk profile, okay.
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So, you have to understand, you have to choose
your own risk profile based on these three
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categories.
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Now we move on one step further wherein we
say that there is a connection between the
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risk and returns, so always remember, higher
the risk, higher the potential returns and
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for that we typically talk about a risk return
trade-off, what does this mean if you are
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going for a lower risk your potential return
is lower, simple example can be investment
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in FDs but, as you climb up this risk return
trade of highest point where you have highest
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possible returns, simple example, you're investing
in small caps, possibility of you getting
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higher returns is more.
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And with this base understanding, now, let's
move on to different strategies, different
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investment strategies that you as an investor
can choose.
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Well there are many investment strategies
but, today we are going to focus on top five
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investing strategies.
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The very first one that we are going to discuss
today is the value investing strategy.
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Now what's this value investing strategy,
you invest in stocks which are currently undervalued,
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in simple words their current value, we call
it as an intrinsic value is lower than their
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market price, than their current market price
okay.
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So instead of you understanding this, I will
give you a very simple example for this.
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This is a comment that I had received on my
pro investor special fundamental analysis
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video.
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The comment says that ma'am you charged us
399, but the knowledge that we got was of
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39999.
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So price paid by the investor was three ninety
nine but, the value that he got was thirty
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nine thousand nine ninety nine.
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Now you can just imagine that if this had
happened with the stock then what could he
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or she, an investor could have paid 399 would
have gotten a value of 39999, would this have
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been instantaneous, no.
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This will happen over a period of time.
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So will you have to buy and wait patiently,
answer is yes.
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So this goes as a buy right, sit tight strategy
okay.
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So I hope you have understood, what is the
focus in value investing?
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Focus is to actually try and find stocks which
are currently available at a discount to the
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current market price.
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But do you think that process is very easy,
no, you have to actually do a lot of fundamental
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analysis, you will have to check the valuations
of these stocks, but if you don't know how
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to do the valuations, we do have a course
on value investing wherein, I have taught
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how to actually value the stocks based on
PE, PB, EBITDA, many many more right.
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So, coming back to the discussion, if you
want to know how I pick stocks, do let me
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know in the comment section.
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I can make a separate video on that as well.
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So, as of now, I hope you have understood
what is value investing strategy the major
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focus in the portfolio almost 80 percent should
go to value investing, balanced and 20 can
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go for debt portion.
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The second strategy is growth investing strategy.
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Now what do we mean by that?
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You invest in stocks which are having a very
high growth, the growth in terms of what,
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growth for a company can be in terms of its
top line, which is revenue, can be in term
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of its profitability, its bottom line, or
if you are talking about growth of a youtuber
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it can be based on the subscriber count right.
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So you invest based on growth but, how can
I decide that whether it's really high growth
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or not, so you can compare it with its peers,
its competitors or you can compare it with
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the industry average right.
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So if I am talking about a company, which
has a little bit high market price as compared
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to its intrinsic value but, it has a fantastic
growth rate, can I still go and buy that stock?
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answer is yes., means what if I am talking
about growth investing strategy ,the focus
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is not on comparing market price versus intrinsic
value but, the focus is on whether the stock
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is giving a very good growth or not.
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So if you are an investor in this strategy
then what is your focus, your portfolio focus
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should be on high growth stocks, should be
on mutual funds which are investing in high
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growth stocks and a minor portion of your
portfolio should go for debt.
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Well, I hope you have understood what is value
investing and what is growth investing but,
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let's take a very different, very nice example
to understand the exact difference between
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these two okay.
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So I know this is a train but assume that
it's an investment opportunity okay, so like
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the train is on the platform right now, if
you're an investor, you go inside the train,
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have a comfortable seat and you sit through
the entire journey of the train, it's like
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value investing.
