Life sure has a fun way when it comes to our wants and money.
The youth have all the wants, and unfortunately the elders have all the money.
Well, there is a way to grow the small sum you earned during your first year at work or some part-time job into something substantial. No, not gambling, it's the stock market.
In case you have just graduated, you are probably thinking of investing and the stock market as some fuddy-duddy activity that middle-aged men involve themselves with.
Life is fun; it's about movies, dates, and splurging. Well if you're reading this article, chances are you're one of the many young people that break the "youth stereotype."
The key to start investing well is to have realistic expectations. The more realistic your expectations, the chances of you being successful go up.
Investing is also strangely similar to dating in terms of adherence to a few basic rules.
Returns are proportional to the risk taken
Not investing, in the present day scenario with rising inflation rates, is probably riskier than investing. There will always be a trade off between risk and return.
Say you have locked your money in a safe iron vault. The risk of losing any of the money is nearly zero, and so are the returns on the amount stored.
Consider the opposite scenario of investing money in a bumper draw or a lottery. The risk of losing the money is incredibly high; rather the chances of you not losing the money are almost negligible.
But in the very odd scenario that you win the jackpot, the returns are many thousand times your investment. Neither of these are very appealing propositions.
What are the odds of an Aishwarya Rai accepting a dinner date with you? This is the lottery winner equivalent very high risk of being rejected, very but if she accepts your date then very high return as well.
The key in investing is to strike the right balance: To know one's own comfort level with risks and returns, and to make money on a sustained basis.
Among your safest options include fixed deposits, and savings bank accounts etc. Higher returns are on offer with mutual funds, which offer measured risk. But with a certain degree of involvement and care, stocks are the best-suited option for high returns.
It's like asking your classmate out on a dinner date. The risk is moderate and the reasonable returns.
You are the proud owner of a company
At least in part, once you own a company's shares.
So every decision that the company makes affects your fortunes. So Reliance Petrochemicals setting up a new refinery means greater revenue for the company, then it will mean a boost in the stock price, and a rise in the worth of your stock.
A stock isn't just a piece of paper it's company ownership in every aspect!
It's not that different than a relationship. It follows the principle of commitment. You are not just seen with your better half, you happen to be an important part of his/her life. So, any change in their life directly affects the state of your life.
'Nothing' may be the right thing to do
The basic purpose of investing is easy money.
In stocks, it means gaining an advantage without having to work much.
It's not like you can lie on the couch and expect the money to flow in. Understanding and appreciating the facets and nuances to investing and the stock markets takes its own time.
You will not be comfortable spending that hard earned money of yours based on just gut instinct. It requires over a year of close observation and a look out for opportunities and trends.
But once you develop confidence in your ability to invest and make money, your money will start working for you even while you're asleep. That's almost as good as lying on your back, and earning money.
This is like a classic dating routine.
Befriend the girl's best friend, and try getting in her good books as soon as you can. This is about the only effort you have to make.
Once successfully achieved, you can sit back and let the best friend market you to the girl of your dreams. And there is no person your love interest will heed to more than her best friend. It's like setting the ball rolling.
It's all about experience
Remember my dear, getting good at handling money is not a piece of cake.
Initially, while buying stocks, take smaller risks, invest lesser and distribute the money you have among more companies to reduce the risk.
Over time, as you gain confidence in your knowledge and judgment, do not hesitate to invest larger amounts to obtain bigger returns.
What is the defining change in your attitude that makes you cross the chasm from an acquaintance to a date?
It is the confidence that comes with time spent with the person, and understanding the signals sent and reacting to body language. Belief comes only with a number of successful iterations, be it investing or dating.
What works for you, works for you
There is no single 'prescribed' or 'correct' method to making money in the stock markets.
Very often, people imitate the investing decisions of the market experts. Purchasing the same stock or having a similar portfolio is not the solution.
Different investors have varying budgets, vastly different time periods planned for, and many such parameters that are impossible to ape or keep constant track of.
Your best chance at dating is if you were yourself.
Copying some popular person's style statements or mannerisms very seldom fit in as you end up seeming uncomfortable. You are most comfortable and spontaneous at your own natural self.
People are not appreciated because they look like or act like other friends who are popular. Sticking to your own style statement is your best bet.
Look past the glitter
All that glitters is not gold, and this is especially true in investing.
In choosing which stocks to purchase, you don't want to invest in a rapidly rising "hot" stock before being sure about your research. However, this is what exactly the average investor is most likely to do.
If you do, the chances are that you will be the loser. The prices of many "hot" stocks plummet just as rapidly as they rise unless there is real material backing that hot streak.
Men and women are quite similar.
You want to check if the good-looking guys and girls have something in addition to what they inherited from their parents. Does the person go beyond the pretty face?
There are a lot of valuable things you can miss out on. If you discover they have strong character, loyalty, and honour, then you've dug enough and you've got a winner. But if on digging you find nothing, then keep looking for something that's real.
Take the initiative
What better way to do this than to start keeping tabs on the companies that manufacture products or offer services that you are interested in?
Say, if you are a sports fan, following cricket in India and you discover that Nike is going to get the contract from the Indian Team, then invest in the stock of Nike in India.
This is the best way to make research interest you while working for yourself.
Similarly, in dating, make these types of discoveries. Discover what he or she really likes before they tell you, and convert that into a special thing that will surprise them.
If successful, you'll surely be one up on your competition.
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