If we talk about share market many people are afraid to invest because of their prior experience which they have from the Frauds and Scandal which is happen in past and, Low Risk Appetite, Lesser Knowledge and No Dedicated Coursers are available in the market in India only 4% people are invested in share market and in U.S. 50% people.
Do you know while many children’s are playing, reading comics and having fun with their friends at that time 13yrs old children he was reading about companies balance sheets his name is Warren Buffet. He earned his all money through share market, but how. For this first you should know how many types investment tools are and their returns.
| S. No. | Investment Tools | Appropriate Returns |
| 1. | Fixed Deposit | 7% |
| 2. | Debt Fund | 6% |
| 3. | Real State | 5% |
| 4. | Gold | 5% |
| 5. | Saving Account | 4% |
| 6. | Current Account | 0% |
| 7. | Mutual Fund | 12% |
| 8. | Share Market | 18% |
Wither many tools are provided returns up to 8%, Share market and Mutual funds are provides 12% to 18% returns subsequently in a year. Two ways are invest in share market. First is indirect investment like Mutual Fund and second is direct purchase share of the company.
Some people are making money through share markets, Warren Buffet, Rakesh Jhunjhunwala, Raamdeo Agarwal, Vijay Kedia and Radhakishan Damani are few of the names who earned from share market.
Share market work on the basis of demand and supply method when demand goes high than price goes up and when demand goes down than price also goes down and Investment in the share market called trade.
National Stock Exchange and Bombay Stock Exchange you can trade. From here you can purchase shares but before purchase or invest investor always do a mistake is they search tips from taken from Television, Adviser, Newspaper, Internet and Friends. It`s a foolish thing so don`t follow the news and also don`t ask for any tips, only follow the trends.
Let`s talk about PE (Price Earnings Ratio) of fifty big companies of countries which are an associate in this pool. Nifty have his own PE ratio means how much we are invest and how much return we are get. This is an Individual PE ratio of Nifty50 also and Individual company also. So before invest always check the price earnings ratio of the company.
If you check the market track record between 30yrs to 50yrs it is always shown the low value as well as high value too. If Nifty PE is Between 10 to 13 you should invest it and if it is revising 25 to 30 you should ignore to invest or invest lesser amount but the problem is people do not want to know about the basics. Simple fundamental of PE is….
| P/E | Earning | Investment |
| 10 | 1 | 10 |
| 30 | 1 | 30 |
If market PE value is 10% and you want to earn 1Rs you have to invest 10Rs and if market PE value is 30% and you want to earn 1Rs you have to invest 30Rs. Now you decide for earn 1Rs you should invest 10Rs or 30Rs. So if the PE value is 30% for safer side you stay with Debt fund or FD instrument till than market is not come out the situation of the investment.
| Year | P/E | Return (Per Year) |
| 1999 | 12 | 105% |
| 2003 | 11 | 116% |
| 2008 | 10 | 130% |
| Year | P/E | Return (Per Year) |
| 2000 (Feb) | 28 | -53% |
| 2008 (Jan) | 28 | -64% |
Expert Sir John Templeton (British Investor) said:
But people live in a myth they thought with perception that ‘this time it`s different’ maybe it`s change, but if you make your mind to invest than invest little amount.
As per Warren Buffet Guru The father of value investing Benjamin Graham said: look Warren ‘Socks or Stocks always purchase when it` on cheaper price’. if you want to invest in the market so always put your money when it`s PE goes down, means. ‘Sasti chej ko Mahnge mai Kharidna and Ek Mahngi chej ko Saste mai Kharidna hi asli munafe ki chabi hai’. So always wait for suitable time and then invest.
FAQ:
Is share market is Risky?
Share purchase means buy a small part of the company and made himself a co-owner of that particular company. It is just like that you invest in your friends or in your relative business if that business does not do well than your money will drown, that`s a risk, just like that in the share market, you are investing in big company like Tata, Reliance, Godrej. And if the company drowns then your money will also drowns. If the company shows very good growth, then your money will also grow.
How many returns can I expect?
When you will enter in high growth economy country like India the chances of returns are 18% to 20% in a 5years of time frame with invest in a good company`s fund . It will reduce the risk of losses and returns of growth chances will increase if you invest 8 to 10 company’s shares.
How much money you need to start with?
In 1st yeat year you should invest 1000rs and then 2nd year increased it by 15% means 1150 per month and so on and if you consistently invested like that through the next 25 years you will get 1crore rupees with the return percentage of 15%. You can calculate it by the help of SIP calculator. It will help you to figure out the approx. return if you start with 2000/- or 5000/- per month or more than that.
What is the Right Process?
Process is very simple. You need only three things Pan Card, Aadhar Card and Bank Account. Now it`s turn around fully digitalize and lot of discount brokers means they take almost zero brokerage are available to you of open in account. Zerodha is one of them, it is simple to use and for beginners it`s one of the best tool. You can open your account with 300 rupees and without any physical paperwork your account will open in 3 to 4 days and you can start trading. If you are investing and keep your shares for few days and then sell it Zerodha will charge negligible charges you just have to pay 0.1% government taxes as a fee.
Why stock market has a bad reputation?
It`s totally a mindset nothing else. Think when you invest in property or gold have you think that you will sold it after 4 to 5 month as soon as the price will increase, means we will give time to gain the value of property and same will happen with gold too but when we talk about shares our expectation setting is wrong. We want to be a milliners with a fraction of time but it will happen only to play a gamble or might be through lottery but not from the share market and the right approach is first know about company background, who is the manager of this company, what is the business model they have used and followed and then start invest and just stick with it for minimum 5yrs and then you feel to sell you can go for it.