My personal guide to Investing In Stock Markets
Are you planning to invest in stock markets? Thinking about making money and doing well. Here is my personal guide which I use to invest:
Divide your money into different funds at the start of the year. This will help you in setting targets and achieving them.
Planned Equity Fund: Money that you plan to invest into Equity at the end of the year. For me, the first year end target was 75,000
Planned Mutual Fund: Money that you plan to invest into Mutual Funds at the end of the year. For me, the first year end target was 75,000
Shopping Fund: Extra money that should be ready to be invested when market goes down. Keep a cap on it and do not be greedy when the market goes down.
Non Performing Assets: Take a regular look at the non-performing assets in your portfolio. The duration after which you review these assets would depend on how much time you can spare for your portfolio. Try to remove the non-performing assets and replace them with something which grows faster.
Year End Target: How much do you want your money to grow by at the end of the year? For me, I wanted my money to grow 15% at the end of the year. Conservative by todays estimates, but as a fresh entrant to the stocks, I wanted to play it safe.
Now the strategy is simple:Invest in stock market through the shopping fund when market goes down.
Refill the shopping fund when the market goes up.
Keep the shopping fund constant.
Do not worry if Planned Equity Fund exceeds Planned Mutual Fund as long as the combination of two is below your limits. Equity is better if you know basics about stocks and have a good GUT feeling about stocks which you can back. For ex. My Equity Fund is more Loaded right now that Mutual Fund but I have a little more faith in my equity skills than choosing mutual funds.
If the planned fund goes above limits, then get it back to planned levels as soon as you get a chance. You will always have funds in your portfolio that are not giving returns as expected. Take a decision and get rid of them. DISCIPLINE your investments.