My learning from one week of investing in stocks

I started learning about the stock market from Varsity by Zerodha, which is a great free source to learn stock market.

Currently, I am learning technical analysis, but I have invested in certain stocks and ETFs.

Though I am just a beginner, for the last 10 days, I have been watching various stock market videos, reading articles, and personal observation, and from all of this, knowing I will be sharing some of my learning from it.

Difference between trading and investing

Before starting my journey in investing, I wasn't aware of the difference between investing and trading, for me anyone who deals with stock was a trader, but it is not quite right.

Below is the perfect explanation of the difference,

"Investing takes a long-term approach to the markets and often applies to such purposes as retirement accounts.Trading involves short-term strategies to maximize returns daily, monthly, or quarterly."

source: - Investopedia

Now, why is it important to understand the difference? because investors and traders have different styles of putting their money in the market.

While traders look for small period trends in the market, investors look for long period trends in the market, while traders hold stocks for short period, investors hold the stocks as long as he/she can.

If you want to be a trader, you have to focus on your technical analysis part more, and if you want to be an investor, then you have to focus on your fundamental analysis part more.

Technical and Fundamental analysis

It doesn't matter if you are an investor or trader, having the knowledge of both, technical and fundamental analysis is important.

Maybe a trader can trade without doing fundamental analysis, but for investors, it is important to know both technical and fundamental analysis.

Some traders may do fundamental analysis to determine if the stock is overvalued or undervalued and trade accordingly, but most traders invest for small periods and on the basis of short period trends.

While an investor, invests for a long period of at least a year in stocks, and therefore it is important to invest in a company with a long term sustainable vision as the risk is high, An investor should never invest by just seeing the trends, an investor evaluates a company by its balance sheet, management, etc, and not by the stock price.

But even investors need to know technical analysis, because:

Fundamental analysis helps you to understand if you should invest or not but technical analysis help you to find the break point to invest in it.

How we can invest in big companies with fewer investments

Would you believe if I say you can invest in companies like Amazon, Apple, Cisco, Google, ETFs, and many more with just Rs. 100?

This is possible with etfs,

ETFs or "exchange-traded funds" are exactly as the name implies: funds that trade on exchanges, generally tracking a specific index. When you invest in an ETF, you get a bundle of assets you can buy and sell during market hours—potentially lowering your risk and exposure, while helping to diversify your portfolio.

Source: - Schwab

I invested in Motilal Oswal NASDAQ 100 ETF, which is based on the NASDAQ index, you can even invest in big companies like Reliance, Adani Ports, and ITC by buying any Nifty ETFs like NIFTYBEES.

As an early investor who is still in the process of learning, its the best way to start investing because I don't have to invest a huge sum also as it is based on an index, stability is more and in long term, it will grow.

We can ignore the price if investing in long term

By saying we can ignore the share price, I mean after buying. If you are investing in any company for the long term, after doing your research, you can ignore the share price in short term.

As in the market, there are two forces, bull, and bear, if both forces exist surely in the short run your portfolio will increase and sometimes decrease, but in the long term if your research is true and the company earns large profits and if the company is sound, your portfolio will increase.

I hope you found this article interesting and you learned something new, if you are enjoying today's newsletter and wish to get more such articles in your Email, consider subscribing.

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Disclaimer🚨

The above information is to spread financial literacy. We are not SEBI registered financial advisors, kindly consult your financial advisor before making any investment decision.