Thursday, May 14, 2009

Money, I blew up the kids

After kicking myself for not having entered the jig when the market was at the 8k mark, I finally (phew) made my entry into the big bad world of the stock market. 9th May 2009, you'll be a day Ill fondly remember.


As is with most events in my life, this foray was accompanied by much trademark-serendipity excitement. I had shortlisted two longterm shares and two highly volatile traders shares. Very excitedly dialed the ICICI Direct phone banking number, selected the required option in the IVR and called slightly nervously to place my first ever 'buy order'.

Of course, nothing in my life gets accomplished without initial glitches and a lot of back and forth. Two phone calls, two log ins later, equipped with my account number and access code which I had to source and generate from my online account, information which was given to me sequentially as opposed to simultaneously (which would have obviously saved me time AND effort, but no. Im not that lucky), I heard the magic words 'Order executed'

And so the deal was done. Beginners luck meant that on friday, the day I actually purchased the share, the sensex dipped below 12k levels, which meant that I got really good deals already. Since then Ive followed up with many a transaction until I finally realised Ive put in a good chunk of money and now need to hang on and play around with what I have.

Since then Im given to refreshing the rediff page at a frequency proportional to the amount of times I tie and untie my hair (which if u know me, is a LOT). Its FUN to watch the net gain (and loss) each day, to understand market sentiments, interesting to learn how to evaluate whether a stock is good and other gyaan which Im fast catching onto. People sitting around me at work are renaming me the new go-to guru of the stocks given that my screen which earlier had multiple blog pages open now has only stock related articles and pages open. My name is now being replaced by other monikers of the stock market.

My first phone call after the first order was to Dad. Who congratulated me and promptly asked me which sectors, companies and who my broker was. I felt fantastic giving him accurate information regarding the investments, and finally about the fact that Im doing my own research and transactions, the middle man of course being the guy at ICICI Direct who executes the transaction. Whoever said women are bad at finance please step forward, so I may have a word with you.

Mistakes are of course, a part of this game. You win some, you lose some. Unfortunately having invested lump sums in MF's when the sensex was at 21k levels means Ive begun on a losing note anyway both MF's showing annual returns of - 32% :\ BAH and double BAH.

If anyones reading this, and a novice like me, here are a few tips.
  • This is THE best time to invest. A lot of Stocks are just at or slightly above their rock bottom and therefore affordable.
  • The Sensex crossed over to 12k in the last two months. People smart enough to have invested a few months ago have made a fortune already. (given the right choices etc)
  • The most money is made and returns achieved in a bearish market as opposed to bullish contrary to popular opinion.
  • You need a DEMAT account. Just call a broking house (ICICI Direct/Reliance Money/HDFC) or your broker and complete the formalities
  • Broking charges are nothing daunting, approx 70paise per 100 rs of transaction. This could vary, but nominal charges is what I'm trying to get at.
  • Diversify your portfolio. Don't buy stocks of more then 2 companies in the same sector.
  • Keep an eye on Government controlled sectors, since a change in Govt and policies could affect the entire sector.
  • Don't borrow ANY money to invest in stocks. Invest only what you can afford to. My thumb rule is that even if I Lose all of it, I should not be bankrupt. In other words, make sure you have some good ole safe options giving 8.5% returns. PPF, VPF Zindabaad.
  • Stay away from Derivatives unless you have sound knowledge and resources to do so. Higher the returns, higher the risk.
  • If you don't have a good risk appetite, but looking for higher returns anyway, then invest in Mutual funds, but ensure that it is an SIP (systematic investment plan) which will average out cost of units when the market shows a steep incline/decline which would be a good buffer. I learnt this the hard way :( Equity Linked Saving schemes are also tax saving so you could claim this during tax calculations.

Now Get out there!

21 comments:

hitchwriter said...

first !!

btw what do those people do who invested at 21k levels !!! boo hoo... invested everythign there... and left searching for liquidity when markets are at 8000 levels.. !!!!

infact neeed money but cant take out my money from the stocks either coz they are reeling... !!!

Remember one gyan from me...

Invest only your spare money, money that you will not need suddenly and urgently.. always invest for a long term... ! and invest in businesses that actually excite you !

Hopeless Romantic said...

Having worked in IT industry for close to 4 years, i have developed very strong adversity about the financial knowledge of girls. But i am truly impressed and ecstatic to see a women do all his ground work before investing in the share market or anywhere in general. All the best, have fun, take calculated risks. I bow ur finanical acumen after my sis, who is a CS :)

Cheers, Do visit mine !

tk care !
amit

Smita said...

