Thus far, the Stock Market Beginner’s Course has covered two important lessons:
- What are equities and how stock markets work and
- How does one select stocks?
Although a beginner can understand equities, markets, and the stock selection process, portfolio maintenance can be overwhelming. Because equities are riskier compared with other assets, one should explore various routes to investing in these vehicles depending on one’s appetite for risk.
However, with improved awareness, education, and experience, becoming adept at stock picking and portfolio management is definitely possible. Therefore, depending on a beginner’s comfort level, he or she can take different routes to investing in equities.
Let us look at the different ways to enter the equity markets.
Routes to Equities
The most common ways to invest in equities include:
- Invest directly in stocks;
- Investment through mutual funds; and,
- Investment using ETFs (exchange-traded funds)
Invest directly in stocks
Investing directly in stocks is one of the best choices for people who are investment savvy and prefer to closely control their portfolio. However, such a person also needs to invest some time, effort, and money to maintain a portfolio through an online trading facility.
Doing so is not difficult but requires some effort to learn the important aspects or tricks of the trade and become conversant with the ups and downs of the market.
The pros and cons of this option are discussed below.
The challenges to directly investing in stocks are not permanent hurdles that cannot be overcome. Instead, investing in stocks is a process or a specialized skill that can be learned by gaining knowledge through effort and practical experience. Although investing is not a cakewalk, neither is it rocket science.
You have chosen to learn about the stock market through this course and you likely want to learn how to invest in stocks and build your portfolio. Also explore options such as mutual funds and ETFs, as ETFs are ideal, cost-effective instruments for small investors.
Investment through mutual funds
Although investing in stocks is not rocket science, if you still believe that understanding the process is too time consuming or difficult for you, or may be overwhelming, then consider the following two alternatives:
- Start with mutual funds, learn about stocks, and gradually invest in stock when you gain confidence or become familiar and comfortable with the market; [OR],
- Stick to investing only in mutual funds
If you choose Option A, you are the ideal candidate to become a Ninja Investor, and we can help you understand how to pick stocks and create your dream portfolio. If you are not able to pick the right stock by yourself, get help from leading stock and investing experts at www.insiderinvestments.com.
However, if you choose Option B, Visit www.valueresearchonline.com to learn about how mutual funds perform. This information will enable you to choose the right set of funds.
Investment through exchange traded funds
Although this is a Stock Market Course that encourages you to invest directly in stocks, the Ninja series also encourages investing in ETFs because they are highly cost-effective, simple, and investor friendly.
ETFs are truly a boon for small and large investors. For example, an investor can buy a Nifty ETF for Rs.530, which represents a diversified basket of 50 stocks. In simple terms, an ETF is a share or unit that tracks or closely follows indices such as the Sensex or Nifty. Therefore, you invest in an index ETF that replicates the index itself.
For instance, if a Nifty ETF such as Nifty Bees trades at Rs.532 when the index is at 5,400 (one unit of an ETF is priced at approximately 1/10th of the index value). This ETF can be bought or sold like a stock and held as a short-, medium-, or long-term investment as per the investor’s requirements. An ETF is the most flexible instrument for investors.
All types of investors, from beginners to seasoned, can use one or more of these options depending on their comfort level. For instance, first-time investors or beginners may want look at mutual funds; however, there is nothing wrong with someone wanting to directly invest in stocks, provided that he/she is aware of the risks involved and has a realistic view of returns.
The aim of this course is to enable you to become good at choosing or picking your own stocks. You can start with stocks, ETFs, or mutual funds, and you will still have the weapons and armory to survive turbulent market battles if you follow the “10 Steps to Becoming a Ninja Stock Investor.” If you still have questions or require further clarification, please write to us.
We also welcome your feedback and comments on this course and would like to know whether and how it has helped you build your investment portfolio.