Reality checkLet’s be real for a moment. Most people don’t know anything about the stock market, especially the ones quoting ‘Risk hai to ishq hai’ are completely clueless. Avoid them. We couldn’t predict the pandemic, neither the political and social unrest nor can we even predict weather these days accurately. There is no one who can calibrate and study these gazillion variables and foresee all this like a champ and spread the word for you to capitalize and make money. The stock market is a drunkard stumbling across the street without any predictable path, but what we know is that the drunkard always reaches home. That much faith, I hope we all have, in the markets and in India.
New to investing – What do I do?
Now imagine the market to be a vast playground. This is your first time in this new playground. Essentially you have been forced to come to play here because of peer pressure. Everyone is playing some game or the other. Some are playing hide-and-seek. Some are playing: running and catching. We know the types. Amongst all this commotion, you find a group playing Simon Says. You want to play but don’t know which game?
Easy answer: Go join the weirdos playing Simon Says.
How to play Simon Says in the market?
Firstly, check out who the SIMON is. Whose instructions are we going to listen to?Simon should ideally be an Index like Sensex or Nifty50. Simon is someone who knows the rules of the game. Simon is honest and transparent and neutral. Let’s assume your Simon is Nifty50. Nifty50 is nothing but a list of the top 50 companies in India as decided by market experts after careful analysis of historical data. A standard of sorts! Nifty 50 is standing on the stage and doling out instructions. Changing small things. Both the good and the bad news which you first don’t understand. So you look out for some champion SIMON SAYS players who are already playing in the playground. You can see them hard at work, trying to win this game. Find a guy in there and make them play the game on your behalf. You can probably give him a small fee. Poor guy. He needs something to follow instructions right? Well, the guys already playing this game are called Index Funds run by Asset Management Companies like Aditya Birla Mutual Funds or HDFC Mutual Funds. They are experts in carefully listening to Simon and making their moves. How focused and good they are in the game, you’d know from their previous games. Where are you amongst all this? Well, you are standing outside, like an audience, chilling and seeing the game playing out. You make money work for you, while you relax or work towards losing those stubborn love handles. This is what is called Passive Investing.