NEVER invest your SALARY in Large Cap Mutual Funds | 10 SALARY INVESTING MISTAKES to AVOID

hi everyone so before moving on to the main video let me share a very important update regarding my mutual fund Investments so I had done a video previously where I dissected all my mutual fund Investments the link is in the description box so I had invested roughly six year and as of today I have made a profit of once Year all this has been done this year itself so this has been less than 12 months and I have generated a kager of 17% mut fund no so that is not the point if you look at the insights tab you will see that approximately 70 75% of my money is in pure index funds so 56.5 3 is an index and then there is funds of funds which is 15% so almost 70 80% money is in index funds purely right so I've used a technique called as bulk buying which I will explain in detail on this video if you want to extract maximum returns from your salary Investments you do sips I have explained multiple techniques on this video please watch it carefully make notes it will help you a lot in terms of improving your Roi from Stock Investing from mutual fund investing you name it so I hope you enjoyed this video let's move on to the main part hi everyone welcome to today's video so when I started making my first salary I had no clue about investing so I chose the best possible path for me which is mutual funds and would have taken the same path I had a mutual fund adviser friend he said that you know what a your money just keeps on lying in like fds why don't you go and invest in mutual funds I thought big right mutual fund is safe this that so I went ahead with that option now what I did not know was that mutual fund comes in different shape and sizes one categorization of mutual fund is called as direct plan and there is a regular plan so regular plan may you go through a mutual fund advisor SL distributor which was my friend so since I went through him I had inadvertently unknowingly picked a mutual fund which was a regular option now in this there are higher commissions and for 2 years I continued to pay high commissions unnecessarily and I lost a lot of money also folks none of these points will matter if you're not safeguarding yourself and your family and in order to do that you need a health insurance the insurance cost especially the healthcare insurance cost in India is going up by 14% 14% this is highest in the Asian countries so from that perspective please Safeguard please have an health insurance which brings us to the sponsors of today's video which is ditto insurance they are a spamf free platform you can go and speak with an insurance expert to understand what type of health insurance you would need so I linking all the information in the description and comment box now the point is that many people are salaried class right we are too busy with our jobs we don't know how to invest someone tells us that do this we end up doing that so to cut the long story short we end up making a lot of mistakes that cost us very dearly on top of that if you're just starting out your salary you might be too focused on your work you might be focused on skill Improvement where will you learn about investing all that stuff so on this video I'm going to consolidate 8 10 points very simple language I'll use if you apply these 8 10 points you are going to get a much higher Roi on the salary Investments that you are making so let's kick start the video and also a very humble request that please like this video simply because of the reason that it would allow these type of videos reach out to more people who are struggling with their everyday job and bunch of dun work problems making a lot of mistake with their salary paying such high taxes help them upscale their Finance journey by making better investment choices I know that you haven't pressed the like button please pause the video please press the like button and we will get started so okay here is a basic rule and this is a snippet that was provided by someone so it's a very good snippet and that what is the average return that you typically get M miy math that how much average return you get across different asset classs for example if you simply go and do a fixed deposit you will make roughly around 6% idfc first yes I'm just helping you develop an overarching thesis here so we are not nitpicking okay so if you go to fds you are going to make 6% if you go to government bonds or government schemes you will roughly make 8 9% for example suya Sami is run by the government approximate return 88 and a half% then if you go to Gold real estate then typical return is 10% depending on the type of real estate when exactly you are buying gold all that stuff if you buy nifty50 then the typical 20 years gager on nifty50 has been 12% nifty50 means overall Return of the market then you have good stocks so if you buy like consistent Compounders type that H HDFC bank at a decent valuation and if you able to manage the volatility then you're likely to make somewhere around 15% and if you pick good fund managers for example if you pick a good mutual fund good PMS if you are able to manage your portfolio really well then it can easily be 18% plus so yes there can be one two point difference here and there but net net this is a good summarization of the target return that we stand to make if we move across these different strategies of investing so with that spirit in mind let us start discussing some Salient points and what investment mistakes you should avoid making if you are on a salary so mistake number one is that we look for extreme safety now what is the meaning of extreme safety extreme safety fixed deposits now there is a very wrong notion that is going on in the market you should never invest in fds no the Viewpoint needs to be slightly more nuanced so regarding fds you must understand three sub points so the first key subo is the risk-free rate of return now what is the meaning of