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How to get into Investing - In My View


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Just putting my "advice" and "experiences" about How to start Investing in to words. Hence, the addition to the title "In My View". This is also the first time I wrote, in a long time. Please feel free to leave a comment.

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How to get into Investing - In My View

  1. 1. How to get into Investing – In My ViewWhen people hear that I work at the Stock Exchange, usually the first question they ask is, “Oh! I don’tknow anything about investing in the Stock Exchange, can you tell me a little about it?”, which actuallyputs me in a little trying position as it is difficult to explain about investing in “little” (little time or littleexplanation!). But over the years, I have summed up the following points to them, the length of whichdepends on how much time I get. For example, if it is someone I meet at a function like a wedding or analms-giving, then it is usually a shorter explanation as we have to rush to the next ritual, but a longerexplanation if it is a student that I meet at a camp.Given that I’ve been directly or indirectly involved with investing for about ten years now, I have put my“advice” and “experiences” in to the following five points. Of course, there is a lot of literature availableon the subject and they may give more or less points than this, but this is how I like to categorize. 1. Read, read, read… If my experiences are anything to be accounted for, lots of people “fail” at investing due to insufficient knowledge of what they are doing. Many are not aware of the “function” of a stock exchange (many think that it is affiliated to the Central Bank!); clueless as to what is “listed” and “unlisted” is and looks heavenwards at the sound of “equity and debt”. The word “risk” makes many of them run for shelter, its translation into any one of the native languages, makes people get goose-bumps! The cure to most of this is reading, greatly and vastly, on the subject (somebody did say that it makes a full man, in this case, a full investor?). As mentioned before, a lot of literature is available on the subject, both online and in printed form and in any language. Any professional in finance and accounting field can recommend good readings. It is also important to note that reading should be done at one’s own pace as everyone’s pace of understanding the subject is different. 2. Ask, ask, ask…Unfortunately, reading is not enough. Investing has many dimensions. There is no direct or one answerto many questions that people will have. Where to invest? What are the products available? How do Iget my return? What are the risks that I have to bear... all this will have lengthy and often confusinganswers. It helps to ask the questions also, but PLEASE ask the questions from a professional and notfrom your colleagues (unless they are finance professionals). Lots of people have burnt their fingers ininvesting due to peer pressure and/or unsound advice.Asking and subsequentlydiscussing the trying areas with a professional will help you to clear the pointsfurther and also open your mind (or eyes!) to other related areas. Again, it is important to do this atyour pace and not that of the professional you are talking to.Page 1 of 2
  2. 2. 3. Start small With all the reading and asking that may have been done, it is still advisable to start small. It is important not to sell everything that one owns or borrow as much as one can, to invest in Stock Exchange as no genie lives there that can double or triple the money overnight! Investing in any product at a Stock Exchange is also a game that is best learnt by “doing”. Some aspects of investing will only become clearer, afterthe game has been started, hence better start small. If it works, keep increasingthe amount invested, if it didn’t live up to the standards, it should be small enough to get over in a small time! 4. Give it some time This is related to starting small but I thought of separating it to give more prominence. If the product that one investsin does not increase its value in the first day, please do not panic (as it is usually the human thing to do). This is where the reading and asking about investing comes into play in full force. The reading would have explained the cycles and the time lines that are associated with investing in that particular product. Asking the right questions will help to understand the “waiting period” that is required. A little bit more of this is explained in the next point. 5. Be alert Anything and everything can affect the performance of the stock exchange and the product that is invested in. These can range from the bigger issues like political, economic, social, and technological to maybe not so big (but they are not small either!) like performance of the company. The demand and supply of the particularproduct matters also. Hence, the investor needs to be alert all the time. It is important to maintain communication with investment advisors so as to be on top of what is happening to one’s investment. After all, it is the investors’ money and he/she should take the lead! Hope this helps.Page 2 of 2