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<blockquote data-quote="esanthosh" data-source="post: 1923685" data-attributes="member: 33844"><p>Peter Lynch's book is good.</p><p></p><p>Most people shy away from stock markets and rightly so. It is risky, but most (<em>but not all</em>) of the risk comes from not knowing what to do. In my experience, there is no particular method that works for everybody. Every one needs to find a method that is tailored for his psychological make-up, strengths and weaknesses. One could be great at making money in Intra-day trading, some may be gifted at finding deep value stocks that become multi-baggers over 5-10 year periods, whereas many would be better off investing money in good balanced mutual funds for the long term and sit tight. Asset allocation, though financial literature would make you believe otherwise, is highly individualistic. For instance, I may be comfortable having 70% of my entire money in stocks even when I get to be 70 years old. Another person may be comfortable holding 80% of the money in FDs even when he is only 25. It depends not only on the 'risk taking ability' (which most people have in abundance when they are making money in the market, but lose it along with the money when things go bad), but information, knowledge and temperament as well.</p><p></p><p>Having money to invest and finding a good method to do it is just one part of the problem. Temperament plays a huge part, which many people lack. Take some time to read up and know what you are getting into before investing money. Start with a small amount of money that you can afford to lose without affecting your quality of life. Experiment with it, figure out what works best for you and take it from there. I lost a lot of money initially, but I have also recovered much more than what I lost. Making mistakes is not a problem at all, I still do. But, you should just make sure that you do not suffer heavily from your mistakes. One of the vital things for that to happen is to continuously re-assess your actions. The other important thing is to learn to hear everything, but think in isolation. One of my favorite quotes about mistakes comes from George Soros</p><p></p><p></p><p>As for now, if I were you, I'd choose to be more conservative.</p><ol> <li data-xf-list-type="ol">Make sure you have adequate health insurance cover. Medical inflation moves at a much faster rate (20-25%) compared to normal consumer price inflation. This may already be covered in your case.</li> <li data-xf-list-type="ol">Do you have dependents right now? Use <a href="http://www.hdfclife.com/financial-tools-calculators/human-life-value-calculator" target="_blank">HLV Calculators</a> to arrive at an approximate cover. While this may be enough for now, as you get older, responsibilities increase, life styles change, this cover should be increased in accordance with the inflated prices. So, you can add more term policies as you go along.</li> <li data-xf-list-type="ol">Create an emergency fund deposit. Keep say, 6 months worth of expenses in it. Add to this as and when monthly expenses keep increasing.</li> <li data-xf-list-type="ol">If you do not need it at all for the next 3 years, better to keep it a FD. If you have, say ~ 3 lakhs left after 1-3, you will get 27K interest @ 9%. TDS will eat away 10.3% leaving about 24K or ~ 2K per month. If you want to play it safe, you can invest this in a RD to earn a bit more. Alternatively, you can route ₹1000 of it to a balanced / equity fund and ₹1000 to RD. It won't add greatly to your corpus, but RD will keep part of your interest safe, while investing through SIP will gain you some experience about the vagaries of the market - ups, downs, the whole dance. Be prepared to mentally write off the whole amount invested in the Equity part. It may gain 30% or lose 50%, but your original capital will still be intact. <br /> <br /> In the mean time, gain knowledge. Subscribe to some magazines and/or read some financial web sites on a regular basis. Outlook Money is good for starters. It will give you good many ways to invest money (the bright side). Then you can subscribe to MoneyLife to get the alternate side of how many crooks exist in the finance industry (the ugly side). Buy some books, read them and see if you want to do it on your own, go the MF way or you are better off focusing more on upgrading your skills. Whatever excess amount you earn in the mean time can be used for investing further in your preferred route.</li> </ol></blockquote><p></p>
[QUOTE="esanthosh, post: 1923685, member: 33844"] Peter Lynch's book is good. Most people shy away from stock markets and rightly so. It is risky, but most ([I]but not all[/I]) of the risk comes from not knowing what to do. In my experience, there is no particular method that works for everybody. Every one needs to find a method that is tailored for his psychological make-up, strengths and weaknesses. One could be great at making money in Intra-day trading, some may be gifted at finding deep value stocks that become multi-baggers over 5-10 year periods, whereas many would be better off investing money in good balanced mutual funds for the long term and sit tight. Asset allocation, though financial literature would make you believe otherwise, is highly individualistic. For instance, I may be comfortable having 70% of my entire money in stocks even when I get to be 70 years old. Another person may be comfortable holding 80% of the money in FDs even when he is only 25. It depends not only on the 'risk taking ability' (which most people have in abundance when they are making money in the market, but lose it along with the money when things go bad), but information, knowledge and temperament as well. Having money to invest and finding a good method to do it is just one part of the problem. Temperament plays a huge part, which many people lack. Take some time to read up and know what you are getting into before investing money. Start with a small amount of money that you can afford to lose without affecting your quality of life. Experiment with it, figure out what works best for you and take it from there. I lost a lot of money initially, but I have also recovered much more than what I lost. Making mistakes is not a problem at all, I still do. But, you should just make sure that you do not suffer heavily from your mistakes. One of the vital things for that to happen is to continuously re-assess your actions. The other important thing is to learn to hear everything, but think in isolation. One of my favorite quotes about mistakes comes from George Soros As for now, if I were you, I'd choose to be more conservative. [LIST=1] [*]Make sure you have adequate health insurance cover. Medical inflation moves at a much faster rate (20-25%) compared to normal consumer price inflation. This may already be covered in your case. [*]Do you have dependents right now? Use [URL='http://www.hdfclife.com/financial-tools-calculators/human-life-value-calculator']HLV Calculators[/URL] to arrive at an approximate cover. While this may be enough for now, as you get older, responsibilities increase, life styles change, this cover should be increased in accordance with the inflated prices. So, you can add more term policies as you go along. [*]Create an emergency fund deposit. Keep say, 6 months worth of expenses in it. Add to this as and when monthly expenses keep increasing. [*]If you do not need it at all for the next 3 years, better to keep it a FD. If you have, say ~ 3 lakhs left after 1-3, you will get 27K interest @ 9%. TDS will eat away 10.3% leaving about 24K or ~ 2K per month. If you want to play it safe, you can invest this in a RD to earn a bit more. Alternatively, you can route ₹1000 of it to a balanced / equity fund and ₹1000 to RD. It won't add greatly to your corpus, but RD will keep part of your interest safe, while investing through SIP will gain you some experience about the vagaries of the market - ups, downs, the whole dance. Be prepared to mentally write off the whole amount invested in the Equity part. It may gain 30% or lose 50%, but your original capital will still be intact. In the mean time, gain knowledge. Subscribe to some magazines and/or read some financial web sites on a regular basis. Outlook Money is good for starters. It will give you good many ways to invest money (the bright side). Then you can subscribe to MoneyLife to get the alternate side of how many crooks exist in the finance industry (the ugly side). Buy some books, read them and see if you want to do it on your own, go the MF way or you are better off focusing more on upgrading your skills. Whatever excess amount you earn in the mean time can be used for investing further in your preferred route. [/LIST] [/QUOTE]
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