We often think of our 20s as the decade of ambition and enjoyment. When we hear the term invest, most push it to their 30s because we believe that’s when the responsibilities kick in. 

But why should you invest in your 20s when it’s your time to enjoy life and focus on your career right? 

If we have to be honest with you, you don’t have to forget your leisure to start investing in your 20s. You just need to willingness to grow your wealth and beat inflation. Besides, if the year 2020 has taught us anything, it is uncertainty. We have learned the importance of saving and returns. 

Your 20s are your best time to start investing! You have the time and the financial freedom to do things for yourself, and you open room for more returns in the long run.

How to invest effectively in your 20s?

Follow the 50:30:20 rule.

The 50:30:20 rule is probably the best rule that was thought of to manage your wealth. Most gurus advise this wealth management rule and apply it too. It’s the best way to have the best of 3 worlds. 

The 50:30:20 rule implies that 50% of your income is solely for your needs, 30% is strictly for your wants and desires, and 20% should be dedicated to your investments. 

Determine your investment goals and do your research accordingly.

It is imperative to determine the investment goals and percentage returns you want at the end of your investment term. There are several ways to invest—mutual funds, Equity, Bonds, Gold, Fixed Deposits, Real Estate, to name a few. Choosing what method suits your current financial ability and helps you reach your investment goals is critical. 

Determine your investment goal, go through your options, and always calculate the amount you will be compounding on an average by the end of your investment term. We will talk about compounding and the importance of compounding below. 

Understand and learn the importance of compounding. 

Compounding or compound interest by definition is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It results from reinvesting interest rather than paying it out so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

In simpler words, compounding is a percentage increase in assets over a certain calculated period. 

Let’s say you invested ₹ 5000 every month for the next ten years at an expected annual return of 15% p.a, you have invested ₹ 6.05 lakhs, and your return on investment would be ₹ 14.15 lakhs @ 15% p.a.

Hence, you must determine your investment goals and do your research accordingly because each method of investing has a different percentage return. While some methods such as fixed deposits and bonds may give you an annual return of 5-10%, investing in equities have the ability to provide you with investment returns of 20% or even more p.a. 

Warren Buffet, one of the richest men in the world, when asked what is his secret behind becoming a billionaire, advised compounding. He says that compounding is an investors’ best friend and compares building wealth through interest to rolling a snowball down a hill. “Start early,” Buffett said. “I started building this little snowball at the top of a very long hill.”

Refer to our blog on The power of saving or the power of compounding to dive deeper.

Be cautious with your investment decisions.

It is pretty determined that investments are subject to market risk. Making the right investment decisions are crucial for your future. Fixed deposits are always the safer bet, but the return on investments is also low. 

We also know that investing in equity can give you maximum returns. But the drawback that comes along with it is Buying and Selling stocks at the right time. To counter this, you can either let professionals handle your portfolio or if you would like to make your own investments do not hesitate to take some guidance.

You can use trusted apps like the Cycle app. It gives you free BUY, SELL signals to help you make more profits and save losses.

Following signals of an app like Cycle also gives you the chance to increase your investment returns. 

a big NO, Investing in Star health IPO can be one of the amateur mistakes that investors make.

“ Stocks were made to sell “ Caveat emptor — “ Let the buyer beware “

What is the objective of investing in an Star Health IPO?

People invest in IPOs with the hopes of investing in a young company that gives them big returns or profits in the long term. While some IPOs help you achieve your bucket list and ultimate financial goals, the company’s chances of shooting high are close to nil. There have been exceptions throughout history, but we recommend against exploring this field if you’re a novice investor.

Here are four reasons to not invest in Star Health IPO

Management is selling

The owner’s of the particular business is running the company. Do you think they will sell their assets for cheap? Assuming that a company is underpriced at an IPO is a risky assumption. The knowledge of the market is stacked against you.

Allocation strategy

When we subscribe for an IPO, We do not know what will be allotted to us. Usually, we apply for maximum size in our category in the hope of at least landing 1 or 2 allocations.
What if it is undersubscribed on the IPO? You will be allotted all for all the subscriptions that you have put in. Meaning — maximum allotment for a bad company.
If it is oversubscribed? You will be most probably allotted one subscription at the most. Meaning — minimum allotment for a good company.

Do you really wish to operate on these odds?

No Historical Evidence

There are so many companies with historical evidence to invest in. New companies entering the market through IPO do not have evidence of a good performance, and usually, it happens that the year these companies are IPO’ing the numbers they report are inflated, to get a good price.

Habit Forming

If a person earns well from one or two IPO allotments, they repeatedly invest in the IPO. Soon, it turns into an endless cycle of investing in an IPO in the hopes of getting great profits, but due to the above-mentioned reasons, it will mostly end up in an overall loss.

