Don’t have cash to invest: Balance between Expenses & Investments

     Now that you have some idea of investing through mutual funds & stocks, now comes the major concern, especially for those who are fresher, just completed their graduation & has entered their first job & equally for experienced working professionals who also got many other financial components like various monthly bills, house rent, grocery, dining cost, fuel cost, medical emergencies etc.. But guys don’t you worry about all these things. As I have explained before in my posts, a balance is required in your life between your expenses & investments, between your family & work load. This again as explained by me is a fine art which we need to develop as we grow old in this. You should not cut down your basic requirements to account for the cash required for your monthly SIPs or Stock calls. I have a unique formula for solving your cash shortage for investments. You need to plan the SIPs in such a way that the total amount required for the monthly SIP say 5000rs (for beginners)/ 15k to 20k Rs (for elder mob), should be completely managed from the profit you fetch out of your monthly stock trading. Not to mention, for fresher their initial SIPs would be of lower value & so is the amount invested in stocks & hence the profit fetch out of it. Similarly, for elder experienced investors, they can manage the profit from monthly stock trading for their monthly SIPs. This strategy may not be initially smoothly executed, but with a little focus on your panned investment strategies you can very well follow this & become tension free about how to raise cash for your monthly investments. 

What should you do while the market falls drastically

     As explained in my earlier post “Bottom Fishing”, you definitely have to analyse the particular strong fundamental stocks & then go for bottom fishing. There is no space for panicking here as we all are well aware that unless there is a big event like another world war, the market is going to swing back to form! But do ensure that you choose a stock with good fundamentals & buy them in sizable quantities. Do note that don’t make a mistake of pumping in all your money into that particular stock as you need to maintain cash liquidity if in case you get another chance of buying more if the market falls further. So you need to have a balanced bottom fishing since there are possible chances of lower cost bottom fishing in future on market falling down further. Hence this art of bottom fishing comes with some solid experience from stock trading for some accountable time, say 1.5-2 years minimum. Hence experience do counts for effective stock trading, but never to worry as far as you are well guided by my blog posts..

Stock Trading Simplified: Bottom Fishing

     This is one of my favourite trading strategies- Bottom Fishing/ Picking. This is an art in fact! Once the targeted stocks reduce in valuation & reaches 7-15% below its original share value & if the stock is having strong fundamentals and healthy balance sheet (debt free) then it’s a perfect time to buy the particular stock. Some calls this “Value Investing”. The stock must have reduced in valuation not because of its poor micro economics, but because of some macro-economic variables/ overall market weakness which is supposed to recover in a shorter duration taking the stock back to its original valuation, in fact higher than that, which fetches you desirable profits. But beware & be cautious of those stocks which are reducing in its valuation because the company fundamentals are becoming weak & not because of the overall market weakness. Those stocks though available at lower valuation, which can easily lure you, should not be selected into your portfolio. Patience, sharpness, analytical skills, matured thinking are some of the qualities to be nurtured while investing vide stock trading.

Family first!

      

      Don’t get carried away by the returns from your share market investments. We should have a balanced life. You should definitely find time for your family, spend quality time with them though in parallel you have to manage your main job & find time for investment strategies. Just imagine how horrific it would be if your family needs you, but after reaching home from your main job, you are unavailable to them & is sitting in front of your PC planning out your investments/ gazing out into the TV noting down stock trading ideas!

      Now you would be wondering how you can achieve all these all in parallel. Well don’t worry, or don’t be confused, life is not that complicated after all! You need to list down your clear cut targets/ goals in life, formulate tailor made investment strategies for that, strictly stick to the ‘Plan’ well then definitely with such a disciplined investment strategy you will find time with your family & can easily do justice to your main job. My subsequent blog posts will guide you step wise to formulate the so called ‘Plan’.