I am 23 years old and have recently started learning about investing. I am still very new to this and want to understand the basics properly before I start investing seriously for the long term.
I had a few questions and would really appreciate advice from people who have been investing for a while.
First, I am planning to start with a small SIP of around ₹500 to ₹1,000 per month. As a beginner, should I simply go with Direct mutual funds? Is there any situation where choosing a Regular plan would actually make more sense for someone like me? I would also like to understand what the practical difference becomes over many years.
Second, for those who have been investing for several years, what mistakes did you make when you were starting out? Looking back, is there anything you wish you had understood earlier or done differently?
Finally, I am also trying to find good sources for learning. Which investing books, YouTube channels, websites or podcasts have genuinely helped you understand investing better? I am more interested in resources that teach the basics, long term investing and how to think about money rather than channels that mainly promote stocks, trading or particular products.
If you were starting from scratch today, what would you learn first, what mistakes would you try to avoid, and which resources would you recommend?
Thanks in advance to everyone who takes the time to share their experience.
Direct mutual funds: Cheaper. No middlemen commission as it’s a direct buy from the fund house. However, you have to operate independently - do your own research and documentation. Regular mutual funds: Middlemen (agent) takes commission. As a fiduciary duty, they shall guide you to find the best product but mis-selling prevails as actions are influenced by inclination to earn maximum commission.
Mistakes are fuel of self-learning. What really matters is that one shall start early (most critical, as time has exponential impact), and learn deeply (from reliable sources) with deliberate practice (real market exposure, real money at stake) to build skill (if you have aptitude and interest). Otherwise, find a good advisor—grounded in the basics you’ve learned from the books suggested below. What does this mean? Time drives overall wealth exponentially, while skill (rate of returns) shapes each year’s outcome. This principle flows from the world’s 8th wonder - the compound interest formula.
You shall at least read these few times till they become part of your active thinking:
a. The Five Rules for Successful Stock Investing, Pat Dorsey (outlines the core principles of stock investing)
b. 100 to 1 in the stock market, Thomas Phelps (provides scaffolding for long-term thinking)
c. Secrets For Profiting in Bull and Bear Markets, Stan Weinstein (technical aspects of stock price, helps to make sense of ongoing price behaviour)
d. The Little Book of Valuation by Aswath Damodaran (I have not read this. It will help you to learn various tools of valuations, and their practical application, and compare market price to business value)
Mostly, covered in above 3. I’ll learn with full vigour. Enrol in a good finance course such as CFA® Program | Become a Chartered Financial Analyst® , and park the money in long-term FD instead of MF till you are ready to venture out on your own.
Thank you for the detailed answer. The point about starting early and learning properly makes sense.
I wanted to clarify one thing about Direct versus Regular plans. Since I am only planning to start with around 500 to 1000 rupees per month and I am willing to do my own research, would you personally choose a Direct plan in my situation?
Also, when you say to keep the money in a long term FD until I am ready to venture into mutual funds, what would you consider someone needs to understand before they are ready to start a simple long term SIP?
I am mainly trying to avoid making unnecessary mistakes as a beginner rather than trying to maximise returns immediately.
Direct Plan - Yes.
My response was with the assumption that you intend to learn stock investing, which brings people to VP. Hence, suggested to accumulate the funds in least risky option till you are ready to start on your own.
Before you initiate the SIP, learn about MF basics.
Hi @uno, I started investing in mutual funds when I was 24 years old. That was in 2002. In these 24 years, I have done SIP every month till last year. (I did pause SIP for 4 years in between, when I purchased a house and started EMIs). Sharing some learnings and I hope they help you…
Just like you, I started with zero knowledge and too many questions. My journey can be broken into 3 phases
Accumulation Stage (2002 ~ 2009)
Started with well known regular active equity funds (There were no index funds then. No direct option either). Most funds were well known funds like HDFC Prudence, Reliance Vision etc.
My allocation was 100 % to equity.
There was a massive crash in 2008. I did not stop SIPs for that. (I did stop in 2010 for my EMIs)
Asset Allocation Stage (2012 ~ 2021)
The investment had grown substantial and the 2008 crash had taught me that drawdown can be massive. I started reading about asset allocation. Came up with a 60:40 debt strategy.
Started diverting bulk of new SIPs to debt so as reach asset allocation of 60:40.
Bucket Strategy Stage (2021 ~ now)
Investment has grown large enough to start focusing on corpus stability and withdrawals. I decided on a 4 bucket strategy.
