CNBC Your Money: How to Invest for the first time investors

Question:

Dear Sir,

I’m new to trade in share market. I don’t know much about the discipline of this. I want to earn money with less amount of risk. Kindly suggest me top companies where I should invest. Also want to know how to multiply Rs. 1000.00 (thousand rs) to greater amount to invest in good company. I’m not in hurry and can wait for time.

Thanking You,
Gyanshu Kumar

Answer:

Dear Gyanshu Kumar,

It’s lovely to know that more and more people like you are interested in investing in equity asset class and participate in the India’s growth. What excites me more is that you have a long term outlook. However I would strongly recommend you to take the mutual fund route to do so. But first a few lessons would be in order:
1. You cannot get high returns without taking higher risk. The whole idea is how to mitigate the high risk inherent in any equity investment. First is diversification, second is long term holding and third is systematic investments. Equity Mutual Funds allow you to do all the three.
2. Don’t have an expectation of spectacular returns expectations. Even the best investment strategy in the world cannot turn “Rs. 1000” in to a fortune. The quest to spectacular returns leads straight to the poor house.

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