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How to invest your salary for good returns? - YouTube
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on the flip side if you're a little
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hands-on you're okay doing index
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investing on your own you're okay
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purchasing bonds on your own you're okay
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creating that list of stocks on your own
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then keep your mutual fund portfolio
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very very small to begin with hi
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everyone welcome to today's video so let
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me start today's video by telling you a
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very fascinating story from the stock
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market about a family called as
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gotrock's family mr warren buffett has
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also narrated this story back in his
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2005-2006
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shareholder meeting there are very very
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important lessons here so i will spend a
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minute or two just telling this story so
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the story goes something like this that
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once upon a time in the u.s there was a
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very rich family called as the god rocks
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family it had a lot of members there
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were a lot of members 60 70 members and
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they were like filthy rich they used to
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own the stocks of all the listed
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companies in the us and because they
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were owning in technical terms and index
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every year their wealth used to grow
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because the u.s economy was growing and
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because god rocks family was owning all
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the listed company
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their wealth was also growing so
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everything was good everything was
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cheerful then a few years passed a few
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of the family members a few greedy ones
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they started getting jealous of each
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other so this is a very common scene in
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india also that rishtradars also get
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jealous with each other so same thing
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happened with the god rocks family and a
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few greedy members thought that you know
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what if we have to make more money than
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our cousins and all our other rishtred
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are then we have to go and hire an
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investment advisor who will guide us on
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how to make more returns than all these
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other different people from our family
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so they went ahead and hired a financial
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advisor now few years passed all these
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greedy family members who had hired a
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financial advisor they saw a very
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interesting observation that with each
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passing year their wealth was actually
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going down rather than increasing now
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this phenomena has been wonderfully
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captured by mr warren buffett in one of
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his quotes and it goes something like
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this that when the motion in the stock
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market or the activity in the stock
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market increases your wealth goes down
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why does that happen think about it
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there are very important lessons here so
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the reason number one is that when you
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hire a financial advisor then you would
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have to pay them commissions so that
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gets into it your financial advisor
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might trade stocks on your behalf so
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every time he or she buys or sells a
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security then you will have to pay taxes
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to the government gdt stt what not there
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might be performance fees also so the
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bottom line is that more activity that
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is done in the stock market the more
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your portfolio shrinks
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this is a very important lesson
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especially for salaried employees
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especially for newcomers in the stock
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market who think that everyone is making
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money so let me buy like more stocks and
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let me keep on trading it let me do day
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trading also let me do like swing also
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let me do like futures and options also
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if you keep on doing everything you are
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not going to make money in anything that
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is the simple message that mr warren
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buffett was trying to give through this
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story now how does this apply to us this
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applies to us in a very concrete way
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because if we are making a salary of
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let's say 50 000 rupees and we don't
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know enough about investing then we end
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up doing really fancy stuff for example
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we will go and buy random stocks or we
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will go and invest in like 50 different
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mutual funds and that is not a good
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practice so please listen to this video
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very carefully it's a very important
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video i will explain it in a very easy
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to understand language through five
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simple steps what you should be doing
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with a salary of 50 000 rupees how to
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invest it especially when you don't know
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much about stock markets share it with
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your friends also and do press the like
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button also a very quick shout out to
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our sponsors for today which is golden
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pie it's an excellent bond investing
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platform where retail investors can buy
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bonds on a commission free basis so let
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us start discussing those five points
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point number one is that if you are
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getting a salary of let's say fifty
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thousand rupees and if you don't know
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much about stock market then you should