Asset allocation - 10 year expenditure is in debt. Remaining is all equity/Commodities etc.
My suggestion to you from my journey above is this
Start with a SIP in a Direct Index fund and keep it going. You dont have to work out the entire journey before taking the first step.
In the meantime, understand the different types of funds and they benefits. Read up about Fund Houses, their investment approach and decide with conviction on which active funds you would invest in.
Think about asset allocation and buckets when you have a substantial corpus. At accumulation stage (when you are 23 years old), IMHO, you can probably withstand a massive drawdown (Not sure)
Links
There are many good educators about Mutual Funds.
Thank you for clarifying. That makes sense now. I understand that your earlier FD suggestion was based on the assumption that I was preparing to learn stock investing, and for my current plan I should first understand the basics of mutual funds before starting a Direct SIP. This was very helpful.
Thank you so much for sharing your journey. The three stages you explained were especially helpful, and I found your point about not needing to work out the entire journey before taking the first step very useful.
Since I am still completely new to investing, if you were starting again at 23 today, what would you recommend learning before choosing my first Direct Index Fund? For example, which basic concepts would you make sure you understood first, and how much research would you do before starting the SIP?
Also, among Freefincal, Value Research and Morningstar, would you recommend starting with one particular resource first for a complete beginner?
every person who invests in MF or sip should go direct. Direct doesnt mean you are doing anything or you need any special skill. It just means that you are giving money directly to the AMC who runs the fund and not to any broker/bank in between. Groww and zerodha have direct funds option or other option is to invest directly via amc.
started late, not much but even 5 years late may sometime mean missing a full cycle of bull & bear. So, in 5 years one either starts as a fresher or as a little learned person to make use in next cycle.
Second mistake, underestimated Mutual funds and did not do sip. Over last many years some top MF have compunded at close to 20% and this is not even considering if you would have bought the dips & crashes. I do not have hesitation to accept that it would have beaten my direct equity portfolio easily.
Third, whatever little I bought MF, ended up buying Regular.
for me one of best learning in direct stocks would be picking up threads of stocks you want to understand and reading from first page till end to know how best investors inthis forum think. But before that to appreciate this, you need to get your basics done by reading some simple books first…most simple to understand & exciting to read is from Peter Lynch - One up on wall street. You can even try Learn to Earn from Peter lynch if you want to understand little bit more about history & money or find one up on wall street a liitle overwhelming. Few pages of Rich dad & poor dad may also help….lastly Intelligent Investor by benjamin graham…this one even i have to read fully…being lazy has really cost me by overpaying too much for quality stocks over last few years
I would start from the intelligent investor rather than with one up on wall street …not that any one bookis better as both are gems but the risk of not reading intelligent investor cost me when quality companies valuation derated over last 2-3 years….I became a decent stock picker by investing in great businesses but failed to protect my margin of safety in few cases and still struggling in art of selling or profit booking….havent found a great book on that yetand neither able to devise a self strategy yet….
I must appreciate your direct and thought provoquing questions. Thank you
At a high level, all investors (whether in MFs or direct equity) have to go through the “crawl… walk… run…” stages, just like we did in real life. Stumbling along the way is a natural outcome and difficult to avoid.
Freefincal, Value Research and Morningstar - These resources have excellent articles to guide you when you have questions, stumble sometime, or have doubts. They are not really guides that you blindly follow. For e.g.
Coincidentally, today’s post in freefincal was about this - A Simple Mutual Fund Guide for First-Time Investors.
In my case, I would still do what I did 24 years back. Start a SIP and learn along the way. Specifically, I would do this
SIP Amount
Suggestion
< 1000
Simply invest in Nifty
< 5000
Invest 70% in Nifty and 30% in Nifty Next 50
> 5000
Invest 40% in Nifty, 30% in Nifty Next 50, 20% in Midcap 150 and 10% in Smallcap 250
Of course, you can decide to invest in active funds, if that is your inclination
Just ensure you invest regularly for multiple years to capture a bull and a bear cycle.
Every year, step up the investments by increasing the SIP amount. Every year, check the portfolio and adjust SIPs for that year to maintain the ratios.
Despite market crashes, geopolitical shocks, personal setbacks, etc. keep investing. Equity investing (especially through Mutual Funds) is a long game.
Disclaimer: Above is just my learnings and suggestions, not a financial advice.
Hey! Congratulations on starting your investing journey,
To start with, try to keep a fix % of your income to invest via SIP.
Let’s say if you earn 50,000 a month, then try to put 10-20% of it into SIP.
