Investing directly in stocks needs understanding and tracking of markets and stock analysis—knowing how to look at companies, understanding the industry and what influences it, the economy and more
I’m fascinated by the concept of power of compounding and time plays an important role in creating a million-dollar corpus. I just turned 19 and want to invest for the long term (25-30 years) on an SIP basis. Please advise.
It is great that you have realized the power of long-term investing so early on and are willing to make a start. You can invest in a combination of direct stocks, equity and debt mutual funds. This will give you the relative stability of mutual funds, along with the high-risk, high-return potential of direct stock investing.
You can start by investing in equity and debt funds. Investing directly in stocks needs understanding and tracking of markets and stock analysis—knowing how to look at companies, understanding the industry and what influences it, the economy and more. You can start reading up and then add stocks to your portfolio.
In mutual funds, you can start with large-cap funds and index funds in equity. Kotak Flexi Cap or Parag Parikh Long Term Equity (this has some international exposure as well) or Mirae Asset Large Cap. Move on to higher risk funds that invest in mid- and small-cap stocks once you get a grip on market behaviour. You can start with any amount; every small bit eventually adds up, which is the power of compounding. In debt, you can go for funds such as ICICI Prudential Corporate Bond or Kotak Corporate Bond, which invest in high-rated debt instruments.
Srikanth Meenakshi is foun-ding partner, PrimeInvestor.