risk-free rate of return examp for example many of times you would have heard that Nifty or the entire Equity Market on an average gives 12% but have you ever thought where this 12% comes from well it has two components one is the risk-free component right and one is the risky component right so for example generally you would have heard that prices typically go up every single year just alup Tom whatever you are buying it will anyways go up like on an average 5 6% a year so that is inflation in the economy so at least risk return right so this is like basic inflation so this 12% number at least half of it comes from where half of it comes from inflation itself and remainder six is the risk premium that you are getting because you are investing in a slightly more risk instrument like nifty50 which comprises of equities right so I hope this point is clear that 6% is risk-free in a way and 6% is the risk premium that you are getting now see if you are just simply going and depositing your money in fixed deposit what are you essentially putting your money behind well you are just blocking this part out return so that will be inflation return that's it right so FD is just a tool to somewhat Benchmark yourself around inflation so let's say that the current FD returns are somewhere around 7% you are getting 7% because of the fact that inflation itself will be higher than 7% right that FD actually matches whatever the inflation in the economy is now many people will argue with me that no inflation is like 6% right now 5 and a half% right now agree but that is a stated and quoted official rate of inflation please don't go by that the real rate of inflation in the economy according to me will at least be 11% 11 to 12% that is the inflation that you should assume especially if you are in the middle class Hospital education look at anything you yourself will be able to that post 2020 till 2023 3 right every year would have been the increase that is the real inflation that you should understand so in that Spirit if you're just simply putting your money in FD blindly so in such a scenario your capital is not growing and you are working your way to Poverty because in real terms every year whatever money you work hard you put it in bank that will keep on losing value so this is part eight part two is the fact that it's not as if that fds are bad all the time for example there is something called as the base interest rate and that is decided by repor rate in India so in simple words if the interest rates in the economy are almost at their highest temporary level I'll repeat that statement almost at their highest temporary level then that is probably a good time to lock in your fds for 2 three years right at least and be cool with it now why is that the case because you can deposit that money from a safety perspective that whatever Safe Money you require just lock it in an FD that becomes your safe money and that will continue to give you highest possible interest rate for the next 2 3 years based on a safe instrument now take a look at that these are the interest rates in the Indian economy right now I will show you the last 5 10 year history here you will categorically see that in the last 5 10 years the interest rates are fairly high as of now so we are almost at that temporary level where the interest rates are fairly high so good time to do FD from that perspective after this the interest rates are likely to be cut but if you have blocked your money for 2 3 years then that safe money is sensible for you so I hope you got the perspective of doing FD if you want to save maybe like 10% 20% of your salary in safe and if you don't have a safe money bucket category then you can definitely consider doing some FD so this is point one the key takeaway here is that if you are making your salary and if interest rate gets cut then please put your money not in fds but in slightly more growth oriented instrument now this is a point that many people understand many salary class people understand but their point is mutual funds are here right this is a tagline that I keep on hearing so they will go and buy every random mutual fund this is the second mistake that you will make as a salaried employee that please do not go and buy random mutual funds I have made a lot of videos so probably you can go check out the list which are good mutual funds bad mutual funds all that stuff but from a macro point of view 68% of active mutual fund managers do not beat nifty50 or The Benchmark returns if Benchmark returns are 12% then 68% of mutual fund manager will make much less money on top of that if you investing in Nifty 50 which are considered to be like gold Mark of safety when it comes to equity investing then the commissions are also lower compared to like what you are paying active mutual fund managers so this is a very important point because when we start investing we typically buy like large cap mutual funds actively managed right there is like hardly any use in terms of paying so much commission there you are much better off just simply putting your money in nifty50 now there was a very interesting tweet that was done by Shankar Sharma so Shankar Sharma is a very celebrated investor in India so he was targeting like some PMS guy I'll not name them you guys can name which PMS person he was speaking about so he was saying that you know what I can't understand clients who pay their fund managers fees to buy HDFC Bank H Nestle CCH britania page Industries Etc and he's 100% right why would you pay your mutual fund manager to buy these Blue Chip companies right it just makes no sense it just decreases your return so if you are on a salary please don't make this mistake this is a very important point so just to recap two three points number one please don't buy Blue Chip mutual funds I'm not saying Blue Chip stocks but avoid buying Blue Chip mutual funds Blue Chip stocks you can buy directly when they have fallen for example right now