7 Powerful New Year Resolutions For Stock Market Investors!

A new year always excites everyone. It’s time for the people to make different personal and professional resolutions like to learn a new skill, learn how to swim, join the gym, try martial arts, create a new blog, explore a new language/country, start maintaining a journal, etc.

I’ve always loved new years and enjoyed making plans for the next year. This time also I’ve made a few resolutions. Professionally, this year I’m planning to expand my team, add new interactive features to our android app and become more active on Youtube. Personally, at the top of the list is to travel to three new countries and learn the Spanish language by the end of 2020.

Anyways, stock investors are ordinary people and hence, they also like to make resolutions for their new investing journey. However, if you an equity investor but do not have made resolutions for the new year yet, then we’ve got you covered.

In this post, we are going to discuss seven powerful new year resolutions for equity investors. All these resolutions are designed to make you a better investor by the end of the calendar year.

7 Powerful New Year Resolutions For Equity Investors

Here are the seven best new year resolutions for the Indian equity investors. I would recommend you to challenge yourself and accept as many resolutions (out of seven) as possible.

1. Save enough, Invest more

This is something that most youngsters struggle with. Although the older generation is doing much better in the art of saving, however, when it comes to intelligent investing — they too are not much mature.

If you are struggling with savings, plan to optimize your expenses this year. Track your spendings and perfect them wherever possible in order to increase your savings. However, do not just stop there. Invest those savings in different investment options based on your needs and risk tolerance. For beginners, investing in blue-chip stocks are a good option to get started.

2. Start goal-based investing

Goal-based investing is a new way of wealth management where the individuals focus on attaining specific objectives or life-goals through their investments. Here, before starting to invest, the individual tries to answer the question- “What exactly are you investing for?”. The best part about goal-based investing is that here the investors do not focus on getting the highest possible returns. But the aim of this investment is to reach the desired returns that meet their goals.

This year, switch from the traditional investing to goal-based investing. Set a specific goal and start investing to achieve it. This goal can be owning your new house, funding your business venture, corpus for your kid’s education/marriage, retirement, travel fund, etc.

3. Increase your circle of competence

Because of different background, qualification, or experience, everyone has built up a greater knowledge in a specific area. In this certain field, these people have the expertise and hence, have a significant advantage. This is called the circle of competence.

The circle of competence might vary from people to people depending on the criteria mentioned above. For example, a doctor might have expertise in medicines, healthcare or pharmaceutical and he can consider this area as his circle of competence (COC).

This year, make a resolution to increase your circle of competence.

For example, let’s say you might have been ignoring tax saving mutual funds or ELSS or any other investment option just because you were not competent earlier. But this year, spend some time and effort to get comfortable in those investments.

Even for stock investors, there might be different industries or sectors that you may be ignoring. This can be because you do not have good knowledge of that industry and hence not inside your circle of competence. This year, learn those new industries and expand your circle of competence.

4. Be consistent

Consistency is the key to build long-term wealth. If you invest in equities just in a bull market and shy off during the bear market, it’s definitely not a good strategy. Bulls and bears are the part of the market and stocks are characterized to go up and down.

This year, make a resolution to become consistent in your investments.

If you have got a monthly SIP, then consistently keep investing in that plan. If you are a direct stock investor, then fix an allocation of money that you’ll invest in the market throughout the year, whenever you find the best opportunities. Overall, to win the game, you need to stay in the game. And that’s why you need to be consistent in your investment plans.

5. Become more Socially Responsible Investor

Socially Responsible Investing or SRI is choosing to invest in stocks that provide a financial gain as well as do social good. For example- investing in companies promoting health, cleaner energy, healthy foods, etc. The companies are evaluated based on the ESG index: environment, social justice, and corporate governance.

Being an investor gives you a lot of power in the financial world. This year, make a resolution to realize the power and influence you have as share investors to make a positive impact on society.

6. Continue your education

The stock market is very dynamic and things keep on changing very fast here. New technology, a new sector, new research tool, etc. And that’s why the biggest resolution that you need to make this year is to continue your education.