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invest twenty percent of that money in
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the bond market now i have done a
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separate video on bond investing so you
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can go and check it here but there are
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three very important points that i would
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like to outline about bond investing so
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first and foremost bond investing is
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much safer than equity investing but
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depending on the type of bond that you
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are purchasing it could be riskier than
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a fixed deposit so the risk curves look
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something like this that you have fd
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which is least risky then bonds then
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equities so this is the simple underplay
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now the returns are also opposite that
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equities are likely to give you the
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highest return but the risk is also very
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high now in terms of returns equities
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are likely to give you the highest
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amount of return if you know how to
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invest in equities if you don't know and
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if you're just going and experimenting
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then yeah that's a really bad idea then
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it's better that you invest slightly
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more portion in the bond market or the
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other subsequent options that i will be
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speaking about in this video
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now another key point that you need to
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remember is that majority of the bonds
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also give you higher return than fixed
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deposits now fixed deposit is also a
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type of a bond but the problem with
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fixed deposits right now is that the fd
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rate right now is hovering around five
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five and a half percent inflation in
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india is going to be between six to
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eight percent so typically you will be
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losing roughly two and a half three
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percent of your entire money in a one
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single year by investing in fixed
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deposit so please don't invest a lot of
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money in fixed deposits second key point
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that you must understand about the bond
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market is that there are two options
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that you have in order to invest in the
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bond market number one is that you can
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go and purchase a mutual fund which is
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called as debt mutual fund now the
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problem here is that the mutual fund
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manager is going to charge commission
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they are going to trade securities at
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the back end again they will have to pay
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taxes commissions what not so again
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going back to that got rocks family
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story that your overall returns will be
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eaten up a lot by commissions and
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trading and other charges now there is a
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direct way you can go directly to golden
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pi's platform and you can go on this
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discover bonds tab now on the left hand
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side you can use these different filters
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that hey i want to earn like higher
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fixed income then fixed deposit i want
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to invest in triple a securities etc etc
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you can use filter and whichever bonds
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come on that list you can go and invest
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in it now for example hypothetically
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speaking if you filter this criteria
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again i have made a separate video on
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golden pie so you can go and watch it so
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let's imagine that you end up reaching
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the south indian bank limited so here
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you will see that the minimum investment
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is 2.05 lakh so let's say that your
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salary is one lakh rupees there are a
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lot of kharchah etc etc and you are left
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with 50 000 investable amount so you
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take 20 percent of that 50 000 which can
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be earmarked as bond investing money so
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that gives you how much money 10 000
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rupees so 10 000 rupees you start saving
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on month on month basis you do it for 20
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months and then you go and purchase a
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bond like this so this is your first
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option meanwhile what will you do with
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that money
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meanwhile you can put it in liquid debt
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fund so just google what liquid debt
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funds are and you can put your money
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there so that is not a problem at all
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and this is how you can invest in this
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option number one now how much
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investment amount will i recommend to
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you so i will say that invest twenty
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percent of your investment amount in
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bond so for example if your salary is
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one lakh and you are saving fifty
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thousand that is your investable amount
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then invest twenty percent of fifty
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thousand which is ten thousand rupee in
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bond on a monthly basis now then comes
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option two which is index investing now
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why do i propose index investing and
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what precisely is index investing very
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quick basics there that index investing
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is that you simply go and buy something
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like nifty 50 or sensex these are mutual
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funds now you'll say you just said that
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don't invest in mutual funds but yes
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that passive index mutual funds they
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have very very less commission or the
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least commission possible you are not
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losing out insane amount of money in
