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Easiest Way To Become Millionaire How to Invest in the Stock Market & Mutual Fund for Beginners


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Easiest Way To Become Millionaire How to Invest in the Stock Market & Mutual Fund for Beginners

Date: 2019-11-20 07:39:29

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If your age is around 20 years old and if you can save Rs 500 every month just by cutting down your monthly expenses a little bit, avoiding a frequent visit to KFC dominos with your friends or Inox PVR to watch movies then with that little savings also, one day you can become a crorepati. Sounds impossible? Do you want to know how?
By investing in the share market.
“But bro I heard investing money in share market is like gambling. So many people lose their money on the share market. No no! Bank is ok for me!”

Now let’s talk about the share market. What is the share market? How does it function? Suppose you are the owner of a company. Now you want to invest in your business by borrowing money from the public. You can do so by listing your company on the share market. Now suppose the current total value of your company is Rs 100. So you divide your whole company into 100 units, so Rs 1 per unit. Now if someone comes to share market and buy 10 units of your company with Rs 10, then that person will become 10% owner of your company. So in future if your company’s value gets increased to Rs 1000, then that person will get 10% of Rs 1000, that is Rs 100. So he will get Rs 100 by investing Rs 10 only. So he will make a profit of Rs 90. But suppose your company starts to run in loss and its future value will become Rs 10, then that person will get 10% of Rs 10, that is Rs 1 only. So he will have to bear a loss of Rs 9.

One of the ways to do so is an index fund. We have two indexes in our Indian share market, nifty and Sensex. The nifty index indicates the current top 50 companies in India and the Sensex index indicates the current top 35 companies in India. So if you invest in an index fund then your money will be invested in only those top companies that are indicated by that index. Most importantly, this index is not fixed. If any company is running in loss continually then that company lose its position from the index and a new company which is currently running in profit makes its position in the index and accordingly, your money gets also transferred from the loss running company to the new profit running company. So basically when you invest in an index fund you don’t invest in any particular company, instead, you invest in Indian Economy. The rate at which the Indian economy will grow, your return will be at the same rate.
In 1979, when the index was started if someone had invested just Rs 100 in any Sensex index fund then by today that Rs 100 would have become Rs 39000. 390 times in 40 years. If I convert it into a percentage, then from its inception Sensex has an average return of 17% CAGR. And as this rate is depending on our country’s economy or GDP so it is not possible to fluctuate very high amount in a short period. Still if I suppose that in the next 40 years this rate will come down by 2%, then at 15% CAGR, if your age is around 20 today and right from today if you start investing Rs 500 per month in any Sensex index fund, then after 40 years you will get 1.5 crore rupees.

You don’t need any advanced knowledge about the share market, nor there is any need for doing any research and finding out the right mutual fund. On the other hand, the risk is also almost zero, because it is depending upon the GDP of our country and no matter what happens a country’s GDP can never become zero or fluctuate a very high number in short time. The only thing you need to do is to cut down your expenses a little bit to save Rs 500 every month and invest it.

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