Why You Shouldn’t Try to Time the Market!!!

Why You Shouldn’t Try to Time the Market!!!

Market timing is not easily attainable.

Timing the market indicates trying to buy low and sell high. And in reality, it is what any new investor wishes to do

Here are some mentioned reasons why you should not try to time the market —

1. Timing command to Emotional Investing

Worthless good gets from emotional investing. And when you attempt to time the market, you vacate yourself weak to emotion. You often worry if prices have plunged low enough for you to feel prosperous buying, or if they’ve climbed high sufficiently for you to sell.

2. Chance of Failure is High

Research has shown that retail investors who acknowledge market timing are inclined to lose money almost actually.

Market timing is a defective technique and we need not glance beyond proportion to prove that. Deem the fact that market timing affects two judgments. One decision is respecting when to get into the market (buy) whereas the other decision is respecting getting out of the market (sell).

3. The Investor’s problems 

Retail investors do not know about the stock markets. Moreover, they maintain other full-time jobs, and they do not retain the time or the resources required to begin such an education. 

The ordinary retail investor would somewhat believe the suggestions of so-called “experts” and invest their money instead than delve into the facts themselves. The danger is compounded when because of the vertical ratio some of these suggestions turn out to be true.

4. Transaction Charges

Investors who accept the timing of the market are very successful for brokerage firms. The extra stocks are bought and sold, the more charges are outstanding to these firms. Yet, the commission is compensated from the investor’s pocket regardless of whether earnings or losses are being created.

Conclusion

The hazards of market timing are generally that an investor will miss out on optimistic price movement as they wait for that accurate moment, and that oftentimes it is impossible to anticipate when a market will roll, so they invest at an incorrect toment.

Nikhil Verma

Its all about Financial education- Why you should Invest in your 20s !!

I love people. I enjoy promoting them and encouraging them to develop.
In this blog, I'm not going to inform you where you should invest your money but moreover why you should start investing in your 20s and how you can reset your finance after this corona pandemic.

So, let's begin -

The word ‘investment’ sounds horrifying, but it is the solely way you can create a strong financial core.
When it accomplishes to investing in your 20s, the earlier you get commenced, the earlier you can start to flourish your savings for more primary goals like a home, education, and travel, as well as more long-term financial goals like a well-funded retirement. The 20s are the time when you begin understanding the importance of saving, investment, and tax returns. This is the age when you begin to have financial freedom and you slowly start carrying responsibility for your own life.


You should start investing for two massive reasons:

+To generate wealth for your future

+To be able to save taxes by investing in tax saving schemes

Note- (Upcoming blog will be on tax saving).

#Power of compound interest

 If you start investing in your 20s you could be a millionaire  later

Compound interest is your partner. Even if you don’t have a ton of money now, what you have is time.

Let me explain this with an example -
Compound interest operates like this: If you invest 5,000/month or 60k/annum on an average 12 per cent compound interest rate, the interest would be rs. 4,047. The following year compound interest lifts in. Rather of receiving another 4,047 based on your original investment, you’ll earn interest based on the 64,047 you now have. If you leave that original investment for another 10 years it will accum.
And If keep investing for 10 years
Then your total investment would be Rs. 600,000 and estimated return would be ₹561,695, it means your net worth would be rs. ₹1,161,695 after 10 years.



How you can reset your finances -

The coronavirus pandemic pushed everyone to remake their behaviours, mainly with money. Make 2021 the year you take planned phases to improve your life and your finances. In May 2020 my elder sister ask me how we can reset our finance and how we can build wealth, we don't have that much money to invest !!
How can we achieve that expectation?
So, I surveyed a lot and comprehend that there is only one way of becoming rich quickly i.e 'by doing fraud'😁 jokes apart.
And the conclusion was If you want to create wealth then it will take time, you cant become wealthy overnight.

So, here are some points which we followed during the pandemic.

Here are directions you can reset your finances in corona epidemic.

1. Form New Goals that Reflect Your Significances.

When you withstand something complicated your attitude on life – particularly goals and priorities – tends to change direction. While your top preference before the pandemic might have been receiving a promotion, maybe you’ve realized your job isn’t fulfilling so much as it puts food on the table. 

This year, maybe change your goal to search for a career you’re passionate about – one with the noticeable impact that gives the joy and balances your desire. Take the time to reconsider your purposes and try to find your passion and convert your passion into profession.

