Where Should I Invest?

Where should I Invest, exclaimed my friend who resides in Sweden with big financial dreams!

As I had recently quit my comfortable 9 to 5 TCS Job and joined the world of proprietary trading firm where we invest money in Financial Markets for a shorter period to make it more. May be he thought I could help him with his query.

It seems, when he asked the same question to his family members, He got the same age old advice , Invest in an LIC Policy and land and you will get rich. This is what your uncle, neighbor and our relatives has done and have made a lot of money.

Even I heard this statement again and again from all my close ones that your uncle who invested in that Traditional investment/ buying a land is now a millionaire because that land value appreciated. I agree to this statement. But what I read and understood from Financial Stalwarts and successful multimillionaires they differed and did not follow these traditional method of investing. There was a clash in what people with financial wisdom and my close cricle were advising me. Then I thought may be those who invested in traditional investments did not estimate the return on investment only, it is just that they could have just been mere lucky or they might have we never know. But, can we expect the same return now when real estate is over priced and the growth is stagnated? I doubt!

Anyways, Just like me he too was skeptical about this idea and wanted to know my views on it since I have few months of professional experience into Investment.

Shoaib, where should I put my hard earned money so that my money works for me as well.

Stock market I replied.

Are you fucking crazy? No one earns in stock market. It is pure gambling. My close family members have lost a lot of money in it exclaimed my friend! I knew you would suggest me that only still I don't feel it is safe.

I replied, I agree that many people lose in markets but it is not because it is gambling but because people speculate and do not take calculative risk while investing.

What do you mean?

I mean many people invest in markets not by analyzing the market dynamics or by understanding the business potential. Rather they choose to invest because some friend or family member or their boss made money in that particular stock. This herd mentality and fear of losing out an opportunity forces them to make a wrong investment decision and they enter markets at the wrong time or they just don't exit at the right time. As the big players in market know this scenario pretty well regarding the mistakes of retail traders, very quickly they pounce on this golden opportunity and make a lot of money. Hence, the timing and understanding about how this business works plays a crucial role while investing.

Oh I see! But you didn't answer my question yet. Where do I invest? I mean there are many types of investment within stock market. Long term investing, short term investing, intraday trading, futures, options many fucking things.

I could realize he was getting frustrated and needed a straight answer!

I replied, when it comes to investing it is you who needs to judge yourself and first understand what kind of investor you are, what are the financial goals you want to accomplish and the risk appetite you could handle based on that you can choose your investment plan.

He asked me what does that mean?

To put it simple by taking example of a car.

I said, if your goals is to buy a second hand car with the generated returns on the money you invest you could go for traditional investments like LIC Policy/ Fixed deposits/ULIP and many such which any relationship manager tries to sell you with his free advice. Most people opt such option because the financial advice is free but hardly they focus on return on Investment for the products. That Investment adviser get his commission but those who invested might not get the expected return or are not satisfied with the returns at a later stage..

If you want to buy a decent car after a long time and are patient enough than go for Mutual fund like Equity Linked Mutual Funds which give you good return on Investment..

If you want to go for a luxury car then, invest in combination of mutual funds, debt funds and good stocks with proper forecast or by taking advice of certified Investment Planner. You might be paying some amount but they make sure you meet your financial dreams..

If you want not only a good car but also other good things that money can buy than you got to take some risk and invest in Futures and intra day trading or invest in good fundamental stocks with proper research or you could take help of Investment gurus/ SEBI Registered Investment advisors. They may charge you huge fees but the returns and the risk involved could vary.

Now, If you are aiming it very big and like shah Rukh Khan said in the movie Zero. Zindagi Katni kise hai hum Ko toh Jeeni hai. Phir toh you must focus on Futures/Options Trading hi choose karna padega. Just to make you aware, Warren buffet calls them weapons of mass destruction. The risk is high and you could be a hero or zero within short span of time.

So the ball is in your court now my dear friend, Until then I asked him to understand himself and decide what are his financial goals, his risk appetite and based on these factors cautiously take a decision. I then took a deep sigh of relief after sharing what all basic things about investment that I know of!

I asked you a simple question and you confused me more now, exactly like a financial adviser does, he told sarcastically. Cool! I will pen down my financial goals and once I decide what kind of Investment I want to opt for, will have more conversation on this subject.

Sure buddy, It is a big topic to discuss and we will catch up soon I replied. And we will definitely talk more about this uncharted territory of Finance by middle class people like us.

I bid him goodbye for now. And wished him to have a good time in Sweden, enjoying the climate!