This doesn’t mean to go and enroll in a university. You simply have to keep learning more. Whether it’s through courses, seminars, workshops, books or youtube videos, it’s up to you. But make sure that you keep on learning. One best way to continue your education is by taking a resolution to read at least one investing book each month. This is not a tough resolution and easily achievable. If you are not sure which books to read, here is a list of ten must-read books for stock market investors.

7. Diversify to other investments

This is the last resolutions to make this year. No matter how good you are in equities, do not invest all your money in the market. Stock market investments are subjected to market risk. And if you’ve allocated all your money in the market and it doesn’t perform well (because of whatever reason)– you are doomed.

This year, make a resolution to expand your investment options and look into alternative investment options. Maybe investing in real estate or diving into startups as Angel investor. Diversify your investments and reduce the potential risks.

Closing Thoughts

The new year is the best time to ‘make the change’ or ‘be the change’. Whether you want to meet your needs/goals or become a better investor, this is a great time to start working on it. Through the new year resolutions, take your investing to the next level this year. I wish you all the best and a happy new year 2020!

Kritesh Abhishek

Hi, I am Kritesh (Tweet me here), an NSE Certified Equity Fundamental Analyst and an electrical engineer (NIT Warangal) by qualification. I have a passion for stocks and have spent my last 4+ years learning, investing and educating people about stock market investing. And so, I am delighted to share my learnings with you. #HappyInvesting

www.linkedin.com/in/kriteshrules/

Invest Rs 5,000 in a month challenge

Hi. This is the 1st day of August 2018. And today, I have decided to challenge all the beginners who are yet to start their journey in the Indian stock market. I challenge you to invest Rs 5,000 in a month.

I know, this might sound a little difficult. But in actual, it is not so. One month is a long time. And this time is enough for you to get started in the exciting world of stock market.

Further, do not worry. I’ll provide you a specific guide on how to invest your first Rs 5,000 in a month in this post.

Are you ready? Let’s get started!!

The goal of this challenge:

First of all, I would like to mention that the goal of this challenge is not to make you rich quickly or a stock market expert in a month. It takes years to reach that level. The goal of this challenge is to get you started.

Remember, the journey of a thousand miles starts with the first step.

No child starts directly running within days after they are born. First, they crawl, then comes baby steps, then imperfect walks and finally they are able to run. You have to also follow the same procedure. However, in order to do that, first, you need to get started.

You can only make good returns from your investments at some time in the future, if you start today.

Before you get started!!

No stupid investing in Penny stocks!!

Yes, I know! Penny stocks are the darlings of the newbie investors. The idea of investing in stocks worth less than Rs 10 in the stock market sounds appealing. You can buy as much as 500 quantities by investing Rs 5,000 if the share price of a company is Rs 10. However, these stocks are very risky and a majority of the population loses money while investing in these stocks.

Therefore, investing in penny stocks is not a good idea for the beginners. The basic rule for this challenge is to totally avoid investing in penny stocks.

Also read: What are Penny stocks? And should you buy it?

Only join if you’re serious to invest Rs 5,000 in the stock market this month!!

If you have any other commitments- let’s say you are giving some important exam, traveling the world or participating in the marriage of a close relative- then please do not join this challenge.

No one likes FAILING. Moreover, failing because you didn’t try enough is not worth it. Only participate in this challenge if you are wholeheartedly ready to invest Rs 5,000 in the stock market in a month.

Quick note: If you are a student and want to get started in the stock market, you can start with an amount of Rs 2,000. However, if you don’t even have this amount, then please do not start. In such case, first, you need to learn how to save!!

Set up your brokerage account.

I hope you already have opened your demat and trading account by now. If not, don’t worry. In the internet era, you can set up your brokerage account within hours.

If you are a beginner, I’ll recommend starting with discount brokers. These brokers will save you a lot of money as they charge minimal brokerage cost. You can always switch to another broker or open multiple demat accounts in future as there are no restrictions. However, for the beginners, I will recommend opening a brokerage account with discount brokers like Zerodha or 5Paisa.

If you need any help in getting started with the brokerage account, feel free to check out this site: Nifty brokers.

Set a time aside for research

One hour per day- not a big deal, right?

Keep this time for study and research. You can set aside this time either in the morning or after work- whichever suits you.

Quick note: If you are able to steal some extra hours during your lunch break or office time, then it will be considered as bonus time. Those time should not affect your regular research time. Stay disciplined to the time that you set aside for study/research.

