START INVESTING YOUR MONEY ABSOLUTE ZERO

 

I'll be teaching you exactly how do you start investing your money from absolute zero. 

You might have no idea about what are the different schemes, what are the different asset classes in which you can put your money in, but this blog will serve as a beginner's guide to knowing all of that. We're going to talk about almost every single investment asset class in this video and let me tell you, I'll be breaking it down for you so simply that you would be understanding this even with no knowledge of finances. A but I'm here to give you all the financial knowledge, which the Indian education system never provides for you. Lastly, I would want to say that every single investment, it's your own personal choice and you should not take anybody's advice upfront and it's all subject to market risk with that disclaimer out of the way. Let me start by telling you exactly how do you start investing from zero.

So my friends, you might have just landed a job. Congratulations. And your salary might be ranging from just 10,000 rupees, which was in fact, my first salary, all the way to 2 lakh, 3 lakh rupees per month.So for the varied amount of people that are going to be watching this blog, I'm going to be assuming a mean salary of 50,000 rupees per month. It's also going to keep the calculation simple. So let us start.

He first thing before you start investing is to calculate how much of the money that you're actually saving and how much of it are you spending. So the easy way to do that is using the spreadsheet, which I made for you guys, by the way, link in the description, you can download and calculate on your own. The first thing that we spend money on other fixed things, for example, the rent, the tuition fees of your college, the food that you have to buy, the groceries that you have to buy, the EMIs that you have to pay, the fuel for your different vehicles.

And this all comes out to be a fixed thing. But apart from that, there's also the things which are optional. So things like going out for parties, hanging out with friends, taking trips around the world, all of these are optional things.

But still, I'm going to include the expenses over here. First of all, we've got our salary, which is 50,000 rupees. Then we've got our rent.

Let's say I'm paying a rent of 4,000 rupees. I'm spending around 4,000 rupees on food. Petrol, I'm spending maybe a thousand rupees.

So in EMIs, let's say I have bought an iPhone, which I have purchased. Maybe I've got an EMI of 5,000 rupees for that. Then we have got our travel.

So travel may, maybe you're going out to your house, maybe you're going out with your friends. All of these come under travel. So let me just put in 4,000 rupees.

So the train tickets, the stay and all, 4,000 is good. For party, 2,000 rupees, that once a while on a Sunday, your friends come over, you order a lot of food. And for yourself, maybe you like to buy new accessories, maybe like the shoes, the clothes, all of that.

I'm putting it around 2,000 rupees. So we've got 22,000 as our expenses. This might vary from person to person, but this is generally the amount that I spend on myself.

And when you subtract this from your salary, you get around 28,000 rupees, which are left with you guys. This is the 28,000 rupees that we'll be investing in this blog. And I'll be telling you exactly how and where do you invest.

But before we start investing, you should know that there is something called an emergency fund. What is this emergency fund? Let's say that tomorrow your employer calls you and they tell you that you are fired from your job. And let's say that the new job opening starts three to four months down the line.

How do you survive in these three to four months? The answer to that, my friends, is something called as an emergency fund. An emergency fund is that amount of money that will tide you over some unexpected things that happen in your life. So the usual way to calculate it is to calculate your total amount of spends in a month.

For our case, it was 22,000 rupees and multiply that by six months so that you're covered for, let's say, the next six months. So using our formula in our Excel sheet, we've already got 1,32,000 rupees as your emergency fund. Now, six months is an ideal time.

You can cover it for three months, you can cover it for four months, even for just one month if you feel like you're confident with respect to that matter or if you're living with your parents and you feel like they will help you out from time to time. But for me, I would say 1,32,000 is a very good emergency fund that I can take a six months break and I cannot rely on anything. I can still live a good and decent life and not have to worry about where, how am I going to pay the rent or how am I going to pay my loans.

So your first goal from your salary should be to save some amount of money for your emergency fund. So out of the 28,000 rupees that you were saving each month, just remove 10,000 rupees from that and put it in your emergency fund because it will save you because it is very important. Once you have got your emergency fund made or at least 60% of it is made, then you can start considering the investment options very rigorously.

You don't have to remove 10,000 rupees each month from your saving just to put for your emergency fund. 

All right, now that your emergency fund is done, let me talk to you about various different parts where you can invest your money. The first thing where I would like you all to invest your money is something called as mutual funds. What exactly is a mutual fund? Well, to understand mutual funds, you first need to understand stocks.

What is a stock? A stock is a small ownership of a company in exchange for some amount of money. For example, Apple, let's hypothetically imagine that one stock of Apple costs 5000 rupees. You will give 5000 rupees to Apple and they will get you one stock.