Ask yourself:

What are the skills and knowledge I acquire during this pandemic?
How have my preferences changed during the pandemic? In what ways should my goals evaluate that change?

Did I learn any valuable skill during a pandemic?

What progress have I made on my current long-term goals like retirement?

And most importantly set your financial goal.






2. Take Another Look at Your Cash Flow.

The most crucial point that I informed my sister and I follow too- to maintain a proper cash flow statement on a chronological basis.
Cash flow is all about counteracting money coming in and money going out. In times of tension, your cash flow management might be the main stuff to go. When was the recent time you checked your expenditures? Are you stunned to see you’re subscribed to every new pouring assistance? Did you ever eliminate that meal service you tried for the first-week promo?

The new year is a considerable time to check your spending obsessions. Try to do the following:

Trace your spending. Whether it’s an application, excel layer, or pen and paper. Realizing what goes out and what comes in will assist you to smooth your budget, freeing up more for saving and investing. 

Dump the negative spending addictions. Every one of us has unfavourable spending habits we’d like to kick to the curb – retail therapy, surprise gifts to boyfriend/girlfriend (sometimes it Ok) unnecessary dining-out, liberal use of Amazon Prime, buying unnecessary stuff etc. Be honest with yourself about where you fall low and take profitable notches to make decent choices. 

Bring motive to your spending.
Paying money well becomes a lot modest when it’s done with motive. Ask yourself, does your purchase carry you joy? (Note I mumbled joy, not happiness). Is your spending connected with your goals, usefulness, and priorities? Does your spending cue to help financial results? When you remake your spending in this manner, it serves more realistic to ingrain expending with your values. 

Give importance to your savings. 
Part of maximizing cash flow is assuring you have sufficiently of your income saved and invested. You need to ascertain a emergency fund, contribute to your retirement funds, save for other purposes, and invest in the markets. 






3. Having no investment plans or eliminating investment

When you think about a corona or any pandemic you perhaps don’t think about points on your investment plan, but that’s actually what you should do. Many find it tough to continue investing during pandemic times, but for most folk, the nicest course of policy is to punch with your plan. 



A major reason why I focused on investing -

Hoping to retire by 40.
Wants to open my own business
To build wealth.
Have financial freedom.
And yes to become ' Rich son'.🙂😎





Conclusion

Remember, financial planning is an ongoing process. Your spending, saving, and investing will likely fluctuate, which is why your goals and values are essential to guiding the process. When you lean on goals and values, you’ll have a clearer sense of what to do next or at least have the right questions to help you get there. 

Closing thought -

Everyone wants to earn, but nobody wants to learn,  how to earn.

Start small but start now!

Happy investing!

A place where money works for you- Stock market.

I love people. I enjoy encouraging them and helping them grow. Since the COVID-19 outbreak, I have grown to realize just how much I can learn and work over my skills and passion. Everyone should try something different as I did.

Before starting my today's topic let me clear you something about market and investment..


What do you think of when you hear the word “the market”? Sometimes it can feel like the market is just a flow of money bouncing up and down without reason. But the market is, of course, much more complex than that. 

Markets, in general, are places where two or more parties can come together to exchange goods or services. There are many different types of markets but the one most applicable to this question is the financial market, which is a place where any security is traded. 

The financial market consists of varying parts – like the stock market, exchanges, bond market, and foreign exchange markets.

Let's begin on the topic-

Stock market
In a lemon terms
Stock market is the place where we can buy or sell shares of a particular company.

Stock market works only between two parties which are buyers and sellers. The whole transaction or trade happen only between buyers and sellers and it's really easy to understand, If one get loss then another get profit.
But the problem is how a normal individual can buy or sell shares of a company who is working with billions of billions dollar capital.
That's why stock market works with a channel which have 4 bodies
1 - Company
2 - Exchange
3 - Broking Firms
4 - A Individual Person

Companies - A company is a legal entity formed by a group of individuals to engage in and operate a business. And to operate a business they need big capital and that's why the are issues shares.

Exchange - Exchanges are the places where a buyers and sellers meets to trade.
Like - NSE, BSE, MCX

Broking firms - Broking firms are the bodies who helps you to reach to the exchanges. Because not a individual person directly deal with exchange.

A Individual - A Individual is a person or a group of persons who wants to buy or sell any shares of any company.

*These 4 bodies are operating whole stock market.