Don’t expect to get fully prepared.

Perfection is the enemy of progress. Find me an investor who knew everything before he made his first investment. I bet, you can’t. Investment is a lifelong learning and there will be always more to learn. You are not supposed to learn everything before buying your first investment.

You will never be fully prepared. Just get started and keep improving on the journey.

Do not expect high returns

Again, the motive of this challenge is not to make you rich quick. Do not try to cross a 500-meter wide river in a month when you are just starting to learn how to swim.

With time and experience, you will get good returns on your investment. However, when you are just starting out, try to learn the fundamentals first.

Let’s start the challenge-

By now, you have would have a good idea of this challenge and its rules. However, what to do next? How to get started.

Don’t worry. I’ve planned out everything for you. Here’s are the exact steps to invest Rs 5,000 in a month.

#1. Start thinking about your favorite companies-

There may be hundreds of companies which you love -whose products and services you most frequently use.

Investing in the stock market is not like investing in Bitcoin, Ripple, Litecoin or any other cryptocurrency. Here, you already know the major companies as you have seen them since childhood.

Just look around and you won’t find it difficult to search for companies. From toothpaste, hair oil, edible oil, shampoo to cars, banks, shoes, clothes, petrol pumps etc, everything has a company behind it.

Automobiles → Tata Motors, Maruti, M&M, Bajaj Auto, Eicher etc
Banks → ICICI, Yes Bank, HDFC Bank, Axis Bank, SBI, IOB etc
Personal care —> ITC, Colgate India, P&G India, Dabur, etc
Shoes → Bata, Khadims, Shree leathers etc
Petroleum → HPCL, IOCL, BPCL, Oil India, ONGC etc…

You have grown up with the names of these companies. Why not study them and invest? Make a list of at least 30 companies which are your favorite.

#2. Be accountable

Do not ask for recommendations from your friends or advisors. Research yourself.

Maybe, you can have a casual talk regarding your favorite companies with your friends- if you know that they have a good knowledge of investing. But, do not get influenced.

This is your decision. No one cares more about your money and investments than you do. If you can’t make a decision to invest Rs 5,000 in a month today, how will you make decisions to invest lakhs in upcoming years? This challenge aims to make you accountable for your actions.

#3. Research. Research. And Research.

You do not need to be an expert to research the companies.

Just visit the website of any company and you’ll find tons of information there. All the products, services, vision, mission, team, management, future goals, latest announcements, financial reports, current happenings… everything is present on the website of the company. This is the best place to start your research.

For example, if you’re researching Hindustan Unilever (HUL)- go to their website and read everything that you can find about that company. Maybe you won’t understand many things. But do not let it stop you. One month is a long time to research and learn new things.

Further, google search your favorite companies. Use keywords like “Company name +..” founding year, founders, CEO, Board of directors, the latest news, results, competitors etc. This will help you to research the company from all the angles.

Overall, research everything about the company. Stalk it for a month and I bet you will know more about the company than most of the financial experts.

Also read: How To Select A Stock To Invest In Indian Stock Market For Consistent Returns?

#4. Select 2-3 companies that suit you the best

After the research part, you will be able to find a few good companies whom you believe are doing amazing and has a good future potential. Select 2 or 3 such companies to invest.

Further, do not select more than 3 companies. Rs 5,000 is not a big amount to invest. If you increase the number of companies, you’ll waste un-necessary time in researching. Keep the final list of the companies- SHORT!

#5. Finally, Invest

When you are done with your research and have made your final stock selection, make your commitment. Simply invest. Nowadays, using the online stockbrokers, you can buy stocks with a simple click.

As already said, the goal of this challenge is to get you started. Do not care about the returns. Just care about your research that you haven’t missed anything.

Bottomline:

One month is a good enough time to research a company. If you will use this time efficiently, you’ll learn a lot many things that will help you to make smart decisions in the future.

Further, making your first investment is very rewarding. You’ll never forget your first investment. (At least, I never did!!). Seeing all your hard work finally put to test is really an awesome feeling. In addition, even if you lose 20-30% in the market, it won’t hurt you financially. But this challenge will give you an experience of the lifetime.