In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle.
— Benjamin Graham, The Intelligent Investor

Feel free to add your opinions in the comments.
Get Actionable buy and sell signals for all stocks in the stock market

Join our investment advisory program by scheduling a call here

Visit our website for more information — iamclearmind.com

The stock market is a vast place to invest in. There are so many companies to choose from, so much to grasp while making an investment decision, and constant inconsistencies to follow. But the constant bafflement lies between the choice between Blue-Chip Stocks and Penny stocks. 

Before we give you insights to help you make your choice between Blue Chip Stocks and Penney Stocks, let us understand the difference between them:

Blue-chip stocks

Reputed stocks that have been in the market for a long time. They are companies that have a reputation for quality, reliability and have given high profits over time. 

Penny stocks

Stocks that trade at a low price. These companies’ prices under Rs.50 could relatively be new to the market. Companies with lower market capitalization rates mainly offer these reserves.

Benefits of Blue Chip stock investments

Blue Chip stocks have been in the market for a longer comparable period and give steady returns because of their reputation.

They have lower risks associated with them. Blue Chip stock investors usually expect regular and stable Returns on investment. They also have high liquidity. 

Drawbacks of Blue Chip stock investments

Because these companies have been in the market for an extended period, these stocks may be expensive.

Blue-chip stocks are not suitable for short-term investments. Most blue-chip companies are at their stable and mature face of growth. Hence their future growth is not as fast. Their stock prices may rise slowly because of their existing development and reputation, resulting in lower returns. 

Benefits of Penny stock investments

Most of these companies have a massive potential for growth, which results in high returns over a longer period.

These can also turn out to be Multibaggers, i.e., give 10x returns, if identified correctly.  Because their prices are low, you can buy a substantial amount of penny stocks and significantly diversify your portfolio. 

Drawbacks of Penny stock investments

There are many risks involved with investing in penny stocks.  It could be challenging to identify the right stocks for you in this margin due to a lack of information related to these stocks and very high volatility.

These stocks have lower liquidity which makes it difficult for their holders to cash out. The artificial inflation of share prices could lead to false statements regarding the company’s situation, leading to fraud.

In conclusion, the choice is hard, it needs a lot of research, and it may still not lead to a solid investment decision on whether you should invest in Penny stocks or Blue-chip stocks. Hence, we’ve simplified this process of decision-making with the Cycle app. 

It gives you buy, sell and wait signals on over 7500+ stocks. It also has a suggestions section with potential stocks to invest in. 

a big NO, Investing in IPO’s can be one of the amateur mistakes that investors make.

“ Stocks were made to sell “ Caveat emptor — “ Let the buyer beware “

What is the objective of investing in an IPO?

People invest in IPOs with the hopes of investing in a young company that gives them big returns or profits in the long term. While some IPOs help you achieve your bucket list and ultimate financial goals, the company’s chances of shooting high are close to nil. There have been exceptions throughout history, but we recommend against exploring this field if you’re a novice investor.

Here are four reasons to not invest in IPO

Management is selling

The owner’s of the particular business is running the company. Do you think they will sell their assets for cheap? Assuming that a company is underpriced at an IPO is a risky assumption. The knowledge of the market is stacked against you.

Allocation strategy

When we subscribe for an IPO, We do not know what will be allotted to us. Usually, we apply for maximum size in our category in the hope of at least landing 1 or 2 allocations.
What if it is undersubscribed on the IPO? You will be allotted all for all the subscriptions that you have put in. Meaning — maximum allotment for a bad company.
If it is oversubscribed? You will be most probably allotted one subscription at the most. Meaning — minimum allotment for a good company.

Do you really wish to operate on these odds?

No Historical Evidence

There are so many companies with historical evidence to invest in. New companies entering the market through IPO do not have evidence of a good performance, and usually, it happens that the year these companies are IPO’ing the numbers they report are inflated, to get a good price.

Habit Forming

If a person earns well from one or two IPO allotments, they repeatedly invest in the IPO. Soon, it turns into an endless cycle of investing in an IPO in the hopes of getting great profits, but due to the above-mentioned reasons, it will mostly end up in an overall loss.

In every case, investors have burned themselves on IPOs, have stayed away for at least two years, but have always returned for another scalding. For as long as stock markets have existed, investors have gone through this manic-depressive cycle.
— Benjamin Graham, The Intelligent Investor

Feel free to add your opinions in the comments.
Get Actionable buy and sell signals for all stocks in the stock market

Join our investment advisory program by scheduling a call here

Visit our website for more information — iamclearmind.com

Generations have been advised constantly about how saving can create a huge safety net for our future. How can compounding help you truly take advantage of savings?

Why are savings so substantial? 

Savings is your income, not spent. It is the part of your income that you keep aside after all obligations have been paid.

While there are many saving benefits, a few substantial ones are –

• Savings keep your money safe
• They give you a steady rate of interest through Fixed deposits
• Inculcate financial discipline
• As we mentioned earlier, it creates a safety net for our future.  

