Hi guys, CA Rachana Ranade here after watching my 2 videos on the basics of stock market everyone is really excited to start investing in the stock market before you start investing in the stock market You need three things number one you should have a trading account number to you should have a demat account and number 3 money............... you need vitamin m what will you do if you don't have vitamin m you will open a trading account will open a demat account that is not a big thing what about money, that is the problem so today I thought that I am going to discuss about trading account I am gonna discuss about Demat account but I feel the most important point which was the third point I will take it to the top now and let us try to discuss that I don't have money many! many people whine about this like when I ask people about do you invest? They answer me rachana we are not like you we don't have money I say what do you mean by we are not like you this doesn't work like this everyone has money it's about the problem is not having money that's not the problem I don't have money that is not a problem according to me problem is the method used to spend money that is not right your budgeting is not right many times this happens people do not think before spending will earn lots of money I have two three friends who have worked for more than 10 years in IT but at the end of the day if you ask how much you have invested how much you have saved that will be very negligible so guys I am repeating problem is not your earning the problem is how much you are saving problem is the way you are spending I am sure you have learned in primary school how to calculate savings? Correct me if I am wrong income minus expenditure is equal to savings do you believe this do you think it is right I think the formula should be reversed income minus savings should be your expenditure you will say wah wah wah Rachana that is something new! did I say something new, yes if compared to conventional wisdom because what people do is they have all priorities for spending and whatever you remains is what they save and out of that, they invest the strategy has to be a little bit different the strategy has to be whatever you earn from that you have to set aside a part mandatorily as saving and then what remains should be your expenditure. In my childhood, my mum taught me whenever she used to give me pocket money she used to tell me you should always keep 20% of pocket money aside spend the balance so that is where I learn this formula actually, that Income minus savings is equal to expenditure now what should be your expenditure is there any Thumb Rule for it you can search it on Google I also search to find new ways the one which is a very common and popular 50-30-20 rule you can follow that let me tell you what is 50 30 20 rule basically 20% you have to save You have to save! Whan, you get that sweet message, You know which sweet message I am talking about? That your account has been credited by whatever rupees. sweet message once a month. But then "Ye ak baar ki Khushiya hai bar bar ke Gum" When you start getting messages Your account has been debited Your account has been debited this trend continues throughout the month but how are we going to tackle this trend of spending that's an important question so if you keep aside 20% from your hundred now what is left is 80 now this 80 how are you going to spend make a further division of 50 30 50 let us say you have to spend this on your necessities. necessity could be like food, clothing, and shelter. and these days this could be food clothing shelter and electricity because electricity is which charges your mobile you are only able to see me when your mobiles get charged so you have to spend a lot of money on necessities but I feel 50% of that covering the necessities of life should be good enough. Now remaining balance 30 spend it on luxury I am not saying you should not buy an expensive phone I am not saying that don't go to an expensive holiday destination you have one life live it fully so how much should be your allocation let me repeat one time again it should be 50 30 20 20 initially as you are saving 30 you can take it for your luxury for your good lifestyle And 50 could be basic expenditures, your necessities of life. many people say that, we don't have that much income where should we save from you know I had this wonderful opportunity to interact with people which was close to Satara, Satara is a place in Maharashtra and there I had a wonderful opportunity to interact with people this program when I deliver the session was co-sponsored google and TATA Mutual Fund Through this program, I was taking this session. so there was one guy he said that, what is there in villages we don't have money what do you know about villages people like us get very low wages what rules you will teach us and don't have money to save so I dared to ask him a question actually, just before the lecture, I have noticed he was smoking so I dared to ask him a question so how much do you smoke in a day? so he said on an average 7 cigarettes a day I don't have any experience. :o :) It is a very serious topic, please understand. if you calculate one cigarette is 10 rupees he was saying 7 cigarettes a day that becomes 70 rupees per day to calculate what he spends for a month on cigarettes that is around 2100 rupees per month and you calculate for 12 months then the figure goes to 25000 rupees per year so now if you are spending 25000 rupees on cigarettes I don't understand why these people are saying that they don't have money to invest? Everyone has their own habit but I said these expenses/habits should be in that bracket I am not saying that is right or wrong that should be in a bracket that is about the discipline if you have the financial discipline then only you can save then only you can invest I have so many of my friends especially girls who said that you know Rachana if we don't do the shopping for a few days we start to feel uncomfortable I don't fall into that category I don't know why but if you feel similar when you don't shop for few days god bless I mean you can do those things but keep that into the limit of 30 that is what I am trying to say ok you do that I am sure you will be a very very very better position 5 years down the line 10 years down the line I am sure you will thank me for my advice You will admit that our spending pattern was a little different