Does anybody who is a first-time investor always have a few questions in their mind?
- Does the stock market mean betting?
- How do people make money in a short time?
- Do mutual funds involve a lot of risks?
- I don’t really understand the stock market very well.
Likewise, there are many typical challenges faced by potential investors in the financial markets. This blog explores basic concepts, real facts about the stock market, and other investment products tailored to help balance your personal life’s growth and manage unknown risks.
In our view, capital markets and investing are all about seeing the unseen, knowing the unknown, trying the untried, and achieving the unachieved. However, addressing this starts with changing how you look at your life and objectives.
1. What Mistakes Do People Make While Investing?
The biggest risk and mistake people make is that they never ask what exactly they are buying with every single penny they spend.
Are you buying liabilities, or are you buying assets for the future, whether for the next couple of days, months, or years?
Normally, people start their first job and immediately begin purchasing things they don’t actually require, driven by social pressure and unsaid status symbols.
- If someone starts a job at 23, the first 15 years are often spent buying liabilities and paying off loan EMIs.
- Without calculating the interest given to lenders, people spend another 20 years trying to build assets, living life up to age 60 before retiring.
Imperial Money believes this timeline should be flipped: In the first 15 years of your career, build all your assets first, so you can enjoy them for the next 40 years.
2. Finding the Right Guidance
Once you decide to build assets, you need a guide to ensure you reach your goals safely, smoothly, and enjoyably.
However, many people end up with product-focused salespeople who lack true investing wisdom. Partnering with the wrong, unknowledgeable person is one of the greatest risks on your journey to financial freedom.
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3.How to Manage Your Monthly Salary
- Invest Wisely: Dedicate roughly 30% of your income to properly aligned asset-building products.
- Handle Increments Disciplinary: Direct your yearly increments straight into your asset-building journey.
- Review Portfolio Asset Allocation: Assess your portfolio quarterly and adjust your asset allocation based on current valuation approaches.
- Understand Compounding and Rupee Cost Averaging: A variation of just 1% in your returns can lead to a positive or negative difference of ₹50 lakhs to a crore over the long run.
- Beat Inflation: Inflation is your silent enemy. Ensure every asset class you invest in offers real returns by outstripping the inflation rate.
4. Making Volatility Your Friend
Volatility often keeps people away from making money, but market volatility simply means the market is alive.
Think of an ECG graph: if it goes up and down every second, the person is alive. If it is flat, the person is dead. Market graphs are volatile because the market is alive—would you rather invest in a live asset class or a dead one?
- Historical Performance (2002–2022 / 20 Years): 209 stocks delivered over 25% CAGR, multiplying wealth 87 times.
- Mutual Funds: Even the worst-performing equity funds delivered around 12.88% (11x growth), average equity funds delivered 19.45% (35x growth), and top equity funds achieved 26.09% (310x growth).
When a professional fund manager oversees your investments for a minimal expense ratio through an AMC, trusting the philosophy of mutual funds becomes a powerful choice. Always cross-verify across categories and analyze which asset class is safe, secure, liquid, and growth-oriented.
Final Thoughts
imperial Money Pvt. Ltd. believes India is on its path to becoming a massive global economic powerhouse, and major indices like Nifty and Sensex are bound to reach unprecedented heights.
Remaining out of proven asset classes that have built generational wealth for millions is arguably the greatest risk of all.
HAPPY INVESTING!
