Equity- Take Risk but Systematically
By Abbasali RJ Advisory
If you ask to people what is equity? The answer may be Stock Market, Nifty, Trading, Share Bazaar etc. Tell me this is the right answer surly answer is No! Simply one can say Equity means either investing in business or becoming a share holder in any company. Thus taking a risk is compulsory for investor investing in equities, but it is more important to understand the fundamentals of business in which you
are going to invest. Listed are some basic strategies to follow for investing in Equity.
If you ask to people what is equity? The answer may be Stock Market, Nifty, Trading, Share Bazaar etc. Tell me this is the right answer surly answer is No! Simply one can say Equity means either investing in business or becoming a share holder in any company. Thus taking a risk is compulsory for investor investing in equities, but it is more important to understand the fundamentals of business in which you
are going to invest. Listed are some basic strategies to follow for investing in Equity.
Invest through mutual funds
Equity is not luck by chance or casino for investor. You should understand the different between investor and trader. First clear your profile of small investor you can start with small amount in mutual funds through Systematic Investment Plan (SIP) because you can invest certain amount of your income in mutual funds through SIP mode. One can select Diversified Equity mutual funds and make goal base investment to get best return over a long period of time. There is two most advantage of SIP one is cost averaging and second is discipline investment with regular interval time like monthly. Here I would like to share one experience of a Mumbai based financial planner who made wealth through SIP he started in 1995 when his first daughter born. He invested 2.12 lakhs in these 212 months and the fund value is around 24 lakhs now! Yes that is the power of mutual fund SIP. So start at early age and make fixed goal like Buying home, Car, Child Education, Marriage, Retirement Planning to creating wealth from equity SIP.
Diversified Your Portfolio
Remember this quotes don’t put all your eggs in one basket to diversify your portfolio. You can diversify your portfolio class in different asset through Asset allocation strategy. Equity allocation should be according to the investment objective, age, risk ability, income and time horizon of investments. Asset allocation should be reviewed regularly and if there is a need for change, it should be done immediately.
Dos and Don’ts while investing in Equity
- Choose diversified mutual fund schemes from best performing schemes.
- Be fearful when others are greedy and be greedy when others are fearful.
- Take advice of Financial Advisor or Financial planner before investing.
- Don’t try to make money through direct trading or speculating in stocks or derivatives market.
- Don’t check your portfolio daily it should be reviewed once in a six month or a year.
- After all it takes time to grow your money, Give time to the market rather than timing market.