One stock is a part of the ownership of the entire Apple company. On receiving that money, the company will definitely grow because they are using it to fuel the research and development. They are using it to build more products.As the company grows, the fraction of their company which you own also grows. So maybe you bought it for 5000 rupees next year, it will grow to 6000 rupees. This is the absolute simple basic buying and selling of how stocks work.Now, there's a simple problem with this. Stocks are highly unpredictable. What do I mean by that? That means they vary on a day to day basis, hour to hour basis, and even a second to second basis.

The valuation of the company and the stock price goes up and down 1000 times over the course of a month. And you don't have the time effort or the energy to monitor what time do you have to buy and what time do you have to sell. Imagine if I hired somebody that I called as a fund manager, and I asked him, find me maybe 100 companies like Apple, which are growing each day.

And this fund manager is the one person who will be looking at which companies are going down, which companies are going up and out of these fixed 100 companies, which company should receive what amount of money and I give that fund manager 5000 rupees. Okay, my friend, this is 5000 rupees. Now you go ahead and buy stocks or buy different asset classes from the different companies which you have selected and invest according to you.

Now this my friend is called as a mutual fund and the person who manages a mutual fund is called as a fund manager. So when you're investing in mutual funds, you're not putting your money into just one company, you're putting your money in several different companies. Now there's an obvious benefit to that.

Let's say that you give 5000 rupees to so many different companies out of 100 companies. If 30 companies fail, 70 companies will grow. And since more companies are growing than they are failing, your overall money asset will go up in price.

Based on this, there are several different types of mutual funds. One is a debt fund. Another is an equity fund.

And lastly, one is called as the index fund. We'll be talking about index funds as well as equity funds in this video. Let's talk about index funds.

So index fund is basically a ranking system. One of the common index funds that you might know is called as a nifty 50 index fund in which the top 50 companies in India, they are ranked from one to 50. And in these 50 company, whenever you give 5000 rupees to the fund manager, they will apply that 5000 rupees in the top 50 companies.

Now the beauty of this is that when a company, let's say at 46 or 47 number goes down to 56, 57, some other company takes its place. So you're investing in the company which are only in the top 50, not the 50 first, not the 50 second, they might come back, they might go down, but you will be investing only in the top 50. So this investment will be only taking place in a ranked order.

So you're assured that only the companies who are consistently at the top are getting your money. That's called as an index fund. Second is the equity fund in which the companies are decided.

So I've already decided 100 companies and in this 100 companies, irrespective of whether they go up or go down, I'll be buying a piece of that company as a shareholder. This is the asset class, which is personally my favorite because in here we get high risk, high reward. And at a young age of around your 20s, you are expected to take high risk, high reward because in the older age, you cannot.

Those are the two types of mutual funds. There is a third type also called as the debt fund, which I'm not going to be talking about in this video. Like I told you about the index fund, let me tell you a bit in detail about the equity fund that we were talking about.

Depending on the number of companies that you have in one mutual fund, that mutual fund is divided into three or four categories. Let's talk about the small cap mutual fund in the first place. These mutual funds, my dear friends, they are high risk, high reward.

And this is the place where I usually put a lot of my money in because I like the high reward aspect of it. Similarly, you've got mid cap and multi cap. Multi cap will obviously have the lowest returns, but it will have maximum safety.

It will not give you that much returns, but your money will be assured that it is not going anywhere. Mid cap is somewhere in between of this. So out of all of these mutual funds that you talked about, Anuj, where do you actually put your money? The one thing that should be constant is, first of all, index funds.

Next, you can start investing in small cap funds, a few mid cap and a few multi cap. Small cap should always be on your portfolio. It is absolutely essential that you have some small cap because at this point, only you can take the risk.

How do you invest, my friends? How do you start investing? You will need your Aadhaar card, you will need your bank card and a few other bank details necessary. And you can start by downloading any application on the market. We've got Grow, we've got NJ.

All of these are different applications. You can log in, sign up for that and start investing in mutual funds. There are better tutorial videos than this one that will teach you an exact stepwise guide and how do you buy a mutual fund.

So now that I've talked about my mutual fund, how do you make sure that you are putting consistent 5000 rupees every month in mutual funds? And that is where the concept of SIP comes into place. SIP is something called a systemic investment plan. It's basically like an EMI that automatically gets deducted from your bank account.

But instead of going towards your loans, it goes towards investments. What an SIP does is that irrespective of how high or low the market is going, if you are averaging out your money spent over the course of an entire year, the high and low of the market will be negated and you will get a good deal almost every time. One pro tip I'd like to give you over here is that whenever the market is going down, that means whenever you feel like the stock prices are going down, the sensex is falling, that is the best time to buy anything with respect to the stock market because essentially all the stocks you're getting at a lower price and eventually market does come up always, always the market has to come up and when it does come up, it's the same thing which you bought for a lot cheaper is now a lot bigger.

Mutual funds are not something that are going to give you a return in one year or two years or even three or four years. I myself have been investing in mutual funds for over three years at this point and still my returns are humble. They are not extremely good, they're not extremely bad, but they are right where it should be.