Now we got the channel of Stock market
Let's start how a individual or group of individuals invest or deal in stock market directly.

First A individual need to select a good broker. Broker provide you a platform (A DEMAT ACCOUNT) which helps you to connect with the exchange. Once your DEMAT Account is ready then you can watch stock market perfectly.

Once you start watching market you will get some idea about shares and the price of shares etc. Then you can take decision to take a trade and invest directly in stock market without investing in mutual funds, SIP or any these financial products. Because they also invest in the stock market no other places are exist in the world.
Your all money which you invest anywhere it will come in stock market only directly or indirectly. So why not we invest directly and get all profit.
Broker is a middleman so they provide the service and charge the money for that which called brokerage.
When you take your decision to take any trade you just have to give a order to your broker and broker will do exactly what you say to do. Means broker buy or sell shares according to your order.
Now, how the broker do my task ?
Here, the broker will go to the exchange and your task will complete in exchange only.

Example.... There are two individuals Mr. A and Mr. B, who are interested to trade in stock market.
Both are watching shares
Mr. A decided to Buy 100 shares of SBI BANK
And Mr. B decided to Sell 100 share of SBI BANK.
both give order to the their brokers, broker will pass the order to the exchange, because all the broker connect with the exchange only. And exchange complete the total task.


Reason why we indian should invest in stocks. 

1.This is really a harsh reality that we Indians are invested in Stock Market near about (2 - 2.5)%. Currently, the population of India is around 1.2 - 1.4 Billion, out of which only 20 - 28 million people invest in shares and mutual funds. #google current data..

2.One of the primary benefits of investing in the stock market is the chance to grow your money. Over time, the stock market tends to rise in value, though the prices of individual stocks rise .

As I mentioned in my last blog 'Rich dont work for money ' money work for them. This is the only technique by which your money can work for you!!

3. As we all know due to corona outbreak all the businesses has been lockdown and more than 50% people had loss their jobs and they dont have any source of income but the investors of stock market are still earning.

4. Investments are important because in today’s world, just earning money is not enough. You work hard for the money you earn (active income). But that may not be adequate for you to lead a comfortable lifestyle or fulfill your dreams and goals. To do that, you need to make your money work hard for you as well. This is why you invest.


Why do Indian youngsters do not invest in share market?

Now, according to the non-investing population, the two biggest reasons that stop them from investing are ‘lack of education’ and ‘lack of time’.

For the first part i.e. the lack of education, it might be a little fault of our education system, somewhat of the parents but most of the individuals. Investing is not a rocket-science that only people with high-IQ can pursue. Anyone can learn and start investing. People should not always blame others if they are not ready to learn. There are a lot of free resources available online and offline, which is enough to get adequate investing knowledge.

Anyways, the other common excuse that most people make for not investing is that they don’t have enough time to invest. “No time to research where to invest!”. A few may even argue that setting up a trading account and making investments takes a lot of time which prevents them from investing.

However, all these are just excuses!!

After reading this the biggest question arise in everyone mind I.e

How do I invest money in the stock market?

First of all, everyone knows it game of long term so you will have always best return on longer run as compare to short time period. Buy and hold strategies work too good on blue chips company and midcap firm which have high probability or good earnings growth. In this kind of company your you might be getting return in terms of multiple.
Investing in stock market can make people rich and it can make you poor also. Stock market is like Ocean. It looks beautiful and it’s scary too. As you know we have to learn everything before entering into the Ocean, here also you have to learn everything before investing. If you are not aware about the risk involved and you don’t have sufficient knowledge, you may loose your entire capital. If you want to be rich or wealthy from stock market, you have to learn how to earn. If you are not earning after learning, you have to change the way you think and you have to improvise yourself.

There are 2 major ways in Indian stock market which makes us rich.

1.Investment

2.Trading.


Investment: Investment in stock market for long term can make you rich. It requires large capital to be invested as well as time frame. Getting rich with investment needs patience. Impatient people can’t get money through investment.Suppose you have invested in metals like Tata steel, JSW Steel, Hindalco, VEDL when they were at 52 week low before 2 years, you must be getting 100% to 500% returns in 2 years. But it requires patience.

Trading: Trading is what we do for short term which involves risk but also generate large profit if you have talent to use momentum of market.