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You are understanding the potential of that
stock before it has kicked off, you enter
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it at the right time and you sit through it
through the entire journey by right sit tight
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through the entire journey, but, if this had
been a growth investing strategy, you don't
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buy, you don't buy into that train ticket
until and unless it has started its journey,
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until and unless it has proven its growth
okay.
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So once the train starts with a good speed,
that's where you will jump inside it and then
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you will ride the balance journey so I hope
you have understood.
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The next investment strategy is income strategy,
means what?
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You invest in investment avenues which give
you a steady stream of income, so this steady
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stream of income can include dividend income,
interest income and whatnot.
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So how do you get this, possibility number
one invest in stocks which can give you steady
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dividend or you can invest in REITs which
can also give you steady dividend.
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Possibility number two, you invest in bonds
or debentures which give you steady interest,
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who will be interested in such an investment
strategy, it will be generally retirees whose
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active source of income has vanished.
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The next investment strategy is conservative
investing.
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You know there are some people who say that
Rachana, if I invest or if I put 100 rupees
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in stock market, I don't want like 100 ka
200 ho jaye, but at least 100 should be safe,.
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that's more or less like a conservative strategy.
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These people are generally people who have
a low to moderate risk taking capacity, where
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do these guys invest, should they be investing
in small caps, mid caps, no.
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They should be investing in large caps, blue
chip companies.
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So for them a typical investing portfolio
can look something like this where, a major
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chunk, almost 70 to 80 percent can go in fixed
income securities like debentures, like bonds
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and a minor portion, 10 to 20 percent can
go in equities but again, as I mentioned in
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blue chip stocks.
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The last investing strategy for today is aggressive
investing strategy, it's exactly the opposite
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of the previous one which was a conservative
investing strategy.
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Who will go ahead with this strategy, those
who are high risk takers, so where can they
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invest?
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Can they invest in small caps, yes, in mid
caps, yes.
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Can they also invest in commodities or collectibles
for that matter, yes.
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So if you have heard about the latest fad,
latest fashion and correct collectibles which
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is NFT, if you don't know about it, it's okay
we can discuss about that in some other videos
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of mine.
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But, as of now, I hope you have understood
what could be this investing strategy.
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A typical portfolio mix of such person can
be like 70 to 80 percent can go in equities,
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small caps, mid caps. 10 to 20 percent can
go in something like debentures or bonds but,
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I can also say a small percentage of that
can go even in very high risk assets, like
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as I mentioned collectibles or can also go
for cryptos.
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Well I hope you have understood all the different
different investment strategies that we discussed
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today.
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I hope you enjoyed our first master class
on the various types of investment strategies.
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If you want to check out, is there any website
which talks about not only these five investment
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strategies but many more investment strategies,
that's the solution for you.
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It's Small Case, what you have to do is just
visit smallcase.com, hit discover small cases,
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in that, choose all small cases.
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So whenever you scroll down a little bit,
that's where you'll get all the investment
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strategies, that's a complete list of investment
strategies so, for example we discussed value,
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we discussed growth, dividend is nothing but
income, they have many many more investment
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strategies.
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Plus, what you can do is you can also select
how much amount you're okay investing it with
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plus, you can also choose how much volatility
you are okay with.
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By the way, this volatility is nothing but
volatility as compared to Nifty 50.
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So, I am giving you an example, assume that
you want to choose growth as an option, plus
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you wish to say that okay I am good with medium
kind of volatility, then all these are the
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different small cases that you get an access
to.
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Here the minimum amount which you can you
will have to invest is also mentioned plus
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whatever is the CAGR that's the compounded
annual growth rate ,that will also be mentioned
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so you can choose from a bunch of investment
strategies from small case.
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So, if you want to check out all these, link
is there in the description box.
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Also, if you want to open an account with
Zerodha, link is also there in the description
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box.
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Well, I hope you have enjoyed this video on
different investing strategies If you have,
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don't forget to share this video with your
friends.
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Till then, take care Jai Hind and bye bye.
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you
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