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commissions so these are least
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commission oriented products per se in
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the mutual fund industry so you simply
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go and purchase what nifty 50 or sensex
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now what is the benefit of index fund
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investing it's very simple so let us
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quickly understand it this is the entire
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nifty chart in front of you and here
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what you're doing is that every month
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when you get a salary you take out how
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much money you take out 30 percent of
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your money and you put it here right so
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50 000 was your investable amount how
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much money will you take out you will
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take out 15 000 and every month you are
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going to invest so you keep on investing
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investing investing every red dot means
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15 000 and you are investing investing
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investing right then what will happen is
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that you will end up getting like an
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average return right so this is the
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trend that your returns will follow this
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is a simple system that every month pick
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a random date for example pick 13th of
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every month why 13th of every month i'll
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tell you the logic also so pick 13th of
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every month and keep on investing this
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15 000 on every month basis whether the
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market is going down whether the market
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is going back up because in the long run
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nifty always cuts its previous peak so
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your average returns will be higher no
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doubt about that as the economy of india
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grows your money will keep on growing
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with it now you will say akshat this
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looks like such a genius idea that hey
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index always goes up i will put my money
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then why are you recommending that i put
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only 30 of my money why not 100 of my
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money okay the answer there is very
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simple that index investing is not full
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proof investing why because there are
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periods when the index does not give you
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much returns so let me show that also
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for example if you started investing
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somewhere in 2010 right then the index
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was at 584
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then till 2014 approximately the index
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did not give much return so you will get
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frustrated that hey four year period i'm
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not making any return that raksha gave
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me wrong advice unsubscribe from his
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channel and move on so i'm telling you
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very very honestly that it's not as if
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that index investing is foolproof there
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are periods when index investing will
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not give you any return and that is the
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time when you especially have to control
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your psychology and keep on investing
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because in the long term index will go
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up no problem there therefore i am
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recommending 30 in index investing 20 in
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bonds because the bonds that you
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purchase from golden pie it will
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definitely give you returns so at least
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these two things balances things out and
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at least you will feel that i am getting
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some return now comes the last part of
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index investing that why did i suggest
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13 because there is an index management
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game that happens even mutual fund
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managers who keep on moving nifty how
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they do it that's a separate discussion
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altogether but mutual fund managers big
[586]
investors they understand that when you
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are getting your salary you will jump to
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invest it so usually everyone invest
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their salary in the first 10 12 days of
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the month 13th is considered to be
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unlucky in several cultures so you go
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and do it on an odd day that no one is
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doing so that day the market is not
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going to be severely manipulated from
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that sense but keep on doing it on 13th
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or any random date that you pick that
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will give you returns but don't do it in
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the first week of the month that is my
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simple advice now comes option 3 that
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you will say that akshat you know what
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we want to be direct stock investors at
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least we will start learning something
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that is very important for us and
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eventually people make a lot of money in
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the stock market so how will we learn it
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if you are not trying it so i agree so
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this is how you get started first and
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foremost start with only 20 to 25
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of your entire investable amount so in
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that 50 000 rupee that you have to
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invest do not invest in the market 25 of
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that money directly in stocks especially
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when you're starting out so 25 of 50 000
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is 12 and a half 000 so that is the
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amount of money that you should be
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investing in the market every single
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month so what you do is that you create
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a list of stocks and you do sip in them
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so for example if your list of stock
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tells you these five stocks then every
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month go and purchase these five stocks
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in an sip format that every month no
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matter what happens whether the stock is
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going up or down i am still going to
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purchase it so you just do it that is
