Invesment Ideas

How to Invest Your Salary and Build a Big Portfolio

Hi, everyone. I will help you understand how to invest your salary in the stock market. Now, if you are sitting on a salary of 25,000, then your investing style might differ drastically compared to a person who makes more than 1 Lakh rupee a month. So what investing style should you adopt as per different salary levels? I’m going to help you understand in very simple, easy-to-understand language. More importantly, I’m going to help you understand how you can generate real wealth and how much real wealth can you generate at each salary level if you follow this investment plan. 

Before discussing each salary level, let me first and foremost discuss a very interesting case study about Mr. Nikhil Kamat. Mr. Nikhil Kamath is the co-founder of Zerodha, and this is how he invests his money. Now, when this data was released in the market, many people started commenting that, you know what, Mr. Nikhil Kamat is the owner of Zerodha, and it’s a big equity investment platform. He has a lot of data on equity investors, and he is investing how much money in equities. He’s only investing 50 % of his money in equities. 40 % are debt, which means fixed deposits. So he has done fixed deposits so much and government bonds, and gold only 2 %, and real estate, 5 %. So does it make sense? That person who deals in the equity stock market almost every single day, he’s investing only 50 % of his wealth in the equity market. So why is it that people like you and me should invest more money in the equity market? This is a very important question. So let me help you understand that it will drive a very important point home that investing is a very personalized subject. So here is my understanding of why Mr. Nikhil is investing only 50 % of his money in equities. So investing less money in equity is a risk mitigation strategy for him. It’s not as if he does not believe in equity. So that is my understanding. 

The second key point is that as your portfolio grows, from a small portfolio to a bigger portfolio to a vast portfolio, your goal also changes. For example, if you’re sitting on a massive portfolio, then a part of it needs to be protected. So wealth protection becomes a very critical goal for almost any investor, especially when you’re setting on a huge portfolio. So these are two central points why I think that Mr. Nikhil Kamat invests only 50 % of his money in equities. I hope you would agree with this viewpoint. Also, please press the like button so that these types of videos reach out to more people. I teach stuff in a highly conceptual manner. I also give you a view of the logic and rationale behind it. Also, I know you haven’t pressed the like button, so please press it and we will continue the video.

If you lose money, no problem. Because you don’t have much to lose. What do you have to lose? You have 1 Lakh, 2 Lakh, 3 Lakh rupees. So why don’t you take a lot of risk? Because that might help you in terms of generating real wealth. So invest in stocks. Do it for the long term. At least invest 70-80 % of your money in equities. Rest can go into other asset classes. In my opinion, the rest can go into fixed deposits. That is more than enough. So now what I will do is I will show you that if you follow this investment plan, how much wealth can you generate? Now, assuming that you are in a city like Jaipur, you are earning a salary of 30K and you are investing in the equity market. And you can make a return of 15 % on an annual basis. So at the end of 30 years, you would be sitting on a portfolio of more than 12 Crore rupees. So this is the type of wealth you can generate if you invest your salary in the stock market.

You cannot afford to lose money because you have much to lose. You might be sitting on a portfolio of 20 Lakh, or 25 Lakh rupees. So if you lose that money, that might be problematic for you. So that is why I believe that you need to be moderately aggressive. And your investment style should be a mix of equities and debt. So maybe you can invest 60 % in equities and 40 % in debt. And that should be more than enough. And when I say equities, it does not mean that you only go for mid-cap and small-cap. Please understand that if you invest in mutual funds, then your portfolio diversification is already taken care of. So that is why you need to be moderately aggressive and invest your money in equities and debt. 

So that is why I believe that you need to be conservative. And your investment style should be a mix of equities, debt, real estate, and gold. So maybe you can invest 30 % in equities, 30 % in real estate, 30 % in debt, and 10 % in gold. And that should be more than enough. And when I say equities, it does not mean that you only go for mid-cap and small-cap. Well, assuming that you are in a city like Mumbai, you are earning a salary of more than 2 Lakh and you are investing in the equity market. And you can make a return of 8 % on an annual basis. So at the end of 30 years, you would be sitting on a portfolio of more than 10 Crore rupees. So this is the type of wealth you can generate if you invest your salary in the stock market. And this is what I believe is a good investment plan for somebody who is earning in that range.

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