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Become a MILLIONAIRE by 30! - Investment Strategy Explained | #StockMarketTips - YouTube
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How you can make money in the stock
market?
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So the most important tip that I will
leave you with is that if you want to make
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money in the stock market, then you should
not be dependent on the stock market.
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Now, what do I mean by that?
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Hello, everyone, welcome to today's video.
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So today I'm going to teach
you how to get rich slow.
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This is super counterintuitive because you
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might have heard a lot of people who would
make tall claims that, hey,
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come by our course and you will become
a crorepati in six months. Come buy our course
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and we will help you make
10 cores in one year.
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So none of that clickbait.
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I'm actually going to share my real
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strategy of how I got
started in the stock market.
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What are some of the mistakes that I made
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and what are some of the key lessons
that I learned along the way?
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Hopefully through this discussion,
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you would understand the power
of becoming rich slowly but sustainably.
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So let's get this video started and just
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humble request that if you like this
video, please press the like button. I would
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urge you again that please
press the like button.
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It would indicate to me that you
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appreciate this type of content and I
would continue to show such videos.
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So when I started my first job,
I used to make twenty thousand rupees.
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And I used to live in Delhi.
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So I was working at the Ministry of Rural
Development and the salary was not high.
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So that entire money was
to go in rent, food, transportation.
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So I had very little money left
in terms of making investment.
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But on the sidelines I started taking
coaching for GMAT, I had a 770 on GMAT.
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I had a good score.
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So I started taking some private
classes over the weekend.
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So through that, I started making money
in the range of 30 to 60 thousand every
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month, and that money became my investment
amount that I used to invest.
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So initially my strategy was that I would
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just get the money and I put it in our
bank savings account and that was it.
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So I was making a little bit of money
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there and I used to earn three to four
percent interest and that was it.
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Then my mom got me interested in investing
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and what she told me was that, hey,
why don't you get some FD done?
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Because she also used to invest
a lot of money in FD.
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So I started making a little bit
of a FD deposit and that used to give me
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around five to seven percent
return on a yearly basis.
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Now I quickly realized that, you know
what, this is like a bad investment.
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Even my mom quickly realized that,
you know what?
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This is not probably the right method
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for me, who is someone who is young
to invest all their money in an FD.
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And then she told
me that, you know what?
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Why don't you go and invest in SIPs
and do an SIP in mutual funds?
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So I thought that would be great.
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You know, what everyone
is talking about SIP.
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So let me just go figure
out how to do SIPs.
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And then I started doing SIPs.
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So SIPs are systematic investment plans
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and through this, your money
gets invested in mutual funds.
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So I had no clue how to do
investments through SPI.
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So there was one of my mom's associate
and he was a mutual fund agent.
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So he used to come to my house.
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He used to show me all the valuable
and lucrative returns that people used
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to make through SIPs
by investing in mutual funds
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and he convinced me that,
you know what SIPs are the way to go.
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And I started doing SIPs.
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So I did that for six months.
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And the way I used to do SIPs
was very silly.
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What I used to do was that I used to look
at historic returns that, for example,
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XYZ Mutual Fund gave 15
percent return historically.
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So I imagined that it
would continue to do it.
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So I used to do as SIPs on those type
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of assets that were getting 15 percent,
20 percent hypothetical returns.
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And imagine what,
I never used to get those
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kind of returns by investing
in SIPs that I used to do. So soon
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I got disillusioned that I realized that,
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you know what, I'm looking at the returns
of these excellent mutual funds.
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They are historically
giving 15, 20 percent.
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But when I invest, I barely get like
five or seven percent in an yearly basis.
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When I used to ask my mutual fund agent
then why did this happen?
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And he also told me that you know what
Akshat, the market is down.
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That's probably why. Every time
the market goes down.
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And I continued doing this
for approximately a year.
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And I soon realized that you know what,
boss, there must be some game that is wrong here.
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So I realized two important lessons.
Number one,
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it's very important to understand
the concept of investing.
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If you don't invest,
you will lose out money.
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For example, initially in the initial days
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of my career,
I was putting money in savings account
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and FDs and I was losing money
because of a concept called inflation.
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So I will link a
video somewhere here.
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Please go and watch it.
You will understand that if you are just
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depositing your money in FDs or savings
account, you're actually losing money
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on a yearly basis because India
is a high inflation market.
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So that was the first key lesson.
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The second key lesson that I learned was
that hey never trust others with your money.
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That is not something that you should do.
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You should actually take active role
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in terms of the investments
that you're making.
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So this brings us to the second
part of my story.
