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There are various investment products available in the market such as mutual funds,bonds,shares,property,etc. Since your query is related to investment in stocks,so let us discuss that first

Written by Adhil Shetty | Published:April 8, 2013 12:44 am

I am a civil engineer with an annual income of Rs 3.25 lakh. I am 23 years old and want to start investing in the stock market. Please help with the basics of investing. What options do I have in the market. My father works in a PSU and has a good income. So I don’t have any pressure to support my family. We have a home but I want to buy another one which costs around Rs 50 lakh and gift it to my parents. Please guide me.

— Himanshu

There are various investment products available in the market such as mutual funds,bonds,shares,property,etc. Since your query is related to investment in stocks,so let us discuss that first.

Stock market fits well for young investors who can take high risk. Following are the easy step to start the stock investment:

Step 1 Open a Demat and trading account with a reputed broker/bank.

Step 2 Transfer money to your account.

Step 3 Start investing in share market.

The above mentioned three steps are just guide to start investing in stock market but for a good return you need to understand the technique of good stock selection. You can consult a professional stock adviser (Registered with Sebi) for picking good stocks,but support of your own analysis and study is very important for a safe investment. Remember not to fall prey to over-investment,stock tips and rumours while investing in stock market.

Apart from stock market,I would suggest you to diversify the investment into mutual funds,bank recurring deposit and Gold ETF for safe and moderate return.

As you have mentioned about gifting a Rs 50 lakh flat to your parents,I would suggest to postpone the plan to at least 10 years or till your earning increases to match the criteria. Maximum EMI allowed for a home loan is approx 50-60 per cent of the gross salary (combined with spouse if included).

Though there is no present expense towards your family but the responsibility is set to grow in coming year when you’ll get married,say in your 28th to 30th year. However,your income would increase simultaneously. So I would suggest 65-80 per cent investment diversified in various investment assets such as stock (30 per cent of total investment),mutual funds SIP (40 per cent) and Bank RD (30 per cent) till you get responsibility of monetary contribution towards your family. If you invests 70 per cent of your present income i.e. Rs 2,27,500 at 15 per cent pa,the corpus you will get at the end of 10 years would be more than Rs 50 lakh.

— Expert advice by Adhil Shetty,CEO,BankBazaar.com

For your personal finance queries please email at expressmoney@expressindia.com

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