How did the Journey Start?

Being new to the Finance Industry of India, a lot of questions popped in my head. An MBA in Finance does have an idea on the theoretical knowledge but how do you fill the gap between the practical and theoretical knowledge. So I thought it would be better to start from scratch.

Starting from scratch would require me to research a lot over the internet & discuss with people from the industry. My internships at Arihant & HDFC Securities helped me to understand what are the positives of different alternative investments like stocks, bonds and cash equivalents. Out of the above, stocks grabbed my attention the most.

There are 2 ways in which you can invest in stocks, Direct Equity & Mutual Funds. Mutual funds have been the retail investor's favored investment for a variety of reasons, with mutual funds accounting for the great bulk of money in employer-sponsored retirement plans. Direct Equity has been known to create long term wealth.

Mutual Funds have been providing a diversified portfolio with transparency & investor fairness as they are guided by laws. A diverse portfolio includes securities with differing capitalizations and industries, as well as bonds with varying maturities and issuers to reduce risk. A Mutual Fund might provide faster diversification at a lower cost than individual shares. They are extremely liquid investments with easy access to investors. The cost of buying a diver mutual fund is lower than building a diversified portfolio via Direct Equity.

Investing in Direct Equity also has its advantages. Profits from capital gains are substantially higher in equity investments than in other types of investments. The shares rise in value as the market strengthens. Shares are also liquid and transferrable. Diversifying in direct equity also provides an advantage rather than investing in one company. Dividends from companies are also a component of Return on Investment.

The primary goal of any investment is to improve the value of the capital invested. Wealth growth is a crucial impetus for investment, which in turn grows the investor's money over time. Your investing strategy should guarantee that your portfolio matches your risk tolerance, investment objectives, and time horizon.

Looking at the above, I felt equity and mutual funds are better investments for me as I have a long time horizon (very young), high risk tolerance as well (can handle some amount of loss in order to learn) and my investment objective to grow my wealth.

With this, I decided to start my Research Journey with Direct Equity & Mutual Funds by making a checklist to help me decide on where to invest and what to avoid. 

PS. Wait for my next post for the Checklist.