HDFC bank is at a good level you can directly go and buy it why unnecessarily pay your mutual fund manager money and commissions for that so this is like basic stuff that you must understand number two if you're looking to buy I don't want to invest put money like risky Equity itself is risky so why should I put money there so okay so just simply go and buy nifty50 you will do much better than actively manage large gap mutual funds right so this is point two point number three let see some portion of your investment for example let's say that you are every month you're investing let's say 10,000 rupees right so 80% of it you can put in Blue Chip categories right so here 20% of it start taking little bit risk with that and here you can simply go and buy mutual funds on small and midcaps if you are picking a mutual fund in the small midcap category it still makes sense because at least fund manager at least that person is doing some research trying to find out what good small cap midcap is putting some effort with HDFC Bank do you need like Assurance from a mutual fund manager to tell you if HDFC bank is clean or not right so that's a simple point that if you are doing mutual fund investing via small mid gaps still makes sense but large Blue Chip mutual funds it makes zero points so then comes the third related point that for example I know a lot of my friends they are earning really really well they are very busy with their jobs but they are setting on huge purpose so right so in that respect they think a you know what I will go and invest via a PMS so PMS in very simple words means that people who want to put like large chunks of money so some pmss have at least a ticket size of 50 LHS so that is what many PMS schemes say and since these pms's are slightly more selective in terms of picking their clients clients think you know and therefore right so so okay so let's look at the data so here is the data of how PMS schemes perform in relation to mutual funds so here only 40% of PMS so this is in percentage terms that only 40% PMS have beaten mutual fund so s% large gap mutual funds have beaten like large gap pmss mid Gap orbu Performance Small Gap 53 right so here small Gap somewhat still makes sense but in majority of the categories you will see that the PMS guys are actually losing the war right on a three year one year 5 year category basis so you can make the decision according to you so just blindly trusting PMS guys might not make sense on top of that PMS funds have a higher commissions so typically they charge 2% that is almost the maximum that could be charged on a mutual fund so please remember that think about it this way that in a market that how much market returns have given in the last one year so let's say so say right so 10% right now 2% is the AUM asset under management that is almost like 20% of your profits right so please don't think that this 2% is very less this is a very high amount so the next point is that many salary people sometimes they become like highly adventurous we are going to like invest here there everywhere this that okay so in that respect please understand the point that please do not invest in something that you don't understand okay now this is a Warren Buffet quot and then many people are like you I don't understand anything so should I not invest in anything no no please understand and build like simple rules right it's not as if that you need a PhD in finance to invest sensibly so see let me give you an example of a market instrument that is gaining a lot of popularity in India so this is called as REITs right so REITs in very simple word means that for example if you going and buying a villa or a plot right then what are you doing you're directly going and saying 1C right give me this piece of land right so you're buying up lot so you're buying real estate directly so this is direct real estate buying so people came and they said that you know what a fund there right one one CR where will you put right do you guys know how to invest in real estate so you'll say okay no I don't know right so then what they will say is that see we will fractionalize everything so fractionalization means that instead of one ticket size we are going to chunk this up into 10 buckets right so you'll create like 10 buckets and each of these shares will now cost only 10 lakhs right so 10 lakhs into 10 that is one CR and now you get an option of investing just 10 lakh rupes right so now you can invest just with rupees 500 on a re right and these are listed entities you can go and invest in stock market via REITs and with just like 500 rupes we'll become like Malik of real estate now just use brain okay it's very simple on one hand you're saying that you know what the real estate will give you 10% return now here there is a party in the middle which is REITs right so% they might charge right management fee this fee that fee whatever it is so underlying asset May in the underlying asset itself here if the return in white money is coming out to be let's say 10% right you are going and buying a listed asset on it how can it give you like 12% or 15% does it make any sense right the answer is no of course I'm simplifying it there is an entire video that I have done on reads in case you guys want to watch it you can watch it understand the entire argument I'm just telling you that people don't understand the full story right it's not as if that real estate investing is bad in fact real estate investing is amazing I have made a lot of money investing in real estate and every single real estate that I own generates a rental yield of 6 6 and a half% minimum right so that is how much money I'm making in fact I'm doing a real estate Workshop also in case you guys are interested I'm doing that physical Workshop in Goa it will be combined with three classes online the mar session is already booked so you'll try to organize one in June July so I will put the links in the description box so