we tried to adjust accordingly, and we have definitely benefited from that! I am sure you will be able to do that. So you have understood Vitamin M, Now comes the Trading Account and second is Demat Account. by the way, before I move on to that let me tell you there are many such mobile apps which you can download from Google Play and app store I was just searching, let me tell you frankly I have not used any of such apps I was just trying to search apps for money management see the first one is Money Manager expense and budget second is your Monefy app third one is your money Manager app fourth 1 is wallet 5th one is a monthly budget planner and Daily Expense tracker. I found many such apps which have such features where you can connect your cards with these apps so what happens when you connect your cards with these apps latest understand if you swipe your card anywhere let us say you swipe this card at BookMyShow then automatically app notes this spending in the entertainment category, if you swipe your card at the petrol pump automatically app notes that spending in necessities category. So without any extra effort you have ready monthly expense tracker to show you where and how you have spent your money is that could be a very good thing to have for your financial discipline these apps will help you definitely so coming to the next point, about the trading account and Demat account many people get confused over Demat and trading account they know what is Demat account but don't know what is a trading account? so first I will try to explain what is a Demat account? The Demat account in simplest words is nothing but a place where you can store you are shares. it is similar as you deposit your money in the banks, as you store your jewelry in safe vaults, like your clothes which you store in your cupboards similarly, for your shares, there is an account and that account name is Demat account. so what is the work of a demat account nothing but to store your shares we should buy that is what the demat does. But this just storage place but if you have to buy or sell from that place demat will not work in that situation demat is only for storage demat is not for buying and selling so what do you need for buying and selling? buying and selling is called trading so for buying and selling of shares, you need a trading account. so please understand you need three things first demat account second trading account and last vitamin m for that, of course, you can open a savings account in any bank there are many banks which will offer you to open 3 in 1 account which will include your Demat account trading account and savings account 3 in 1 but let me be very Frank with you there are many banks which charge brokerage at high levels so it is not bad to have Demat account with any bank but definitely, your charges whether it might be Demat charges or your trading account charges generally with banks are higher. having your demat and trading account with one provided is always good o I will give you a simple example when I started trading I did not know about this my Demat account was with a bank and my trading account was with a different broker so the problem was when I had to check how many shares I had of X company I had to always check bank statement and back then there were no online systems so always I had to go to the Bank get my statements updated then I would get to know about my shares and then go and sell it! it used to take so much time so don't do this Demat account is with a bank and your trading account is with a different broker according to my opinion that is a bad strategy, I've done this mistake at the start of my career you don't repeat that please so what I did afterward was shifted to a broker who had the Demat as well as a trading facility. initially, I started with edelweiss broker even today I am using the same broker but this concept known as a discount broker so what is a discount broker? let us understand it first see these brokers will provide services at bare minimum charges so let me give you a simple example so I only edelweiss any other big brokerage house it could be Motilal Oswal it could be Share Khan it could be ICICI Securities unless and until you take a big advance brokerage plan generally your brokerage is high generally, it would be at least 0.4 or 0.5 of your total buying and selling amount. So 0.4% of your total buying and selling amount you have to pay as brokerage. For example, if you buy a share of hundred rupees 100 x 0.4% is equal to 0.4 Rupees will be your brokerage As your trading amount increases the brokerage increases so I thought I was giving so much brokerage hot and what can I do for it and I came across this concept of discount broker I just checked google searched best discount broker and Zerodha came up Zerodha is one of the leading Discount brokers So I have opened a second account with Zerodha I found their charges very nominal everyone has their comfort zone for many years I have used Edelweiss as my primary broker and I don't want to close that account so I am simultaneously kept that open so a very important lesson for you all again can we have 2 Demat accounts, Yes! can we have two trading accounts, Yes! it is your choice you can open as many accounts you want only thing is you have to pay annual maintenance charges for both accounts so for Zerodha, the account opening charges is 300 annual maintenance charges are also 300 it has best brokerage plans and there is no comparison with any other broker according to me so that is why I thought I should try it have done very few trades prove it my personal experience was amazing so I thought I should share this with my audience in fact, there were so many students who bought my course who said that can you suggest us some brokers so that was the reason I tried to trade myself because unless I am satisfied I cannot recommend a broker so had that good comfort good experience trading with this let me give you this recommendation you can also open your account with Zerodha and if you want to open an account I have given a link in the description and I just click on that link you can upload your documents to get your account open I got my account opened in 3-4 days so it was a very wonderful experience so keep watching my videos keep absorbing more and more knowledge and please pass on these videos most of your friends family relatives so that's it from my side Jai Hind Jai Bharat!