The value of your savings keeps decreasing every year!

Inflation is a general rise in the price level of an economy over time, and no one can defeat inflation through savings alone

What if we told you that there is a better alternative to just savings? 

Compounding. 

What is compounding?

Compounding or compound interest by definition is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It results from reinvesting interest rather than paying it out so that interest in the next period is then earned on the principal sum plus previously accumulated interest.

Compounding is a percentage increase in assets over a certain calculated period. 

Compounding is an investors’ best friend and compares building wealth through interest to rolling a snowball down a hill. “Start early,” Buffett said. “I started building this little snowball at the top of a very long hill.”

Warren Buffet, when asked about his secret of wealth management.

Years	10%	20%	30%
Year 1	11000	12000	13000
Year 2	12100	14400	16900
Year 3	13310	17280	21970
Year 4	14641	20736	28561
Year 5	16105	24883	37129
Year 6	17716	29860	48268
Year 7	19487	35832	62749
Year 8	21436	42998	81573
Year 9	23579	51598	106045
Year 10	25937	61917	137858
% Return	259.37%	619.17%	1378.58%

Most people think investing in the stock market is risky, if done right can be advantageous.

You skip the setback of saving by increasing your savings through compounding. 

If you do not have experience or the time to invest, you can always hire an investor after a detailed background check.

If you are still concerned about letting someone else manage your wealth and want to invest in your own but don’t know what to buy and when to sell, you can use apps like the Cycle app. 

The Cycle app will help you compound your wealth the best way possible, helping you make more profits and save losses. It gives you free BUY and SELL signals and enables you to increase your wealth by helping you make profits and save losses. You can choose from over 2500 stocks and add them to your watchlist. 

A sudden dramatic decline of stock prices across a significant section of a stock market, resulting in a substantial loss of wealth, is known as a stock market crash.

Stock market crashes occur for many reasons, but the most significant one is panic selling due to predictions of an expected outcome due to current situations.

It is a social phenomenon that gets in effect due to crowd psychology. When a certain amount of people start selling, it creates panic and more people starts selling, which in turn creates more panic and more selling comes into play. 

How do we deal with a stock market crash?

• The first and foremost way to deal with a market crash is to stay calm. Try not to panic because when such a situation occurs, it is mainly driven by panic. 

• If you’re a long-term investor, do nothing at all. Stock market crashes are temporary, and after a few days/weeks of downfall, the stock market is bound to stabilise. Most influential stock market investors talk about how you shouldn’t panic during a stock market crash and rather wait and be patient. 

• Acceptance is such a critical practice in our everyday lives and when you’re a stock market investor. We all make mistakes, and we all learn through these mistakes. Do not give up after a setback that you can always pick back up from. Take this setback in the best way possible and find better ways to invest during a crash market through your experience. 
• Always have a stop loss according to your profile of investing to be sure that you’re alive in the market and do not come across such a hit where there is significant loss of capital.

For better investment decisions do not hesitate in taking advice from true experts.

Just add your chosen stock to your watchlist and during a crash, it will give you Buy and Sell signals. It helps you make more profits and save losses during the times you need it the most. 

A lot of people utilise a lot of time tracking the ocean of finance for personal investments and eventually fail to make good investment decisions for their personal wealth. Some even fail to take any decisions at all.

To start, I’d like to advise you to grasp the fundamentals of financial markets. Our new era gives us the privilege of easily accessible knowledge. It wouldn’t take much time to educate ourselves.

But we’re all aware of the inconsistencies of financial markets. We are also mindful of how only the most discerning ones bear fruit to the fortunes of financial markets due to their familiarity, exposure, and experience in the market.

If we need a liver transplant, we won’t do our own surgery. We appoint a doctor with years of education and practice in the medical field. If we do otherwise, we are going to bear the misfortune undoubtedly.

Then my question to you is,

why do we not choose a professional to handle our personal investment activities?

We are already so busy with our prioritized professions that we anyway don’t have the time to give our full attention to our personal investment management activities. That’s how we get our fingers burnt. 

Review the performance of the professional in whose hands you are going to lay your savings. They have years of knowledge and experience in financial markets and know what they’re doing.

Making investments in stocks from the surface may look like it doesn’t require much skill; you can open a brokerage account and buy and sell shares you have heard from different sources. You may make a profit or bear a loss, and for a while, it may seem like fun and games until it isn’t. 

If you gain profits during your early tradings, you may become overconfident, and if you bear losses, you may quit the market.

The best way to invest in the financial market is to focus on your daily profession and fuel your investments through your savings from your income and pay a small fee to a professional to handle it for you.

You will be happier when you focus on yourself and see your wealth growing through the hands of a trusted, experienced professional!

Interested in getting financial advice?

We’ve been consistently giving superior returns to clients for over 5 years now. Reach out to us at invest@iamclearmind.com