How I Made 2.2 Lakhs from Rs.29,000 in the Stock Market

Hello Moneymint fans,

Welcome to all the new members who've joined us this week! Thank you for being a part of Moneymint.

Today, I'm going to share one of my personal stories, which I rarely do in this newsletter. It's about how I make money by investing in the stock market. I don't trade options, futures, or anything like that because I don't like trading.

I don't have anything against trading itself, but beginners like you often get drawn to it and end up losing their hard-earned money.

How I Turned ₹29,000 into ₹2.2 Lakhs: My Stock Market Success

I have made 5x to 10x returns on 9 out of the 10 stocks I've invested in so far. I only made one wrong bet, but I exited with a small loss once I realized my mistake.

Making mistakes is normal as long as you recognize them and take action to correct them.

Before, I continue how many of you’re interested in learning about stock markets?

I invested Rs.29,695 in one stock, which has made over Rs.220,730 in profit so far. In another stock, I invested Rs.55,151 and have made over Rs.109,569 in profit to date. I've hidden the stock names to avoid any buying in these stocks because, at their current levels, I don't recommend beginners to enter them.

Overall, I invested ₹84,846 and made over ₹330,299 in two years. People easily lose ₹40,000 in options trading because they think they can't become rich by investing ₹40,000 in the stock market. No amount is too small, because even with a small amount, you're learning the basics of the stock market.

Also, I am only showing 2 of my 9 stocks. I don't want to showcase my entire portfolio or boast about how much money I've made. My point is to show you that you can earn a good amount of money by investing in the stock market.

As you continue, you can start putting whatever money you save into the stock market. Over 20-30 years, this can add up to a substantial amount. If you don't have the time or resources to invest directly in the stock market, you can easily invest in mutual funds.

You can start a monthly Systematic Investment Plan (SIP) in mutual funds. For example, Sundaram Mid Cap Fund and Nippon Fund turned a monthly SIP of ₹5,000 into ₹1.02 crore in 20 years. You invested ₹12 lakhs over 20 years and made ₹1.02 crore. This results in an Extended Internal Rate of Return (XIRR) of 18.52%. Other mid-cap funds have also provided strong returns, ranging from 15% to 18% XIRR.

My Stock Market Journey: 15 Years of Learnings

I started learning about investing when I was 15 or 16 years old. My father used to trade in the stock market, which sparked my interest.

My father lost a lot of money trading, and that's another reason I don't like trading.

I decided to learn more about investing and the stock market. I made up my mind that I wouldn't lose money in the stock market; instead, I would make money. The first thing I learned is that you need patience and conviction to succeed in the stock market.

After that, I learned fundamental analysis, watched countless TV shows and videos on investing, and gradually started to understand all about investing. I believe the stock market is all about experience; theory can only take you so far.

After 1-2 years, I began my stock market journey using my father's Demat account. My investment philosophy is simple: hold good quality stocks for 5-10 years. I started making money through investing in my father's account, which gave me confidence that I could do well in the markets.

There is a lot that goes into how I select stocks for investing, which I can't cover in one newsletter. But I'll give you an overview of my process:

1. Identify Promising Sectors: I look for stocks in sectors that are likely to perform well in the next few years. For example, I'm investing in semiconductor stocks and AI stocks because they represent the future.

2. Check Fundamentals: I examine the company's fundamentals. Is it profitable? How is the management? What does their order book look like? Are they expanding? I also review their balance sheet, and profit & loss statements.

3. Review Annual Reports: Once I finalize a stock, I read its annual reports for the past 2-3 years to understand how well the business is doing.

4. Avoid High Debt Stocks: I avoid stocks with a lot of debt because interest payments reduce profits and lower the chances of the company doing well.

5. Focus on Midcap and Small Cap Stocks: I prefer midcap or small cap stocks because they have a higher potential to give 10x or 20x returns.

6. Confirm Conviction and Price: Once I'm confident that I'm paying the right price for the right stock, I invest.

Don't follow others' tips blindly; always understand where you're putting your money. Think of it this way: if your friend asks you for 50,000 rupees, would you be willing to give that money (your hard-earned savings)? You might give 5,000 or 10,000, but not without asking why they need it, what it's for, and when they'll return it.

But when you invest the same amount in a stock, why don't you investigate it just as thoroughly? Find out what the company does, how profitable it is, and what its future plans are.

I know investing is hard, being patience is hard but its not impossible. You learn about stock market, you can develop [patience, you can make money. But would that happen overnight? No, it will take few years before you make good money.

If you want to learn more about stock market, I recommend Zerodha Varsity as its one of the best resources on the internet.

Conclusion

In summary, my journey in the stock market has been one of learning, patience, and disciplined investing. From starting at a young age and learning the fundamentals to making informed decisions based on thorough research, I've managed to achieve significant returns.

The key takeaway is not to follow others blindly but to understand where you're putting your money. By investigating the company's background, fundamentals, and future plans, you can make well-informed decisions. Mistakes are a part of the process, but recognizing and correcting them is crucial.

Investing doesn't require large sums to begin with. Small, consistent investments, like those in mutual funds through SIPs, can grow substantially over time. As demonstrated, even modest monthly investments can lead to impressive returns over the years.

Ultimately, whether you choose direct stock investments or mutual funds, the principles of patience, research, and long-term commitment remain the same. The stock market offers opportunities for significant wealth creation, and with the right approach, anyone can achieve financial success.

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Thank you for being a part of our community, and I look forward to bringing you more exciting content next week.