Closing Thoughts

1.Stop excusing that you do have spare time to invest, instead start acting. Everyone has the same 24 hours in a day. If you are not investing, it’s not because you don’t have time. It’s because you do not understand the importance of investing.
2. Everyone wants to earn, but nobody wants to learn,  how to earn.

3.Choose investments carefully after doing adequate research .

4.Dont invest in the business you dont understand says MR. WARREN BUFFETT. 

The Choice is yours: Assets or Liabilities?

Before starting my today's topic, I would like to tell you the real meaning of assets and liabilities and what mistake we students mostly do.

Last week I took a survey of my 5 friends. I asked all of them the same questions: The question was "What is an asset " and "What is a liability?"
All of them came up with the same answer which was "Assets means property and liabilities mean debts."
However, it is correct theoritically but not practically.
According to me, an asset is something that makes you money or anything which gives you cash flow.
Whereas a liability is something which costs you money and outcome of your cash flow.

To make it more clear, let me provide you all with a simple yet explanatory example.
There are two boys and both of them receive their respective pocket money. The first boy buys an iphone and starts showing off and he thinks that his phone is asset for him but as I told you earlier, assets means the things that makes you or gives you cash flow but by buying the phone he did expense.
On the other hand, the second boy decides to invest that money in stocks and purchase an iphone with the cash flow of that investment, which is the real asset of that boy.
If the rich do not work for money, then what do they work for?
Before stating the fact that the rich do not work for money, we should understand the true and actual meaning of working for money.
Simply, working for money is getting paid for time and work directly. It means if you are working, then you get paid as salary .
It is called Trading time for money .
Trading for money is just like working for money as active income.
Example - if we work for an hour we get paid for an hour.
And more than 95% people in India work like this.

And rich people do not work for active income they build assets and cash flow from assets is their income.
This is why rich people first focus on creating assets which can give them passive income.

5 types of asset of rich people are:

1. Small or big systematic business

2. Real estate (focused on rental income)

3. Paper asset (stock, bonds)

4. Commodity assets (gold, Silver)

5. Intellectual assets ( copyright, patent)

Many of us think that our property is our asset which is totally wrong , according to me our house is also a liability for us because it also increases your expenses and the
outcome of money .
But your house can be converted into an asset, if you give your house on rent by which you will get earning /cash flow and your house/ asset will make money for you.
If you want to be a real rich person, then you must apply this secret and create/build asset which will give you passive cash flow income.

Note:  The Choice is yours: Assets or Liabilities?

Motivation:

1. Focus on learning not earning.
2. The truth is that real rich are those only who have passive and portfolio income more than doublethan their lifestyle expenses.
3. Try to find the difference between the real asset and liability.
4. You become what you study - read alot...

INDIAN EDUCATION SYSTEM

Before I begin, I'd like to share a story with you all..!

Once upon a time, there were a few animals in a jungle and they decided to open a school for their children.

The students in the class were a rabbit, a duck , an eagle and an elle.

The first class was of RACING, it commenced between the rabbit and the duck.As the rabbit runs fast, it secured the first position while the duck looses. The teacher then punishes duck and asks it to stay after school for extra practice.The duck practiced a lot and in return got it's legs broken. 

Then the next class was of swimming between the duck and the rabbit.The duck went down in water but wasn't able to swim as it's legs were broken the previous day.The rabbit then went down the water but it couldn't swim.As a result, the teacher then punishes rabbit asking it to stay after the school for extra practice.

Rabbit practices alot yet couldn't swim and looses its conciousness.After the day,the running class begins again within the rabbit and the duck. This time rabbit couldn't run , as he already lost his consciousness while practicing for swimming, 

The next class was of climbing a tree. All the animals were climbing the tree step by step but the eagle flew and sat on top of the tree.The teacher then punishes it for not folowing the rule and got him resticated.The other animal was an elle who could do everything but in a minimised way.It could swim on an average, climb on an average, run on an average but according to the teacher it was the genius as he could almost do everything on an average. 

Do you all really think that this was the class for animals ??

Well,let me tell you, this is more like our INDIAN EDUCATIONAL SYSTEM. 

Nobody wants to know about your passion.

Everyone is just following each other rather then being different..

You know what,our Indian education system is about 400 years old started by the Britishers because then they needed workers for their factories and thus they taught everyone in a similar pattern and it is from them that we have recognised our educational system.

Our indian educational system starts with IIT,MBA etc ending up with suicides or at least such attempts.

There is no innovations but just the theoretical learnings.