Congrats for taking the 1st step :)

So many ppl have urged me to enter but am just too much in love with my money and too scared as well :)

Mishty said...

I see that Rakesh Jhunjhunwala is getting tough competition :P May be soon you can give away tips which one to buy and which one to avoid ?

snow said...

that's cool actually.. now i feel like i'm the only one walking this planet with zero financial sense...

Aditya said...

i'm a big fan of yours, S, but saying

"This is THE best time to invest. A lot of Stocks are just at or slightly above their rock bottom and therefore affordable."

might just be on the brink of irresponsibility.

I know the market seems to have sort of recovered and all, but there are enough people saying this is a dead-cat bounce. I read today that even during the great depression, there was one where stocks regained more than 40% of their value before crashing badly. A lot of people who lost money back then lost it during the bounce rather than having bought at the start.

You, and anyone else reading this would be well advised to have recovered the cost of purchase first, and should play around in the market with money you can AFFORD TO LOSE.

Sorry for being so negative and pessimistic, but you can't be too careful in money matters.

Serendipity said...

Hello Hitch - aww. I know. Ihad some Lumpsum MF invesments at 21k levels that are sitting collecting dust now.
and your right about the spare money bit, I TOTALLY agree.

@Hopelessromantic- wo! your sisters a CS? awesome!

Serendipity said...

Hi Smita! there are safe, smart ways to invest.
But its not for the faint hearted :)

Hiya Mishty :) I LOVEE your name. It means sweet in Bong doesnt it?
And hellyeah, u want tips?u come here. all at a fee o'course :D

YOsnow! :) no no! invest now. if not stocks, other safer investments... its never too soon to start saving.

Serendipity said...

Hiii Adi! Where've you been foo.
firstly, ditto about the fan thing :)

secondly, your 100% right. but if you've sized me up semicorrectly having been blog friends since over 2 yrs now, you should know that I'm fairly level headed. I have over 40% of my income in safer, (more boring) and low return investments. :)

The thumb rule Im going by is that assuming I dont even get a buck back from this investment, I shouldnt be bankrupt. hence invsting only what i can spare, as you pointed out.

Is it dumb that I totally liked how strongly you reacted? :D

Mumbai Diva said...

awesome!

I'm scared to enter. I even have a demat account but zero sense of which stocks to invest in.

Serendipity said...

Hi D :)
Figure out if you want to first, if yes. then get advice. Family broker, Husband if at all.. you see.

But whatever you do, in case your investing through a broker, dont give him blanket permission to transact. Take the trouble of knowing exactly what how much etc.. and good luck! :)

Chandni said...

wow! u're actually motivating me to try...

are there good artciles and stuff that you know that I can read beforehand to try and understand the game?

BlueMist said...

Now you are talking :D You have motivated me to get back to stock market. I had almost given up keeping the track. Thanks !!

The knife said...

i am with hitchwriter too ...since them am in a shell like the turtle we baby sit

J Escobar said...

first of all, congrats on your first investment.

second, i would put a disclaimer on that post if i was you. just in case some nutter takes your advice and loses their cash on the stock market and turn around and sue you for giving out negligent advice. it happens all the time.

eye-in-sty-in said...

Hi B,
1 more "check" on the list of commons :D

Aditya said...

Fair enough, S. I know I came down hard but, well, I'm way too careful in money matters. I was about to invest a bit of money (but expendable stuff) around 10 months ago but luckily I did not. Now as a student I'm not spending anything. Will wait till I start earning before I can play around!

And if you liked it that I reacted strongly, you might just be a masochist ;)

Roy said...

very honestly speaking, "sab moh maya hai"! and it is all luck. and to ward of the comment that I am loosing money and hence assign it to luck, I have made over 50% since Sep'08...

Jass said...

Had my share of the market last year. Equity, futures, options , you name then instrument i lost money on that in the Jan crash! :P ;) Haven't traded since a year now, Good luck and yeah 12k levels did seem reasonable to enter :)

dipali said...

Congratulations on your first purchase!
The Internet has empowered women in more ways than one! I'm a long term investor, though the spouse takes all the decisions and I merely execute them. Despite getting badly burnt in the last crash, we are still foolishly optimistic and have invested again. But this time around I insist on a more diverse portfolio of savings.
All the best:)

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