Investing is a technique of expending money with an expectation to achieve profit by putting it into a financial product, stocks or real estate, or using it to develop a business. Below are some of the frequently asked questions about Investing.
Q. What is a company's 'market cap'?
Market cap or market capitalization - refers to the total value of all company's shares. It is calculated by multiplying the price of a stock by its total number of outstanding shares. For example, a company with 20 million shares selling at $50 a share would have a market cap of $1 billion.
Q. Should one be investing daily in stocks?
Well, it’s not at all needed. But you can definitely invest when you see some correction in the stocks that you’ve in your watchlist or any other good stock you wish to invest in.
Read More: How to Open a Trading and Demat Account with Zerodha
Q. Which is the best time to invest money in the stock market for a beginner?
Well, now is the time. Actually, now is the perfect time to invest as today (July 9) Sensex closed at 38730, more than 1500 points lower than its all-time high. Even my portfolio is down by 1–1.5% and so this might be the time which I can utilize to gain that extra 1.5% return on my investment. One should always look for such opportunities and invest wisely into good quality stocks. And, remember, it is well said - the best stocks are the ones that you already hold.
Q. Should I buy small cap mutual funds with my money as large cap funds are already at high?
No. And if large-cap funds are at their high, that is because they have performed well and maybe will continue to. And, as small and mid-cap funds are at their all-time low and so investing in them at the point of time can be a mistake. But one can definitely invest in small and mid-cap funds based on the sector/theme you think will perform well in the near future.
Q. Is it good for young students to take part in the stock market? Do you advise it?
Yes. But first learn about the stock market. I, myself, started trading when I was in my first year of engineering. Initially, I invested Rs. 3000 to start with. I almost lost half of it in the brokerages itself. I made some decent profits as well after. I was having a demat account with ShareKhan but due to high brokerage charges, my net profit decreased. Then I switched to a discount broker - Zerodha, one of the best in the industry. Now, it’s been more than 3 years I am using Zerodha for all my investment. And is working really great.
Read More: 5 Ways To Start Investing With Low Capital in India
Q. Is it advisable for long term to buy only mutual funds or some stocks too?
You should always diversify your investment. A diversified portfolio is always a better option as it will have a good balance of all the investment methods and can cover up losses (if any). One should also consider investing in Fixed Deposits, Bonds and NSC along with Mutual Funds and Equity.
Q. Should I invest in myself or in the stock market in the beginning?
Well, both of them will benefit you in the long run. Learning a new skill set will, definitely, come handy one day. Knowledge is great. On the other hand, investing in the stock market at an early stage will help you financially. I would recommend you to not only invest your earned money or savings in the stock market but also in other investment options like Mutual Funds, Fixed Deposit, PPF, NPS, or Bonds. One should always have a diversified portfolio to keep a good balance of the P&L.
Disclaimer: All views and opinions expressed above are purely my own.
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