The urge to invest in Individual Stocks!
Should I invest in individual stocks?
YES – by all means.
But before that, please ensure you tick these 5 items:
- Your monthly S.I.P in Mutual Funds must be greater than your monthly EMIs.
- Your Mutual Funds portfolio is at least 3 times your annual income.
- You have min. 12 months of monthly expenses as emergency fund safely in bank FDs.
- You have min. 5-10 times of your annual income as your life insurance cover.
- You have min. 5 – 10 lakhs health insurance cover apart from company's cover & your parents are adequately covered too.
These 5 items would ensure that you won’t be miserable in case things don’t work out in direct stock investments. Otherwise, even after how-much-ever you gain in direct stocks, it will not have any major meaningful impact in your financial status / freedom.
We get carried away by only those stocks which gave stellar returns - No one talks about the losers!
Last 5 years return of famous Top 50 stocks
During the same period, the worst performing Flexi-cap Mutual fund has given 12.64% return, while the best performing fund has given 29.13% with the average return being 16.67%.
So rather than breaking your head on, which stock to purchase, following numerous social media channels, fretting over how much your colleague has made money in stocks (they won’t say how much they lost though) & tracking all the news every day, it is better to FOCUS ON YOUR CORE JOB (PROFESSION) & UPSKILL yourself to be future ready. That is the best investment to make & for all others, there are always professionally managed mutual funds & other low risk safe financial products.