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Now, after one and a half, two years,
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I started realizing that you know what, I've
learned two important lessons that I need
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to invest and I don't need
to trust others with my money.
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I need to figure out a way
to make investments myself.
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So I went and explored that out of making
direct investments in equity markets.
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But the moment I started analyzing
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the market, I realized that you know what
this is like super complex.
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There are so many things to consider.
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There are so many companies to consider.
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And I just don't have the time,
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along with the full time job,
to actually trade in stocks.
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So what I did was that I did the next best
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thing, that I started investing in mutual
funds myself rather than going through a mutual
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fund, I directly started investing
in mutual funds. And majority,
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almost all my investments at that stage
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were being made and actively
traded in mutual funds.
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Now, what do I mean by
actively traded mutual funds?
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These mutual funds actually
have a mutual fund manager, a team
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that runs an office and they literally
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trade on that mutual fund
on day to day basis.
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So essentially I'm investing in their
mutual fund and this mutual fund manager
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will have a big team and this team will
pay itself a commission from the money
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that I'm paying them, and they will trade
the money that I'm giving in stocks.
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That is how active mutual funds operate
and they charge a higher commission.
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At the time that I used to make this
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investment,
I did not realize the difference between
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actively traded mutual funds
and passively traded mutual funds.
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So I imagine that if I'm giving my money
to an expert, he or she will manage
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my money wonderfully well and will
generate a massive return
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and I'll become rich.
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Guess what? None of that happened.
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So what ended up happening was that I
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ended up making six,
seven percent return for another year.
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And again, I got bogged down by the entire
scenario and I started investigating that
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you know what?
It just doesn't make any sense.
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Right?
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When I myself was investing my money
in FDs, I was making five, six percent.
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And some of my actively traded mutual
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funds are giving me
only 7-8 percent return.
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Why am I doing all this? Just to make
two percent additional return?
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It was madness.
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This led me to ask myself a simple
question why these mutual fund managers
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are able to generate only
eight percent returns?
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It just did not make any sense to me.
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And that is when I started analyzing
the markets a little bit more.
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I started investing in equities myself
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and I very quickly realized
that a couple of things were happening.
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Number one, that these actively traded
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mutual funds, were charging
a lot of commissions.
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So I used to lose out
on a lot of commissions.
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That was problem number one.
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Problem number two,
if you actually analyze the FII and DII
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data. So FIIs are foreign institutional
investors and DIIs are domestic
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institutional investors,
which are mostly these big mutual fund
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managers which are running
the actively managed mutual funds.
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So this is the difference between FII and DII.
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Right now, what used to happen was
that the market mechanism was such
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that on somedays, on somedays, when FIIs
used to buy DIIs used to sell.
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And on somedays, when DIIs used to buy
FIIs used to sell. This made no sense.
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This made no sense in the sense
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that why would big foreign institutional
investors would be buying the same stocks
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and DIIs, why would be
selling the same stock?
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It made no sense to me back in the day,
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but now it makes a lot of sense that
FIIs and DIIs are actually working
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in collaboration,
DIIs will hardly ever give you more
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than 10 to 12 returns consistently
over a longer period.
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Now, earlier, I explained you the concept
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of actively managed mutual funds where
the mutual fund managers are charging
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a lot of commissions and retail investors
like me, were losing a lot of money.
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So I diverted my investments
to passively managed mutual funds.
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This brings me to the third part
of the story where I was making a lot
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of investment in passively
managed mutual funds.
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So let's look at Nifty 50. So passively
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managed mutual funds essentially means
that there is a mutual fund manager,
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but that he or she is just
mirroring the market.
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What they're doing is that, for example,
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that if we are at this spot in the market
and if the market is trading at 15,600,
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and if I placed my order of buying
a mutual fund at 15,600,
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then at this stage the mutual fund
manager will buy and mirror this index.
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He or she will buy exactly the nifty 50
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stocks in that same proportion
that indicates this particular market.
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That's it.
So resultantly that commissions that are
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charged on passively managed mutual funds
are much less. Right. They are much,
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much less compared to actively
traded mutual funds.
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Just a very quick fun fact.
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Now, I would want you to comment on this,
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that do you think that passively managed
mutual funds make more return in the long
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term or actively managed
mutual funds make more return?
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Read my answer to the comment, I will
hide my answer somewhere in the comments.
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But I would want you to do this exercise.
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What is the 20 year average return
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for actively managed mutual funds
versus passively managed mutual funds?
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You do this exercise and you
will understand that
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why was I investing in passively
managed mutual funds?
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So coming back to the topic.
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So I started investing
in passively managed mutual funds.
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But there were two problems
that I started facing.