What matters here is just scores and marks and no knowledge and skills.

Nobody asks you what you are learning or atleast want to learn but just enquire how much you scored!!

According to me, our indian educational system turns the dreamer child into a confused, unemployed youngster .

We can't change our education system but we can change our way of learning by following our passion.Now, the time has changed. 

Nowadays there is no value of a graduation degree , and you know what!, in India, every year more then 1 billion people get graduated and none of the sectors has the compatibility to produce more then 40 million jobs. You know what! due to this Corona outbreak, more than 50% people are going to loose their jobs.Earlier this outbreak, the problem was unemployment but now there will be underemployment, which is kind of a cancer to our economy. 

Our Indian educational system just focuses on theoretical knowledge, but in practicality,that knowledge is useless.We all just give exams for getting good grades.Everybody coins up that 'life is a race'.Here, nobody talks about innovations or any new ideas.

We have to frame a new educational system. For practical knowledge you don't need to go schools or colleges. There are many opportunities out there.You just have to grab them. You can learn from Google or YouTube etc and focusing on your passion, turning your passion then into profession. This is the only time when you will be successful.

Nowadays, MNCs don't ask for college degrees. They hire skilled people.

And as we all know, the Artificial Intelligence is acquiring a great position and the only thing it lacks is a person's talent or skill.

A person's skill means skills of communication and leadership.

The A.I cannot replace a person's art.

 Thus we must focus on learning good communication skills and leadership.

In this lockdown let's learn something new and turn towards our passion, becoming a skilled person before this pandemic ends.!!!

Motivation: Turn your passion into profession , then only you can achieve success. 

Build your skills, not resume.

The future belongs to those who learn more skills and combine them into creative ways..!!!

Financial education by Nikhil verma.

Before starting my blog, I would like to tell you why I choose this topic ,  FINANCIAL  EDUCATION. 

According to a global survey, about a staggering 76% of Indian adults do not understand basic financial concepts and are unfortunately financially illiterate even today. The survey confirms the financial literacy rate in India has been consistently poor as compared to the rest of the world.

So, I am here to share my knowledge about financial education..

 Before starting my topic I would like to inform you  that there are three types of education 

1. Academic education 

2. Professional education 

3. Financial education 

so, what is financial education? the answer of this question,  is in the question.

Financial education means education/knowledge about the money/finance.

Why I am here to discuss this topic !

Because in today's life every thing is depends upon money I.e, if you have money you have everything.

Example- if you have the money then only you are able to buy the phone by which you are reading my blog.

I would like to share one secret about  money I.e, there is no limitation of earning money, you can earn money limitless , if you yourself know that you will be rich person one day then that affirmation will help you to become rich.

 

#why in india there is less financial education?

Because we indian take financial advice from our parents,  who themselves are in rat trap of this system. If they are in trap and they give advice to you you will also become the part of that trap.

So, my advice Is to listen those person who is having the right knowledge of this money game like #warren_buffet.

He once told that listen to those people like whom you like to become..

#Types of earnings-

1. Employee-  The person  who do jobs for other .if he work ,he get paid #work=money.95% people are in this category ,having 5% money of economy 

2.self-employed- The shop owner. If he work, he will earn.#work=money. 95% people are in this category,  having 5% money of the economy 

3.  Business- The person who has started his startup and doing well and his employee are working for them. #money+ work+time=money.  Only 5%,  having 95% money of the economy 

4. Investment-The person who invest the money. #money=money it means money is working for that person. Only 5%,  having 95%money of the economy. 

So, why I choose the topic save vs invest. 

Because we Indian think that saving money is good option but it is totally wrong. 

Let me first tell you the difference between both- 

1. Saving is setting aside money you don't spend now for emergencies or for a future purchase. ...
2. Investing is buying assets such as stocks, bonds, mutual funds or real estate with the expectation that your investment will make money for you.

Let me take an example it will clear you why saving is a bad option.

Suppose you have $100 and you save that money in you house and after 10 years you decide  to withdraw that money and after 10 years that $100 will be $100 and if you choose the second option that is investment and you invested $100 and let take 12%p/a minimum return then after 10 year that $100 will be will $220. So this is the power of investment. 

 

In india why people hesitate to invest their money?

Because they dont have the proper knowledge about the investments. 

But keep in mind one thing 

Dont save your money,  invest your money.

By which you dont have to work for money money will work for you. To be continued....