Understanding The Fundamentals Of Investing For Wise Decision Making

"Today, Reliance's share price is ?700, and you should invest in this as this will cross ?900 within 10 days."

This was the news flash back in 2017, when I took trading lightly and thought I should invest in this stock as I was getting a straight profit of ?200 in 10 days.

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I am 23 years old now and manage my finances well. I even invest some percentage of my salary every month. But, my investment journey started with twists and turns and, of course, the accidental LOSSES.

My investment journey

I had just finished my 12th grade examinations and had a lot of free time, so I started watching many YouTube videos and was trying to learn about the stock market. Growing up, I saw my maternal cousin talking about stocks, finance, and chartered accounting.

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But, back in 2017, when I had just turned 18 and was at the pinnacle of my excitement because I was of the "legal" age, nothing but a statement in a YouTube video or news channel made all the difference. I started searching for "How to open a Demat Account?" videos.

The top result showed Karvy, so I chose to go for it. They asked for details like an Aadhar card, a bank passbook, and an amount of ?200, and by evening, I received a confirmation mail that my application was approved and the account would be opened within 7¨C14 days.

But, as an 18-year-old middle-class girl, where could I get ?700? So, I immediately broke my piggy bank, and I could fetch some ?350 in coins from Re.1, 2, and 5. So, I went to my mom for a barter exchange and asked, "Maa, I will give you ?350 in change, and you can give me a round figure of ?500 for the same."

My mom could sense my greed and asked me what I would do with the money. I did not answer and just said I would open a bank account. Mom sensed that I was lying, but she gave me ?500. A few moments later, I asked her if I could also get ?200 as an advance from my next month's pocket money. She agreed, and I was on cloud seven, dreaming of turning into Richie Rich very soon.

I was thrilled and eager to invest; the fun fact was that my family didn't know I had applied for a Demat account or that I was even thinking about trading. Being from an orthodox family where the stock market was still regarded as gambling, I decided not to let my family members know about my investing journey.

So, I opened my Karvy app and entered my ID and password. Some red lines, some green lines, and the app's interface seemed to be all traffic signals to me. They were changing from red to green and vice versa in the blink of an eye. Hence, I wasn't able to decide which road to take.

However, I saw some videos and read news articles on investing and learned some aspects of it. But, I guess my mind decided not to apply what I learned from the videos and articles.

But, youth years, you know!

My mind subconsciously decided to ignore the learnings, and I invested ?700 in Reliance and started waiting eagerly for it to touch ?900. But fate had something else to decide. On the 10th day, the share price dipped to ?690.

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I was in shock, and the whole day I wandered around my house thinking that. Oh no! The video said the share price was going to touch ?900, but it didn't. I felt like I had been cheated.

I thought I couldn't take any more risk; I sold it right away and thought my loss was only ?10. I was now waiting for my money to appear in my account. But wait, what and how? I couldn't figure out what was happening or why my available balance in the demat account was showing only ?640.

I purchased the stock for ?700 and sold it for ?690. The available balance should show ?690. Where is my extra ?50? My thoughts began to wander to various ways I could sue the brokerage firm. For me, they suddenly became looters, scammers, and everything else related. I even called customer care and gave them an earful. Then, the customer care executive made me understand that these were Depository Participant (DP) charges for every purchase and sale I made.

That is not the exciting part; the interesting part is that I did the same for 1.5 years. Some days were profit, but mostly they were losses, which I am repeating that I couldn't afford.

Later, I realised that the video I saw suggested that people like me, who didn't know anything about investing, "start your investing journey by investing in index funds."

All these things happened to me when I had just turned 18.

The trading lesson herein

When we cross the 18-year mark, we think now nothing can stop us, and we can do anything. Interestingly, the first thing a large number of youth think of is to start earning, and the easiest way seems to be the stock market.

You saw just now; I was no less!

I just jumped in and started trading without thinking about what the stock market, investing, or trading were.

You may ask what the result is. Well, you've read it for yourself, haven't you?

Overall, I am still learning the stock market as a 23-year-old. But, the most important thing I learned as an 18-year-old was that "savings are important, and starting savings early is a boon."

Here are a few things I learned from the stock market:

1. Never go for social media/news channel recommendations.

2. Always learn before investing.

3. Rather than watching videos, start reading articles on the stock market for a deep understanding.

4. Always do fundamental and technical analysis before investing in shares (if you don't know what they are, you are not ready).

5. Patience is the key to growing wealth in the stock market.

Here are a few suggestions for anyone who wants to start their investing journey:

1. Search for the top mutual fund and put your money in it at once. Or, if you can save monthly, invest in the same mutual fund every month with a fixed amount and let the power of compounding do its job (if you have even one percent doubt, refrain from investing).

2. If you can afford to save an extra 500¨C1,000 every month, open a PPF (Public Provident Fund) account with your bank and invest securely; you can save some tax here.

3. If you are still left with money, invest that amount in index funds.

4. After all of this, if you have any money, try to enter the stock market (only after proper fundamental analysis).

5. Always remember that in the early years of investing in the stock market, you can lose as much as you want and it will not break you.

This was my investment journey; from this and any investment journey, the two main things anyone needs to understand are the eagerness to learn and the patience and perseverance to earn.

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