A twenty something I know asked me….’I wish to Invest’ so here is what I told her/ him…

You are a new investor with a lot of enthusiasm for investing, so welcome to the world of investing. It is a nice world out there and you can increase your wealth by investing. Let us see why you should invest.

1. You are earning well, and have a surplus! – you are investing because you have a surplus. Face it for the first 5 months of your working life you were busy spending, having fun, buying gifts for your loved ones…and now suddenly you feel like investing. I am proud of you that in 5 months you realized the importance of investing. There are people who wait for 15 years before they invest!

2. You already are saving: the life insurance policy that your father took about 6 years ago – and for which you are paying the premium – is a lousy INVESTMENT product, but since the premium is low you should continue it for another 14 years. This is not an investment, but a saving product.

3. There is enough research to show that equities out perform other asset classes. In fact Jeremy Siegel says ‘Equities out perform other asset classes in 8/10 times in the US’. I would like to believe this will hold true in India over the next few decades.

4. Ocassionally the share market will do huge somersaults – and it will be scary. However when you read about equity markets and equip yourself about how the markets behave, you will realise that volatility is an opportunity not a threat.

5. Luckily for you your father is also an investor, hence you will not be actively discouraged from investing. I know of a girl who started with a 4k SIP – and was buckling under family pressure to stop. Luckily for her she has continued for the past 6 years and she is now reasonably happy with the SIP returns! So Funds are a good place to start, and SIP the safest route.

6. The more you read and learn the easier it will be for you to tell your banker why you think his/her suggestions are good for the bank and not for you.

will write more…as you ask…

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  1. Hey,
    I am all of 24 now. Been investing regularly for last 2 years. Looking forward for more of your advice for 20 something olds 🙂

  2. Subra Sir,

    Thank you for your valuable inputs. For the last few years, reading your blog every morning has become an integral part of my daily routine. Taking inspiration from your blog, i have invested my entire salary to SIP and PPF as I have no commitments, (am only 25 years old and working for past 3 years) and feel that this phase of life is a good opportunity to invest and build a corpus. After marriage, expenses are bound to increase and such a high % of savings might not be possible.

    I heard that REITs (especially the ones specialising in commercial real estate) offer an attractive IRR (10-15% appreciation p.a) and 7-9% rental yield as well. Is it worth considering to park a lumpsum amount? Your guidance in this regard would be highly valued.

  3. Dear Sir,

    Thanks for your blog.Could you please provide some input on how to identify the right prices for individual stocks?

    Am 27 years old and majorly investing through the SIP route in couple of large cap funds and a small cap fund.Invest lumpsum in ELSS fund for 80C tax saving.Keep my PPF active (Rs.500 every year).

    Currently invested in only 3 stocks – Airtel,Coromandel International and Hindalco all through reading your blog and my stock portfolio is up by 20% thanks to you.

    I would like to learn more about individual stock picking.I want to build a solid portfolio of stocks.Please advice..Thanks a ton

  4. Hi Subra,
    For any new investor, first pressure comes in form of owning car and then house. What is your suggestion on that? Also,how to control credit card expenses …

    Also for the investors like me(in 30’s) there are pressure to own second home. Is it really worth?

    Thanks and Regards,

  5. Hello Subra sir,

    I am 26 and the only savings I have is an LIC policy, some cash in my account, 1 RD and some amount in PPF. I also have an education loan that I am currently repaying. I want to start investing in MFs through SIPs.I have read through all your posts on mutual funds as well as other online blogs and online data on public domain. But, I must say the information is extremely overwhelming. What are the key things that I should do at this stage of life in terms of investing? Are mutual funds are the way to go or should I do anything else?

  6. Hello Subra Sir

    I am 22 and i want to invest in equities for a time horizon of about 5 – 6 years. The problem is that i dont have enough money at the present ( I am a student ) and my parents are quite reluctant to give me money to invest directly in stocks at this point of time.
    Do i need to have patience of investing , say , 2k -3k bucks per month (savings i get out of my expenses from home) directly in equity markets or should i invest this amount into a mutual fund that mainly consists of the stocks that i am currently contemplating my investment into. I dont want to invest in a traditional investment product like SAVINGS A/C , RD , FD ,ETC..


  7. Hi Subra

    Thanks for the input. Started investing in MF when was 25 4 K per month been 10 years now and increased the investment to 50 k per month seen the cycles of up and down and one thing is for sure discipline and trust is important never tried hands at direct equity only MF through SIP

  8. subra sir i am a business person…..by the grace of god i am able to take out 75000 surplus every month ……how should i go about investing…….

  9. Hi Subra,

    Am a 27 year old, finally managing to save up post-MBA.
    Your advice of SIPs holds good. But the problem is SIPs are usually for people who do NOT want to do active money management, and just let it go into an SIP.

    a) I want to actively manage my money, and I do not mind investing 10-20% of my corpus in direct equities.
    In such a case, what is the checklist would you advise?

    b) Even for inactive money management into SIPs of Liquid fudns and STPs into Equity/debt funds, what checklist would you recommend when shifting between debt and equity.

    Thanks for your offer of help!

  10. Hi Subra Sir,

    I have been investing in MF’s for almost two years .Now,trying my hand into equities ,I understand that buying a share means a part ownership in business .I want to know about analysing a company ,reading balance sheet ,cash flow ratio and various ratios needed to identify multi baggers.

    I also wish to know about the market behaviour you talked about and how to make volatility our friend.

  11. Hi Subra Sir,

    I do not have any exposure or understanding of direct equities or money markets. In order to invest on a consistent basis for mid term as well as long term, what are the other ways apart from MFs? If direct equities is the only way to achieve financial freedom, could you please let us know what are the first key steps/measures/essential things to look out for to get my foot in the door?

    At the same time, I really appreciate your initiate and I am a believer of continuing and ongoing knowledge gain. You had mentioned good reads in your earlier posts. Will Parag Parikh’s book on behavioural finance (recommended by you)help me build a perspective of a 1st time investor in direct equities. In case you could suggest any other reads to better understand how to play in the stock market, please do suggest some books (esp. within the Indian market context)

  12. Hello Subramoney,

    I have read your Rs. 40/- invest book twice, many years back and again(reprint copy) last month. Biggest question is how to give surplus money into indirect investment with the current limited trust in Banks, agents ,”CFA” , having 70+ hrs work weeks cannot do direct investments tracking on weekly or monthly basis. Max 1 day per qrtr.

    second biggest question is how to handle surplus EMI once that housing loan is closed ? Have sudden feeling of richness and urge to spluge without proper goal.

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