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Number one, that whenever the market used
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to go up, for example,
if you take a look at this 2017 period,
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the market was constantly
going up, it was going up.
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Then I used to think that
you know what market
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was actually going up and it is going
consistently up so maybe it will come down
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and then I will do my SIP or
I will actually invest some lumpsum amount.
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Right.
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So I used to miss out in terms of making
investments in a regular cycle.
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That's one. Second problem that I faced was
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that earlier I used to do
consistent investments.
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For example, if you take a look at this
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entire period from April 2010 to 2014,
market hardly moved much in this period.
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It was essentially trading
in that same range.
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So despite me doing SIPs,
I was not getting any return.
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This was the second problem.
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Now, the third problem was that whenever
the market used to go up and if I was
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holding this particular index, then I
used to get this temptation that hey
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let me sell it. On some
occasions I sold it also.
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But then came the problem that in what
market is just not going down.
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So how will I reinvest?
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OK, let me explain this point further.
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For example, let's imagine that I
was holding the index from here.
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It was trading at, let's imagine, 5000
range right then here it became let's say, 10000.
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Now I sold my index completely
at 10000 levels and I made money.
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And now let's say that if I have
10 lakh rupees
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sitting in my bank account,
what am I supposed to do with it?
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I can't reinvest.
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That is the primary problem that I faced
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in terms of making investment in passive
mutual funds. Passive mutual funds are great,
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but only if you want to just hold
it. You don't need to trade it.
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You don't need to invest it and grow
that money on a consistent basis.
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So it's good for holding.
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But again, it can make you very
frustrated that the market is not moving.
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Number two, if it grows,
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you might stop your SIP imagining
that you know what market has just done too much
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run up, number three, even if you sell
it, you would have reinvestment risk.
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So these were some of the problems that I
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faced in terms of managing
my passively managed mutual funds.
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So then I finally realized
that enough is enough.
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I actually need to take care
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of my investment because this is
something that will impact my whole life.
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I actually need to start
learning how to invest.
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So I read a lot of books.
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I analyzed a lot of balance sheets.
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I read about different companies.I analyzed
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work from my previous experience
of investing in mutual funds.
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Combining all this,
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I started getting a sense that you know what as
a first step, to equity investor,
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you need to start investing
in blue chip companies.
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You need to start investing
in blue chip companies.
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So what I simply did was that I
identified 20 best stocks in India.
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This 20 best stocks, and I started
investing my money in those 20 stocks.
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And that's it.
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These were companies like HDFC,
HDFC Bank, Reliance, Maruti Suzuki, Tata.
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So these are the companies
for which I bought stocks.
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But since I was a novice investor,
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I actually used to lose money
on some of these trades.
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Now, you might ask that he Akshat why did
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that used to happen? You were investing
in such blue chip companies,
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why did you lose money?
So let me show this to you.
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So I remember buying Maruti Suzuki's
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stock. So Maruti
was a growing company.
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It was getting consistent return,
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as you can see from this entire graph,
that hey,Maruti was on uptrade.
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And I bought that stock because there was
a lot of positive news about Maruti, how it
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plans on building new distribution
centers, how it plans to improve
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distribution, how India centric
focus is going to come up.
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So I bought a lot of shares
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for my Maruti, somewhere here, right at
around 4500 levels.
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Now, then what happened was
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that the Maruti share actually went down
and it went down to 3400
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and I panicked and I sold my entire
lot and took a huge loss.
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I'm telling you
because I was a novice investor back
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then, I did not understand investment
fundamentally and I genuinely felt
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that there is something
wrong with the Maruti stock,
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let me just sell it down and go out.
Right.
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I did not have tools like
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analyzing default
probability or quality
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checks etc.
I did not use these features.
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I just literally traded on news and I took
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a huge loss and went away,
on a blue chip company.
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And I can show you multiple examples
of these blue chip companies where I lost
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a lot of money because I literally traded
on news. When good news used to come,
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I used to go and buy stocks.
When bad news used to come,
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I used to sell my stocks.
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So as a result, because of this news based
trading, I lost a lot of money even
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on blue chip companies, despite me
being fundamentally good stocks.
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So this brings me to the final part
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of my stock market journey,
which started somewhere around 2015.
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And since 2015,
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I have been making consistent return,
ranging between 20 percent to 40 percent
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in stock markets and have been
investing huge amount of money in that.
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So what changed for me?
First and foremost,
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the first key thing that changed for me was
that I actually learned about investing.
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I learned from my mistakes
that I made up until this point.
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I learned from the fact that you know what,
long term investing is not always good.
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You actually need to trade to make money.