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where you start and that is how you
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spend your first year in the stock
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market this is very important please do
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it please try it out you will learn a
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lot about stock market investing from
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that particular perspective now how to
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create a stock list and what are some
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basic points to remember there are two
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key criteria that a stock should meet in
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order to get featured in your list
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criteria number one that your stock
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whichever stock you are purchasing it
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should be a profitable company so let me
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show this to you by taking you to
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screener so here is page industries and
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let us look at its balance sheet profit
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and loss statements so you can see that
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hey the sales of the company is growing
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consistently net profits are also
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growing so try to pick this simple type
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of company that's one second you must
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understand how the company is going to
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grow in the future and where will you
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find this data just go and read the
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annual report if you are convinced after
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reading the annual report that okay this
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company has growth prospects if these
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two simple criterias meet your list
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please go and purchase that stock at
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least you will not lose your capital now
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comes option four and option five this
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is for people who cannot do the first
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three things you think that you know
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what i'm just too busy with my job i do
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not have time to invest my salary i just
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don't find that time what can i do i
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have like 9 am to 11 pm job there is
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nothing i can do i i can't track the
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market it's just too cumbersome for me
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to go and invest things on my own so i
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want to give my money to someone to
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manage it's fine i understand it so what
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are your two options there so option
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number one here is mutual fund that if
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you don't want to do things on your own
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go and invest via mutual funds now
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please remember that try not to buy
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hybrid mutual funds why because the
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commissions generally on hybrid mutual
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funds are very very high so you will end
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up losing a lot of commissions it's
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better to invest in passive points but
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if you don't even have the time to do
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that
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it's okay to just buy large cap blue
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chip equity funds just buy that and be
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done with it now the problem that you
[777]
will face in terms of investing via
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mutual funds is that you would not know
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what exact securities are being
[782]
purchased at the back end that brings
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you to a related option which is called
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as small case investing so here there is
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thematic investments that you can make
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for example if you are very bullish
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about the rural economy then you can go
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and buy a small case which is focused on
[796]
rural economy so this way you are at
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least understanding something before
[799]
investing in it but yes you don't need
[801]
to manage that portfolio at all someone
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is going to manage that for you now how
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much money to invest in mutual fund or
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small cases it really depends on how
[808]
much time you have if you have absolute
[810]
zero time then invest all your money via
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mutual fund and small cases it is fine
[814]
you are done you don't have to keep
[816]
tracking it the mutual fund manager or
[818]
the small case manager is going to send
[820]
you the updates and you are done and you
[821]
don't have to worry about it on the flip
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side if you are a little hands-on you
[825]
are okay doing index investing on your
[826]
own you are okay purchasing bonds on
[828]
your own you're okay creating that list
[830]
of stocks on your own then keep your
[832]
mutual fund portfolio very very small to
[834]
begin with then comes the final option
[836]
that i'm a super busy professional i
[838]
have no time whatsoever and i don't care
[840]
about commission i don't care about
[842]
other things but i still want to make
[843]
high returns without knowing anything
[845]
about the market then you must try
[847]
something called as portfolio management
[849]
service pms service now there are big
[851]
big investors like mr saurav mukherjee
[853]
who runs marcellus which is a pms
[855]
service so you can go and check out
[856]
these type of forums and other fund
[858]
managers whose ever investing style you
[860]
like give them a large chunk of your
[862]
money and they will invest your money on
[864]
your behalf now what are the pros and
[865]
cons here now essentially pms services
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are very very expensive from a
[870]
commission's point of view for example
[872]
here are some of the leading pms
[873]
services in india and this is their
[875]
associated commission so two to three
[877]
percent commissions is very very high
[879]
plus there is performance fee also so
[881]
essentially this becomes like a very
[882]
expensive affair this is problem number
[884]
one now problem number two is that
[886]
usually these pms services have a very
[888]
high ticket size that again becomes a
[890]
problem for majority of the retail
[892]
investors that you need a minimum ticket
[894]
size of roughly 50 lakh rupees to start
[896]
with so this becomes an expensive affair
[898]
but yes if you are a salaried
[899]
professional who is making crazy amount
[901]
of money and if you have a lot of money
[902]
aggregated with you and you have zero
[904]
time to invest in the stock market then
[906]
pms service might make sense for you so
[908]
just a very quick summary about the
[910]
entire thing that number one please
[911]
remember the god rocks family story very
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very important your idea especially as a
[915]
small retail investor should be to
[917]
decrease the motion or activity in the
[919]
stock market pick things where you don't
[921]
have to pay a lot of commission for
[922]
example if you're buying bonds go buy
[924]
via golden pie it's a good platform
[926]
commission's free platform similarly if
[928]
you're buying index funds the
[930]
commissions are very low so your job
[931]
should be to lower the commissions
[933]
number two try to do things on your own
[935]
if you do it then you will end up saving
[937]
a lot of money in terms of commissions
[939]
but if you see no other option you are
[941]
too busy then there are services that
[943]
you can explore depending on how much
[945]
time you can invest in the market but i
[947]
hope that this video gave you a sense as
[948]
to how to go about investing your salary
[950]
and what are some of the basic absolute
[952]
basic things to keep in mind please
[954]
press the like button share it with your
[955]
friends and i will see you tomorrow
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