anyways to cut the long story short please do not invest in something that you don't understand and many times we don't understand right for example I am not able to completely grasp the Pharma theme that is playing out in the Indian economy right now right right it's fine you don't need to invest in every single thing that is trending and all that stuff so then comes the next point that if you're a salaried employee then you make certain kind of rules right and you never take bulk buying opportunities so for example when we are going to office we'll go to office this day so it's a routine right similarly we make investing a routine then by Fifth we have to do sips in these five mutual funds and be done with it so please don't mechanize it it's not automatic you will have to use little bit of brain at least right I'm not saying that sit in front of computer gawk at your screen for like 10 10 hours re like 100 research reports no nothing of that sort at least basic when there is an opportunity opportunity it's free money on the table grasp it that is called as bulk buying opportunity can I give you example yes so this is a video that I made a few months back when the Nifty was trading at 15,500 something like this I took a Nifty position of roughly 50 lakhs so bulk investing the right I took that the index is now at 20 so free right why because that was a great buying opportunity it was a bulk buying opportunity now very recently like maybe month and a half ago I built bulk position in Nifty it I invested close to 1 CR in Nifty it itself it's up 10% in 2 2 and a half months how much risk did I take by investing in nifty50 or it index very similar now you might say that okay now you're qualifying gur right and all these things are in the past tell us the future right so okay so guys please use brain that right now there is a bulk buying opportunity in Banks go and check any Bank HDFC Bank k bank ICICI Bank this bank that bank only good ones right not every single bank but good Banks you'll see that they are trading at their lowest ever P they are sitting on their highest ever revenues highest ever profits why will the stock price not at least go back to its previous High slow down grow competition all that stuff is there no doubt right it might take 3 4 5 6 months I don't know how much time will it take I cannot guarantee that it will 100% bounce back and all that stuff but the risk reward ratio is very favorable for you so these are the times when you could consider building some bulk buying position as for the market dynamics I'm not saying that do bulk buying in nifty50 I'm saying that potentially you could start pouring little bit more money on banks as of now because it will improve your returns right so that is a simple point and simple message so I had done an entire banking video you could consider watching it it will give you more idea you research more and then finally you can consider building some positions but to cut the long story short please understand the concept of bulk buying that's a very effective way of improving your returns so then comes the sixth point that many of the salary people what do they do they create an Emi of 2 lakh rupees a month and Hyderabad I'm getting a house of 4 and a half CR so now K now why because mama papa is asking me to get married and all this stuff is happening and I'm being pressured so I will go and buy what not a house but a Emi okay so I'm not saying that whether you should be buying a house not buying a house that is your call I cannot guide you on that but see what I'm trying to tell you is that if at any stage in your life if you are overleveraged now overleveraged means that if you are making one lakh salary and your debt or the debt repayment that is happening from your side is like 60 70,000 80,000 then you're almost 80% of your salary is going into paying debt you yourself think that is that a sensible thing to do right lot of people do it lot of people create these type of emis which puts a lot of financial strain for you see when you're are in your early 20s early 30s even mid-30s there are a lot of opportunities that you can take advantage of so from that perspective do not get yourself into a situation where like more than 50 60% of your salary is going into paying debt that is just a very bad way of doing any kind of investing right so that's a simple point that you should understand and I hope that you will see that in the right spirit so then comes the seventh point and the funniest point that I will invest the way my friends are investing now see guys your friends might not know much about investing either so it's like blind following a blind it's a phrase so because of like social pressure a lot of people just randomly buy stuff right so I get to talk with a lot of my friends and they point you know I'll also go and buy Dubai makan right that's not a way to invest invest in something that you understand something that makes sense to you now why is that the casee because any type of investing that you do you need to have conviction in it for example today you got impressed Banks I'll go and buy Banks now if you yourself do not have any conviction on Banks and news that you know the banks have fallen by 5% 10% this that you will Panic right you will not understand what is going to happen you will not be able to downward average your position so downward average means that if the stock Falls a bit then you are able to buy more of it so you're not able to do any of these steps you just get scared so unless you yourself have conviction please do not go by what your friends are doing and all that stuff investing is an individual game not a community game that our community is going to invest here so I will also invest here no that is not the right way of approaching investing okay so that brings us to point number eight which is a related point which is called as Trend chasing so now let me tell you a quick story of Suson energy and I