GET READY TO EARN MONEY IN STOCK MARKETS | CAP CLASSES

FINANCIAL LITERACY TO BECOME RICH

HOW TO EARN MONEY IN STOCK MARKETS

Article – 1 dated 2^nd Jan, 2019

Hi Friends!!

Welcome back to CAP CLASSES. 

First, let me ask u one question! How many want to become rich. No exception, everyone wants to. Isn't it? 

Now think and answer, is it your dream or a goal? Is it something like, kaash mere paas ek BMW car hota! Or you want to work on it and achieve it. There is a lot of difference. Remember, luck favours the prepared. 

The concept in this article is LEARN TO EARN. First let's understand basics.

What is a share?
What is a mutual fund?
What is stock market? 
What are the risks and returns associated with stock markets?

As a part of series of my fin-ed (financial education) am writing this blog. So, let's start learning today for earnings tomorrow. 

This article is on, "HOW TO MAKE MONEY IN STOCK MARKETS AND TO BECOME RICH"

FIRST OF ALL, LET ME TELL YOU, I AM NOT AN ADVISOR. I DONT HAVE CLIENTS TO WHOM I GIVE STOCK MARKET TIPS. I am a Chartered Accountant with 12 years of experience in Accounting and Audits. And a past tense of losing tons of money in stock markets. (I turned around it thou) Then systematically I have studied various ways and means of investing and becoming rich in stock markets. So, this is an attempt to share my knowledge to you because, loosing 30 - 40 lakhs and then studying stock markets for 4 years and then becoming rich is very risky for you.

How many of you want to be rich? Everyone right!! There is hardly any exception. So, today let us learn how to earn money.

Before we start with a discussion which lasts for a life time, first answer the following questions

1)      Who is rich? (in terms of material wealth)

a.       Who’s parents are rich

b.      Who earns big money

c.       Who is a successful business man

d.      Who trades in stocks and cryptos

The answer to the above question is – NONE OF THE ABOVE

REMEMBER:

You never become rich if you earn more. There are so many examples where people earn money but end up without wealth. Consider the following example.

Mr. A is a business man and pays Rs. 1 crores tax. He invested money in his own businesses and reinvests his earnings. His annual profits are say 3 crores. He lives a lavish life and didn’t save money.

Mr. B is a middle level manager in a MNC and earns Rs. 40 lakhs per annum. He is from a small family, worked hard and eventually climbed the ladder of career. He has a car, house and all the comforts. Yearly trip to the world is his stress buster. He invested money in certain assets. No savings.

Mr. C is a small employee in a company and earns Rs. 25,000 per month. He has a strict financial discipline and the moment his salary account he has given instructions to bank for investing in some good mutual funds. 5,000 is the monthly investment. He got a job at 23 years and can save money for more than 30 years. Can you imagine what his investment value is if he saves a meager amount of 5,000 per month???

At a compounding rate of 30% (there are mutual funds which have consistently given above 30% return on investment)

His investment value is Rs. 1,48,69,12,903 (149 crores) 

You may say 30% is aggressive. May be the investment value is exaggerated. Then, lets see at different rates what it could be.

If Return is (%)	Monthly savings for 30 years	Total Investment 30 * 5000 * 12	Investment Value
30	5,000	18,00,000	149 Crores
25	5,000	18,00,000	41 Crores
20	5,000	18,00,000	12 Crores
15	5,000	18,00,000	4 Crores

Consider the worst of the above. Still your investment of Rs. 18,00,000 becomes Rs. 4 Crores right?? Isn’t it smart, awesome and exciting? Yes, it is.

Now you will ask a question, what is the risk? The answer is, practically no much risk. I have explained it in detail in the coming paragraphs.

LEARNING:

1. Savings will make you rich not earnings. Dont save money after spending, spend money after saving. {This is because, if you earn 25,000 you will live a 30,000 life. If you earn 1,00,000, you will live 1,50,000 life. If you earn 5,00,00,000 you will be willing to live 7,00,00,000 life and the game never ends. So remember, whatever you earn, there is a room for savings}
2. Always look for Long term. 
3. Dont trade with your life. just invest. Stock market is no game.
4. Believe in the power of compounding. it works. it really does.

REMEMBER - SIP (Systematic Investment Plan) IS THE MECHANISM WHERE YOU EARN MORE IF STOCK MARKET FALLS AND YOU CONTINUE EARNING MORE AND MORE WHEN STOCK MARKET GROWS.

Isn’t it interesting, eye opening or jaw dropping? Yes it is. But wait. More eye openers and jaw droppers are here waiting for you. Trust me, it is going to be a life’s learning and implement these principles properly, you will become RICH.

In this series of articles, I will help you with the following.

a)      How to make money in stock markets

b)      What is meant by mutual funds

c)      What is the meaning of Return on Investments in stock market or mutual funds.

d)      What is the risk involved in investments

e)      How to identify what is good for you. Risk - return trade off.

f)       And the most important part is, which are the best performing mutual funds that can be chosen for 2019

Now let’s move further:

How many of you have dreamt of earning money in stock markets. Many a times, we read about some successful people who earned a fortune in stock market investments like Warren Buffet, Rakesh Jhunjhunwala etc., and then we have either of the following responses:

1)      Either we will be in depression sulking about our earnings, our family background, our middle class life of struggling for daily necessities. Or

2)      We will strongly desire to earn tones of money in stock markets.

And then what stops you is the investment amount. You read that their portfolio size is huge. Sometimes as huge as thousands of or lakhs of crores. Then you feel, this is not for us. We are not fortunate enough. Now it is high time for you to know the following:

REALITY BITES ABOUT STOCK MARKETS

1)      Earning money in stock market is not easy. It requires a lot of skill.

2)      Stock market is not a place to try your luck.

3)      Advises of others regarding investments mostly wouldn’t work.

4)      You shouldn’t see someone earning money in stock markets and start trading.

5)      You need not sulk about the investment size. (You can start with Rs. 500 also)

6)      If you want to earn money in short time remember it evaporates faster than you ever could imagine.

7)      Never believe in stock market advisors, (unless you have the knowledge of what you are doing on his  advise and what are the risks and returns). You believe, these so called people are experts in making money. Remember they are experts in making money for them. May not be for you. Everybody has an agenda here!

8)      A desire to get something without having relevant skills can kill you. And if you want that desire to be fulfilled quick, it can take you to hell. Remember, GREED KILLS YOU.

It is rightly said, need can be satisfied but greed cannot be.

So, friends, the New Year resolution is earning money, Slowly, Systematically, Steadily, Step by Step.

Even finance experts who are good at understanding the radical factors of stock markets and having experience in financial analysis also can’t understand the dynamics of stock markets. They only predict. And these predictions are like astrology. If you like it it’s a science. But if you don’t, it’s a mechanism of making money for them using your emotions. And the funny part is that whether you lose money or earn, whether the prediction of your advisor (Equity analyst or astrologer) they always make money. Majority of cases you lose. So what’s the solution?

The only solution is, learn to earn.

1)      Have basics strong

2)      Understand what you are doing

3)      Use commonsense

4)      And most importantly DON’T BE GREEDY.

In this series of articles, am going to tell you how to earn money in stock markets through mutual funds and 5 best Mutual funds for 2019 to earn money and create wealth over a period. 

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