Direct Growth/Regular won’t make much of a difference, Direct work fine for me. You get more units in regular (at a higher NAV price) vs in direct (Lesser units but lower entry NAV).
Talking about mistakes, quite a few!! Most important is being patient and not having FOMO. Easier said than done.
Have your thesis thoroughly ready, enter at a good point to keep buffer, be patient in waiting it to play out, once it does, don’t get out too early, monitor it closely and once the thesis start showing cracks, GET OUT.
To start with:
Autobiography of a stock - Manoj Arora
Little Book of Common Sense Investing - John Bogle
Psychology of Money - Morgan Housel
Websites like Investopedia, Screener, VP (ofcourse!), Varsity
Thank you for sharing your experience. Your point about underestimating funds and later realizing the value of SIPs was particularly interesting.
Since you have experience with both funds and direct equity I wanted to ask one more practical question. If you were 23 again today with ₹500 to ₹1,000, per month available to invest would you start with a simple Direct Index Fund while learning or would you wait until you had a much stronger understanding of investing before starting?
Also looking back at your own journey what is one thing you would definitely NOT do as a beginner today
I appreciate the detailed response. The explanation has cleared questions for me especially the advice to start small and learn progressively instead of waiting for perfect understanding.
The SIP allocation examples are very helpful. I am planning to begin with about ₹500 to ₹1,000 per month. I would like to clarify a detail: when you suggest “simply invest in Nifty” for a SIP below ₹1,000 do you refer to a low‑cost Nifty 50 index mutual fund in the Direct Growth option?
If that is correct I now have a clearer starting point. I also appreciate the advice to continue investing through both bull and bear markets and to increase the SIP gradually over time.
Thank you more for sharing 24 years of experience. The guidance is extremely helpful, for a person who is just beginning.
feels so nice to reply thinking i am 23 again coming to topic, if i were 23 again and had 500 to 1000 rs to invest, the first thing I would do is to see where I can cut back some more of my expenses & invest 2000 instead into a direct mutual fund (nifty 100 equalweight, nifty midcap 50 for example)….save an additional 500-1000 every month (on top of 2000 that i invest) extra into debt fund/fd to build a corpus which I could make use as lump sum investing (or increasing SIP) in big market crashes where index plunges 15- 20% or more depending if its a V shaped crash (or a long grinding one)….all this immediately while i learn more simultaneously…..
I would do this if I am able to handle market volatility & after knowing that people dependent on me have part of my income available for expenses & emergencies, if any….so the income i invest is additional to the basic needs income + emergency as for this I would not want to get anxious and break my investment in between at loss….
I have been a relatively conservative & risk averse investor, thankfully to my early Koutons story - one of my first direct equity investment where I lost my total capital (thankfully not a big part of portfolio then) & hence became more risk averse at begining……also my aptitude is average and nature is not to get things too complex or involving too much labour….so there are more things that i regret not doing than which i regret doing….
still if i have to think what i regret doing when i was 23 and would not do if i were 23 again….it would be selling some of my strong conviction ideas early, not investing with more capital during crashes….but then all this is a natural learning cycle….I would now know in hindsight that my high conviction bets did very well over long term….what if they hadnt….however index would have done excellent specially from any crashes….
disc: All views only for learning purposes. I am not eligible for any advice. I can be wrong in all my assessments
Thank you for sharing these resources. Zerodha Varsity and ValuePickr are useful recommendations for me as a beginner. I will go through the basics first. Gradually learn more instead of trying to understand everything, at once. I also appreciate your point that staying invested and gaining market experience is an important part of learning.
Thank you for sharing this. The points about patience and avoiding FOMO are especially helpful. I also really appreciate the book and learning-resource recommendations.
I also noted that you personally prefer plans. I just wanted to clarify one thing from your explanation. When you mentioned getting units in a Regular plan versus fewer units in a Direct plan is the main practical difference you were referring to actually the higher expense ratio and distributor commission in Regular plans?
coming to topic, if i were 23 again and had 500 to 1000 rs to invest, the first thing I would do is to see where I can cut back some more of my expenses & invest 2000 instead into a direct mutual fund (nifty 100 equalweight, nifty midcap 50 for example)….save an additional 500-1000 every month (on top of 2000 that i invest) extra into debt fund/fd to build a corpus which I could make use as lump sum investing (or increasing SIP) in big market crashes where index plunges 15- 20% or more depending if its a V shaped crash (or a long grinding one)….all this immediately while i learn more simultaneously…..