will show you the chart you will like it so see this was 2006 right and during this time there was this news in the world world and you can go and check with people also and people were saying that you know right oil will vanish from Earth because there is limited amount of oil and that's it right the humanity will run out of oil so the Renewables is going to grow and because Renewables is going to grow if you pick a company that is into renewable energy byab you are going to make like crazy amount of money so that was what suon energy story was and it did well initially right and then right and it was at what right it was at 355 now what is the stock trading at it is trading at 151 18 rupees so renewable energy now similar Trends are being talked about e right okay final artificial intelligence machine learning and whatnot see guys I'm not saying that these Trends are not going to change the world of course they are going to change the world but I don't think that we are smart enough to identify okay this company is going to do this particular thing in AIML now many of you would say then why are you betting on AI based companies this that see I'm taking broad bets I do not make like the specific bet compan is going to become like AI leader ml leader no nothing like that I have taken my broad bet on top 4 five performing American firms so I a thematic macro investor I do not look for needle in a ha stack now Trend chasing is the fastest way of going bankrupt that you'll listen to your friend your friend says know what EST so I'm going to buy like an apartment in Dubai right then some third person is going to say you that you know what on this particular thing so we are going to buy like this domestic company this that so please do not do this trend chasing it will just bankrupt you so let me tell you something interesting also this comes from Twitter I just posted today so this was yesterday's news on tataa consumer product right every major news Outlet media organization it started posting on tataa consumer product News Channel same thing this stock was being I'm scared to use the word manipulated but we use right so in a way it was manipulated right so the retail investor loses money by chasing these type of Trends please do not believe in it please do not believe the news unnecessarily learn how to analyze don't just simply chase the news so Point number nine is that salary class people do not consider a portfolio of income and portfolio of stocks this is a very important stuff see you cannot forever continue to invest in mutual funds so it's very important to learn how to evolve as an investor you can start definitely by investing in mutual funds picking nifty50 yourself then investing in indices then picking Blue Chips then picking small cap midap But please understand that you will go through a journey this is a very important aspect now why is it important to learn how to invest your own money well it is critical because your level of income will keep on changing there will be times when you will see bulk buying opportunity there will be times when you should not invest much in the stock market so you will be able to intelligently time all these signals only when you learn your own portfolio building and learn how to invest your own money without that you will not get much ahead so as a final Point what I will do is that I will leave you with three four key tips if you're just starting out or if you're somewhere in the middle of your investing Journey so the first key thing as a salary class employee is that you could start out by investing in nifty50 if you have never made an investment that's a good way of starting out nifty50 is a safest instrument it's not as if that entire Nifty and India economy will become zero so nifty50 will also become zero so that is highly unlikely to happen so if you're starting out start with nift 50 number two then graduate towards buying Blue Chip companies on your own when they are available at discounts so for this please continue to tune into my videos if you want to learn fundamentals of stock markets all that stuff then please consider joining my member YouTube Community the feedback has been excellent just try it for one month it's a subscription base hardly like 150 160 rupees try it for a month and if it doesn't work out then leave it right big deal so see how much your knowledge grows in that one month Point number three add a little bit of risk to your portfolio risk taking is not bad mad risk taking is bad right so if you are investing 20 30% in slightly more risk oriented instruments for example small cap midcap nothing wrong don't pick individual stocks go with mutual funds not a problem then comes the fourth and final point that please understand that there are bulk opportunities in the market in some areas right now there will be times when you will have to stop your investing there will be times when you have to double down and be aggressive how will you learn all this just by focusing a little bit on learning every single week you don't need to take out 5 five hours of your schedule but every week just learn over the weekend couple of hours you will see a c difference in your portfolio I hope that you enjoyed this conversation if you did then do check out my mutual fund portfolio here here I have shown you how exactly you can build your mutual fund portfolio too

Channel: Akshat Shrivastava

Views: 1,050,118

Keywords: akshat shrivastava, cases over coffee, wisdom hatch, wisdom hatch courses, stock market courses, akshat shrivastava courses, stock analysis, how to pick good stocks, stock market course akshat shrivastava, investing for beginners, hdfc bank, stocks fundamental analysis, technical analysis, when to sell your stocks, hdfc bank stock, which stock to invest in, nifty bank, bank nifty movement, investing mistakes, how to invest your salary, kotak bank

Id: glfX6mwosaI

Length: 27min 46sec (1666 seconds)

Published: Fri Sep 08 2023