If somebody's promising you quick money, they are actually lying to you, but if somebody's providing an in-detail guide about how do you invest, you should definitely subscribe to that channel. Mutual funds will actually provide you very good returns when you invest in them for a lot of time. So if you have an SIP that is continuing for 10 years, 20 years, 30 years, that's when you'll see exponential returns and that's the magic of it.

How does exponential returns happen? Let's say that you've got a corpus of five lakh rupees and on that you're making seven lakh rupees. That two lakh is already added to your corpus and next time whenever the price goes up, the seven lakh will grow. Second thing I want to talk about is fixed deposits.

FDs, they are one of the best kind of investments for a secure holding of money and they are very liquid. That means if you have an FD with the bank, you can go in the bank right now and by the evening you will have that money in your account. There is nothing bad in doing FDs.

The social media influencers are telling you you should put all your money in mutual funds and stocks, but it is honestly okay if you're doing your own FD as well. Usually an FD is a pretty low return investment, but it is one of the ways in which you can keep your emergency fund, you can keep a liquid asset that you can immediately use whenever you need it. It's a packet of money that you're giving to your bank account and telling them to keep it for safekeeping.

However, if you compare that to mutual funds, the average returns that you should expect per year on a mutual fund is more than 12%. 12% is the minimum. Of course, like I told you, mutual funds are not to be taken on a year-wise basis.

They are for a decade-wise basis actually. On a decade-wise basis, it is exponential. You can't even put a percentage to it.

Per annum, I would say FDs give you around 6.5 to 7% interest but there is no risk associated FD and that's one of the safest investments that you can do. How do you do an FD? You go to the bank, you tell them that you want to do an FD. They'll give you a form.

You sign that form and then you give them a check and that's how an FD is done. All right, let's talk about the next thing and that is individual stocks. Individual stocks, like I explained to you what stocks are, are very, very risky.

So if you don't know what you're doing, I would say get well-informed, get well-educated about the process and only then start in it. I personally have never invested a huge amount in any of the stocks because I find it to be too risky and not worth my time. However, as we grow older and we get more knowledge about the stocks, I'll definitely be making a dedicated blog  on it.

Next investment is one of my favorite ones and it's called metals. So metals like silver and gold, I really, really love them. I've invested some of my money into buying them.

There are two or three direct benefits of having these metals in the first place. First of all, I'd like to talk about silver because if you look at the graphs, silver has given you a more return in the last three, four years compared to gold. Gold definitely is always a good long-term asset, especially for females who can actually make jewelry out of the gold.

Let me tell you exactly how does gold work. So I think around 2018, if you look at the price of gold, it was around 33,000 rupees per 10 grams. It's 2024 now.

And the last price, which I checked was 80,000 rupees per tola. So if you had bought a gold of let's say 33,000 in 2018, you could have sold that for 80,000 today. It has definitely beat inflation.

It has definitely beat a lot of FDs that you can do. Whenever buying gold, there are two ways you can actually buy it. One is the physical gold, which I really love.

I'll tell you what that is. The purity of the gold is calculated on the basis of carats. So 24 carat equals 100% purity.

22 carat is a little bit mixed with some other metals. So that's how we calculate it. Pure 24 carat gold is the gold that you should be buying if you are looking for investments.

And what exactly should you be buying? You should be buying coins or biscuits because those have the lowest making charges. The lower the making charge, the more amount of return that you will get in the future. Of course, when you start to buy fancy items with gold, that making charges can go very, very high.

They can reach up to 50%, 60% sometimes. You might be tempted to buy gold jewelry. You can do that if you have a lot of excess money lying around.

But purely from an investment strategy, I think gold coins are the best way to go. And they also look good in your collection. If you have gold coins, when you look at them, you feel genuinely good.

The second way to buy gold is to buy gold bonds. However, I'm not that experienced to comment on that. You can definitely read up on that on your own.

But from what I've heard is that the long term capital gains tax and all of the different taxes involved actually make gold bonds not that different from buying actual physical gold. Secondly, the metal that you can invest in is silver. Silver has given a better return compared to gold in the last few years.

And there is one beautiful aspect of silver is that when you are buying silver utensils, no PAN card, no Aadhaar card is required. And when you're selling those utensils, there is literally no PAN card, Aadhaar card required because they all come under personal belongings. The same way that you buy, let's say, Parle-Jika biscuit, you are not required to give your PAN or Aadhaar.

Similarly, for silver, you are not asked for any of that. Last, but the most important asset in which you should invest in is yourself. So investing in yourself is one of the most underrated things you can do.

When you invest in yourself, when you learn new things, when you learn new skills, that's when you actually have exponential returns, more returns than mutual funds or stocks. And if you need a part two of it, let me know down below where I'll be going down into different asset classes like real estate, stocks, and gold bonds. That's it from my side and I'll see you in the next one. Goodbye and take care.