I am a new investor. I don’t have a lot of cash in my hand right now for investment. Does it make sense if I don’t invest a large sum but 30,000 to 40,000 per stock in a month? I can invest in 1-2 stocks in a months per month as per the market situation. I would look at the technicals and fundametals while making the investment.
I wanted to ask this because I am skeptical about SIP investments because you keep on investing your money every month in funds even at their all time high NAVs. This could result in lower overall returns. SIP is simpler but will give you a limited returns.
Investing in MF and stocks are 2 different things, SIP or otherwise.
SIP is MF is due to the reason of not timing the market, which is time consuming to certain extent, and the investor may feel to not invest and wait, citing high valuations or low valuations, and as such, he may miss certain periods of time, which may impact the overall return. So, invest irrespective of the levels of the market, irrespective of the valuations, at regular intervals. There have been some articles, studies done on SIP or other ways yielding results, one can look at them to see the differences, if there are any.
SIP in stocks is different, one can look at business, valuation, chart and take decisions, which need not be at regular intervals. Even, if one wants to build a position in a stock, it need not be at regular intervals, there are many ways to do it depending upon a lot of things, say market falls in a particular week, and the stock falls by 10% in the same period, and this could be an buying opportunity. Many ways to do this.
If you are a new investor, how are you sure enough that you will earn more than the index?
I think you should put your ability to test first by investing some amount in mutual fund and some amount in stocks of your choice over atleast one bear and bull cycle.
SOIC tells us to test our ability at least for few years in comparison with the mutual fund.
For reference, I currently invest only 25 percent in direct stocks, because I am not completely confident of my ability. I have recently decided to increase that percentage. I have started investing in mutual funds in the late 2019. Direct stock investing in mid 2021.
How do you know that a mutual fund NAV is at all time high?
Except maybe smallcap mutual funds, being tactical in mutual funds does not help much.
My selection criteria for a good mutual fund for your reference →
AUM is not too high
Managers is good and can invest in all caps
Change in AUM due to fresh money is not high as there are not many good ideas every month to invest into.
Low beta(should not take too much risk) when compared to the alpha
I prefer the Parag parikh tax saver fund.
Finally to your question
You will learn it in your journey and it is investor dependent.
For reference, I like keeping my SIP on until and unless, I see some opportunity and skip my SIP to invest in direct stocks that month.
I have also planned to keep less than 10 percent in fixed assets to invest in company directly when I don’t find many good ideas and to keep the allocation to direct stocks at least to the minimum defined.
Disclosure - I can be too stupid at times and take this advice with the pinch of salt and sugar maybe.
I do have monthly SIPs as well & Parag Parikh being one of the funds in them. I do also have a few stocks in my watchlist and waiting for some margin of safety for example 15% - 20% price correction. It isn’t exactly a stock SIP but investing everytime in a certain high growth stocks of my preference whenever there is a good price correction.
I have been investing in MFs for slightly less than 2 years & absolute returns are around 11%. I have recently started researching and studying about direct stocks. SOIC being one of the main sources of my study. Although I am not 100% confident to beat the index or even emulate MF returns. I am not averse to risk taking and just trying to expirement for say next 2-3 years how much returns can I gather by investing directly in stocks.
Thank you so much for your inputs. It makes more sense if I invest in both SIP & direct stocks and evalaute their returns after a few years. It will give me more confidence in terms of what would be my ideal investment option.
I acknowledge and understand opportunities lie for market participants even in times like these, but war is not an act of God, it is created by man, and as with all wars, there is loss of human life, including civilians.
If you are already an investor, you wouldn’t have asked this question, presumably you are not, and I would not deny that, this too is learning and if participated, experience is gained, not to mention financial gain, if it happens. I am a speculator myself, trying to learn the tropes of shorting and would like to have opportunities on both sides. But I guess, we can hold our horses for a little while here.
If that is Buddha in your DP, then I guess it makes even more sense.
There are 6000 companies…And I would like to keep my money in safest bets to choose within 15-20 companies. And it’s always better to be grounded, than to become off the reality.
And it’s a learning experience on how to retrieve info on where are the geographical areas that one’s company is invested. One should know about it.
No one is denying the effect such incidents have on the markets. If one is an investor in a company that caters to foreign geographies, he will know, may not be the exact % of business, but regions the company caters to. An investor knows, a trader not necessarily. Your question seemed like you are not an investor, and it that you were looking for an opportunity, hence I said that.
Everything is a learning experience in the markets. There are many businesses that have significant export revenue, and in threads of those businesses, members post links of many different websites addressing many issues.
You will come to know that from individual companies’ annual reports only. There is no such screener yet developed which can screen as per geographies served. Moreover, this is dynamic situation. Some companies get some orders from some countries, and may be they are just one time orders. Also even if a company is overspread in a particular geography, they are well versed to counteract such situations and if quality of company is good, they will come out as winner. So from risk point of view, if your original selection of companies is top notch, then you need not worry about such situations. Good management will come out successful.
My question is I tend to avoid the companies Price to sales Ratio is above 5 . Is the P/S getting shows on Screener is misleading? Can companies mislead the P/S ratio ? How to use Cashflow in conjunction to derive P/S ?
When dividends are paid, what date should be taken for consideration for tax purposes? Announcement date/Record date/Actual dividend credit in bank acc date?
I would recommend using the Taxpayer Information Report or Annual Information Report generated by IT-Dept. You can access it by login to IT Efiling website.
It gives a true blue picture and avoids difference with IT Dept collated nos.
Does this means simply HDFC AMC is holding short term debt papers or deposits which keeps on maturing and they keep on purchasing with any additional retained earning ?
is there a way/process/book/doc anything … to identify manipulations in P&L/ balance sheets OR cash flows OR how can we define how good /genuine /OK the finance statements are … particularly for companies from microcap/smallcap OR potential multibaggers … P.S not hurry in identifying the targets but to adapt the skill to clean the financial datapoints as a learning … thanks !
Financial Shenanigans by Howard Schilit is a well-known book on accounting manipulation. At home, Dr Vijay Malik’s blog contains several ideas on how to dissect financial statements, go through the detailed company analyses of a few companies. Saurabh Mukherjee’s Diamonds in the Dust has chapters on how to detect accounting quality. Follow @BeatTheStreet10 on Twitter. Read fraud / corporate governance related threads here on ValuePIckr. There will be many other sources too but these come to mind immediately.