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So I started engaging in different styles
of investing right from swing trading
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to long term investing, to short term
trading, intraday, whatever you name it,
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I have learned it from that angle.
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So I started investing
a lot of time learning.
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So I spent a good two years learning about
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stock trading, stock investing
and different styles of investing.
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So that really helped me amp up
my knowledge about stock market.
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And I started making investments
in a more convincing way.
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There were times when the stock used
to tank and I used to stay calm because I
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knew that I had learned
the fundamental research.
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Second, I realized the power of fundamental
analysis and analyzing certain techniques
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like momentum strategy,
buying low, selling high.
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What is bull run?
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What is bear run?I started studying
economics, interrelating all those
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concepts to make money
in the stock market.
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Yesterday I posted a video on some
strategies on how I buy low sell high.
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I will link that video somewhere here.
Please go and watch it.
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You will understand how I
do fundamental analysis
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more holistically.
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But just to very quickly show you
the concept so that you don't miss it.
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So let me just quickly share my computer
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screen and let us look at what
do I mean by buying low and selling high.
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So let's look at HDFC Bank Ltd
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and here you'll see this is
a fundamentally very sound stock.
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And you can check that hey,
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the default probability is really low.
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It has good quality checks.
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The growth rate is very high.
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You can actually check the forecast
that it has a high probability of growth.
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All these fundamental analysis
can be done very, very quickly.
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Now the important point to notice is
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that retail investors actually
lose money because they buy here.
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And they sell here.
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The opposite should be the case.
That they should actually be buying here.
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They should be buying here
and they should be selling here.
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Right.
If you understand concepts like support
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resistance, MACD, all these technical
parameters, if you understand fundamental
[931]
analysis, it can actually
change your life.
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Let me explain this point further
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by giving you an example
of Ray Dalio strategy.
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So Ray Dalio simply say is
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that if a fundamentally strong company
is posting its highest ever profits.
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If a fundamentally strong company is
posting its highest ever profits and it is
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trading below its highest ever price,
then it's a good time to buy.
[952]
So we can actually check
that in HDFC Bank's case.
[955]
So let us just take a look
at the financials here.
[957]
So here you can see that from year on year
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since 2018 to 2021, the profits or net
income has actually grown for HDFC.
[965]
So is it posting its highest ever profits?
The answer is yes.
[968]
And if you actually go and take a look
[970]
at the price chart for HDFC Bank,
this is what you will find.
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Now, is it trading now,
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now today, we are sitting at 18th June.
[978]
Is it trading at its highest ever price?
The answer is no.
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It is trading at 1418, and its highest
ever price was 1626.
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So you have approximately 140,
[987]
150 rupees that you can easily make
from this stock even sitting today.
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Such a simple strategy.
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So learning set strategies,
understanding the viewpoint of different
[995]
investors, implementing that into my own
strategy style actually ended up helping
[1000]
me make a lot of money
in the stock market.
[1002]
So this brings me to the sixth and final
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point about stock markets and how you
can make money in the stock market.
[1007]
So the most important tip that I will
leave you with is that if you want to make
[1011]
money in the stock market, then you should
not be dependent on the stock market.
[1014]
Now, what do I mean by that?
[1016]
What I simply mean by that is so I've seen
a lot of my friends and associates,
[1019]
what they do is that they get so excited
by the journey of stock market that they take loans
[1024]
and start poring that money
in the stock market.
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Never do that.
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Always have a source of income that gives
you holding power in the stock markets.
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For example, there have been times when I
was having 30 percent loss on a stock,
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but I was able to hold it because I was
able to make money from other sources.
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So I was able to hold that stock.
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I had no necessity of selling that stock
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and eventually that stock turned around
and it started giving me massive profits.
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So the point that I want to leave you
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with is very simple, that number one,
please don't take loans
[1051]
to trade in stock market. Number two,
please do your own due diligence.
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Number three, have multiple sources
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of income outside the stock market that
would allow you to make massive bets.
[1061]
You might have seen me making
massive amount of bets,I
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have shown you my portfolio before
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that I make really large
bets on a bunch of stock.
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The reason why I'm able to do that is
because I have built other sources of income.
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So I feel that if a corona like pandemic
again happens and the stock market tanks,
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I would be making money
elsewhere from that perspective.
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So it gives me the confidence of playing
a little bit risky in the stock market
[1082]
and analyzing and being confident
in the moves that I'm making.
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So that is the message
that I will leave you with.
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Please give it a thumbs up and a like.
[1089]
That would mean a lot to me.
[1090]
It would indicate to me that you
[1092]
appreciate this type of content and I
would continue to shoot such videos.
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