Raksha Bandhan Stocks: This Raksha Bandhan 2022 introduces your sisters to capital markets and the benefits of compounding
Over the years, ‘protection’ has moved from physical to financial. Today, it is more important to provide financial protection that works in the long run.
After hedging, i.e. taking on a comprehensive health and life insurance policy, it is important to focus on building her capital so that she achieves financial independence. main.
One way to do that is to ask her to invest in a Systematic Investment Plan (SIP) in a plan that is linked to equity and allows her to profit from compound interest.
Provide market education
Another way is to educate her in the investment process and let her build her intellectual capital, which will help her build her financial capital.
It is not necessary to get an MBA or a CFA degree to gain enough knowledge to learn about investing. As legendary portfolio manager Peter Lynch said, “All the math you need in the markets, you’ll get it in fourth grade.”
Investing relies heavily on common sense, identifying opportunities, then sticking to them and allowing time and compound interest to work their magic.
Start by educating your sister through books, mainly biographies that are easier to understand, then expand it into more difficult topics. Choose investment strategies that fit her upbringing.
Nowadays, there are ready-made filters available that will give results based on the query. For example, if we want the fastest growing companies or the companies that offer the best dividend yield etc.
So even if one does not know how to calculate the formulas but knows how to interpret the numbers, it is good enough.
When it comes to investing, timing the market when you’re in doesn’t matter, but getting out early is a sin.
Investing is about finding a good stock with a fair valuation, if not depressing, waiting for it and letting the story unfold.
As far as the company she’s investing in is properly managed and has a proper stock investment process in place, there’s very little to worry about.
While her education is progressing, ask her to open a broker’s account and link it to her bank account. This will help her get ready with her system to invest.
Remember to keep transaction costs as low as possible, not a big deal when one is investing as transactions will be few and far between, but the habit of saving will be formed.
Having a brokerage account and a bank account is one thing, but the bank account needs to be fully funded so that when the opportunity arises, there will be no shortage of cash.
First, money should be saved and whatever is left needs to be spent. Having a frugal lifestyle helps achieve your investment and life goals.
There is no better gift than the gift of knowledge. Teaching your sister how to invest and benefit from compound interest to achieve financial freedom is one of the best and lasting gifts a brother can give his sister.