Long term investment

[destello]

I am not belonging to any financial background, I work in IT industry as developer and obviously want to do investment. Good part of me that I want to buy stock and hold it as long as I can.

Now, how to pick up the stocks at right price
(i know everyone affordability is vary). Let's say I like HDFC bank business model and the stock of HDFC is growing 2 to 3 % per month.
For long term investment should I buy one stock, for long term investment?
To be honest i just see the profit and net worth charts of well known companies and it profit is on negative I totally ignored e.g. Zomato or Paytm.

Do I need to lean about reading company financial sheet?
Do I have to learn about companies fundamentals?
As New in this investment what should e ideal baby steps for long term investment.

Note:
(I do SIP too, want to invest in stocks too)
(HDFC bank is just for example)


If there any investment tool for long term please mention it.

 

[TaxWiser]

As New in this investment what should e ideal baby steps for long term investment.

For Learning purposes, Try checking out some Books(Fundamental Analysis, Coffee Can Investing etc.) and Akshat Shrivastava YT channel and if he add some value in your investment journey then try joining his community for atleast 3-6 months.

Since you're a 9 to 5 guy, my personal recommendation will be to consider Smallcase for Progressive Learning and saving time & effort in short-term and utilize the remaining time wisely thus becoming a Successful Investor in Long-term

Just my thoughts, Best of Luck

 

[destello]

Let's say if I like pne company business mode and i see potential in it should I buy it frequently no matter what is the price.

For example , pidilite which is monopoly business should I buy It or should I learn indicators to determine overpriced or not good time to buy?

 

[TaxWiser]

Let's say if I like pne company business mode and i see potential in it should I buy it frequently no matter what is the price.

For example , pidilite which is monopoly business should I buy It or should I learn indicators to determine overpriced or not good time to buy?

It's great that you're interested in investing in companies with strong business models like Pidilite. However, buying a stock frequently without considering its price can be risky. Here are some key points to consider:

1. Understand Valuation Indicators:

Price-to-Earnings (P/E) Ratio: This ratio compares a company's current share price to its earnings per share. A high P/E ratio might indicate that the stock is overvalued.​

Price-to-Book (P/B) Ratio: This ratio compares a company's market value to its book value. A high P/B ratio could also suggest overvaluation.​

Price/Earnings to Growth (PEG) Ratio: This ratio considers the company's earnings growth rate. A PEG ratio above 1 might indicate that the stock is overvalued relative to its growth.​

2. Market Conditions:

Economic Cycles: Stock prices can be influenced by broader economic conditions. Understanding where we are in the economic cycle can help you make better investment decisions.​

3. Diversification:

Avoid Concentration Risk: Investing all your money in one stock, even if it's a strong company, can be risky. Diversifying your portfolio can help mitigate this risk.​

4. Long-Term Perspective:

Buy and Hold Strategy: If you believe in the long-term potential of a company, a buy-and-hold strategy might be beneficial. However, it's still important to consider the price at which you buy.​

5. Research and Analysis:

Stay Informed: Continuously research and analyze the company's performance, industry trends, and market conditions. This will help you make informed decisions.​

Conclusion:
While it's tempting to buy a stock you believe in frequently, it's crucial to consider valuation indicators and market conditions to avoid overpaying. Learning to identify when a stock is overpriced can help you make more strategic investment decisions.

(Source: Summarized Using Samsung Note Assist)

 

[zacobite]

I am not belonging to any financial background, I work in IT industry as developer and obviously want to do investment. Good part of me that I want to buy stock and hold it as long as I can.

Now, how to pick up the stocks at right price
(i know everyone affordability is vary). Let's say I like HDFC bank business model and the stock of HDFC is growing 2 to 3 % per month.
For long term investment should I buy one stock, for long term investment?
To be honest i just see the profit and net worth charts of well known companies and it profit is on negative I totally ignored e.g. Zomato or Paytm.

Do I need to lean about reading company financial sheet?
Do I have to learn about companies fundamentals?
As New in this investment what should e ideal baby steps for long term investment.

Note:
(I do SIP too, want to invest in stocks too)
(HDFC bank is just for example)


If there any investment tool for long term please mention it.

this is a vast subject with multiple divergent and contradicting theories... So anyone advising you is basis their limited understanding... The risk will remain and high... To your example HDFC is one of the lowest performance in the last 6 M.. So classic example... Invest in MFs.. choose wisely... trade with risk directly.. if ur portfolio drops by 50% in stocks will it shake your finances ?? if yes then DONT trade directly...

 

[destello]

For ideal scenario who wants to stick with their investment with long term only. Like Warren Buffett hold as long as you can. Does it true in case of MF?

Like we as middle class or upper middle class employee does not afford 50-60 or 100 stock quantity at a time, so how can we diversify the portfolio with such small amount.

 

[TaxWiser]

For ideal scenario who wants to stick with their investment with long term only. Like Warren Buffett hold as long as you can. Does it true in case of MF?

Like we as middle class or upper middle class employee does not afford 50-60 or 100 stock quantity at a time, so how can we diversify the portfolio with such small amount.

Investing with a long-term perspective, much like Warren Buffett's approach, can indeed be beneficial for mutual funds (MFs) as well. Here’s why and how you can effectively diversify your portfolio even with smaller amounts:

Long-Term Investment in Mutual Funds

1. Compounding Benefits: Holding mutual funds for the long term allows you to benefit from the power of compounding. The returns generated on your investments are reinvested, leading to exponential growth over time.​

2. Market Volatility: Long-term investments help you ride out market volatility. Short-term fluctuations are smoothed out, and the overall trend tends to be upward.​

3. Cost Averaging: By investing regularly (e.g., through a Systematic Investment Plan or SIP), you buy more units when prices are low and fewer when prices are high, averaging out the cost of your investments over time.​

Diversifying with Smaller Amounts

1. Systematic Investment Plans (SIPs): SIPs allow you to invest a fixed amount regularly (monthly, quarterly) in mutual funds. This approach is ideal for middle-class or upper-middle-class employees as it requires a small, manageable amount each time.​

2. Variety of Funds: You can diversify across different types of mutual funds such as equity funds, debt funds, and hybrid funds. Each type has its own risk and return profile, helping you balance your portfolio.​

3. Index Funds and ETFs: These funds track a market index and offer broad market exposure at a low cost. They are inherently diversified as they hold a basket of stocks.​

4. Sectoral and Thematic Funds: While these are more focused, you can allocate a small portion of your portfolio to sectoral or thematic funds to gain exposure to specific industries or themes.​

5. Balanced Funds: These funds invest in a mix of equity and debt, providing diversification within a single fund. They are suitable for investors looking for a balanced approach.​

Practical Steps for Diversification

1. Start with SIPs: Begin with SIPs in a mix of large-cap, mid-cap, and small-cap equity funds. This ensures exposure to companies of different sizes and growth potentials.​

2. Include Debt Funds: Allocate a portion to debt funds for stability and regular income. This can include short-term, medium-term, and long-term debt funds.​

3. Consider Hybrid Funds: Invest in hybrid funds that combine equity and debt, offering a balanced risk-return profile.​

4. Review and Rebalance: Periodically review your portfolio and rebalance it to maintain your desired asset allocation. This helps in managing risk and optimizing returns.​

By following these strategies, you can effectively diversify your portfolio and invest for the long term, even with smaller amounts.

Note: This is not investment advice, just somes ideas to be considered before making your final thoughts. Always make decisions based on your own financial knowledge, risk appetite, and do your own research (DYOR).

(Source: Conversation with Gemini AI)