3 Myths of first time investors

I do not have to have a lot of money to start investing

As low as Rs. 500 a month can do wonders for you in long run. You can not invest for sometime, leave it for sometime and take it out when you want to buy that newly launched iPhone. You want to buy an expensive item like an iPhone or a premium laptop or go out on a luxury vacation? Go ahead and do it with the money you saved for that very purpose. No touching the investments you have made. That’s how you build long term corpus. Allow the money to grow. Allow it to work for you. Money invested is like a bamboo tree growing. They do not show you good results for first few years. But when they do, you would not want it to stop.

I can not time the market

It is practically impossible for us to time the market. Best of bests can not do that. This is where taking positions come into play. If it’s a stock that you are buying, you buy only one fifth (1/5th) of the entire amount you want to invest. Say you want to buy 5 shares of Infosys. You buy just 1 share first. You buy another share a few days later when the price has fluctuated a little bit. You do so until you buy 5 shares. What this does is it averages out your buying. Your stock may go up or fall down. You take advantage of this movement. This works brilliantly especially when the market is volatile.

If you are planning to invest in a mutual fund, SIP (Systematic Investment Plan) is the best way to go about it. It doesn’t matter if the market is going up or down (bull run or bear), you just keep putting your money every month taking advantage of the fluctuation.

The key to get wealthy is consistency.

Which product is the right product?

One of the other reasons we hold back from investing is because we do not know which product is the right one. We do not know if we are making a right decision or not. There is a lot of information out there for us to comprehend. Just Mutual Funds itself have many types and categories in it. Each of those have many different fund houses. Each fund house have many more mutual funds. We have no idea which of these is good or which of these are bad. We have no idea on what metrics to look at while downselecting the funds. With so many information around us, we rather be out of it. Or even worse, we might simple listen to our cousin or a relative and put our money in it.

We have discussed on how to choose the right product in each of its category chapters. The key is to understand and consume just as much information that we would need and let all other information pass by.

Interested in knowing the mistakes that I had done when I started my investment journey?