How to start investing in stocks and trading, can you give a basic 101 guide to 18 year old ?

Ans: • Categorize stocks as Cyclical, Growth or Defensive Cyclical
• Investing in cyclical stocks — cement or steel, requires an understanding of the economic scenario.
• An active involvement is required in order to reap the maximum benefits of swings in economic cycles over time.
• The stock prices are likely to move through extreme highs and lows, and the ability to time entry and exit will be necessary.
• Categorize stock as Cyclical, Growth or Defensive Growth
• Growth investing is investing in sectors where the future direction is clear for the medium term – such as technology.
• Timing is key, the stock may do nothing for a long time as momentum builds up and then move sharply thereafter.
• Categorize stock as Cyclical, Growth or Defensive Defensive
• Defensive investing is done from a long term perspective.
• It is investing in sectors that grow consistently and on a sustainable basis over time, such as Pharmaceutical
• Appreciation may, at times, not be as dramatic as cyclical or growth stocks. However, stocks that constitute defensive investments are expected to grow steadily over longer time periods.
• Check market activity
• Being able to sell is as important as buying. The liquidity of a stock is very important in taking an investment decision.
• Look at the price volume relationship for a stock.
• If a stock price is moving up or down on high trading volume, it is more likely that there is real interest in that price movement than if there is very little volume supporting the price move.
• Know the business you buy
• The performance of each stock is linked to the underlying business, and the market’s perception of the future prospects for that business.
• Study the future potential in terms of demand & supply and the company’s competitive position in the industry.
• The business model of the company should have the ability to sustain growth and momentum well into the future.
• Study the company’s performance
• Look at the year-on-year growth in the company’s performance.
• Look at the price earnings (P/E) for arriving at comparative valuation.
• Finally, look at return on equity (ROE), which is the year’s earnings divided by the net worth of the company.
• ROE compared to the cost of capital allows the investor to gauge the company’s wealth creating ability.
• Set a price target
• Set expectations, by identifying a target price, and re-evaluate the stock when this target is reached.
• If there is a loss on a stock and does not show potential to rise, sell.
• By not selling out of low return stocks to get into higher return stocks, you miss out on opportunities.
• Tracking your investment
• Tracking your investment is as important as buying it.

Ans: It is truly inspiring that you want to start investing now. Many people delay it for years. You are taking the right step at the right time. Wanting to learn is the first and best decision.

Now let me guide you from zero knowledge to confident investing. I will keep it simple, clear, and practical.

» Understand the Purpose of Investment

– Investment helps you grow your money.

– It beats inflation and protects future expenses.

– It builds wealth over time with discipline.

– Investment also supports retirement and life goals.

– Without investing, money loses value over time.

– You earn today, but investing grows that earning.

– Saving alone is not enough. Investing is must.

» Difference Between Saving and Investing

– Saving means keeping money idle or low return.

– Like bank FD or savings account.

– Investing gives you better returns by taking calculated risk.

– It involves equity, mutual funds, gold bonds, etc.

– Investing can beat inflation over the long term.

– Saving gives safety, but returns are too low.

– Investment gives growth with time and planning.

» Start with Clear Goals

– Define what you want to invest for.

– Like retirement, child’s education, wealth building.

– Write these goals down with time frames.

– Goals help you choose right investment types.

– Short-term and long-term goals need different plans.

– Having clear goals gives your money direction.

– Don’t invest blindly without knowing the reason.

» Know What Mutual Funds Are

– Mutual fund pools money from investors like you.

– A fund manager invests it in stocks or bonds.

– You get returns based on performance of those investments.

– It is managed by professionals and well-regulated.

– Mutual funds are safer than investing directly in shares.

– They are transparent and give liquidity.

– Returns are market-linked, so they can fluctuate.

– But over time, they give good growth.

» Types of Mutual Funds You Should Know

– Equity mutual funds invest mainly in stocks.

– They are for long-term wealth building.

– Returns can be higher, but fluctuate short term.

– Debt mutual funds invest in bonds and deposits.

– They are for low risk and short-term needs.

– Hybrid funds mix both equity and debt.

– They suit medium-term investors.

– All these funds are managed by experts.

» Don’t Start with Index Funds

– Index funds only copy a stock market index.

– They have no active fund manager.

– They can’t manage market falls.

– They fall fully when markets fall.

– There’s no active stock selection in them.

– They don’t offer downside protection.

– In India, actively managed funds still perform better.

– So avoid index funds in the beginning.

» Don’t Choose Direct Plans in the Beginning

– Direct mutual funds are low cost but lack guidance.

– You must select and track everything alone.

– Small mistake can lead to big losses.

– Beginners should not go for direct plans.

– Regular plans come with service and review.

– When you invest through Certified Financial Planner, you get advice.

– A CFP tracks performance and makes changes for you.

– It saves time and avoids confusion.

» SIP is a Good Way to Start

– SIP means Systematic Investment Plan.

– You invest small fixed amount every month.

– You don’t need large amount to start.

– SIP creates habit and discipline.

– It works well for salaried people.

– SIP reduces market timing risk.

– It works in both rising and falling markets.

» You Can Also Invest Lump Sum

– If you have saved money, invest lump sum.

– For lump sum, equity investment should be slow.

– You can use STP from liquid fund to equity fund.

– STP means Systematic Transfer Plan.

– It moves money every month automatically.

– It balances market entry timing.

– A Certified Financial Planner can help you set it.

» Learn the Basic Process to Start

– First, complete KYC with PAN, Aadhaar, and mobile.

– It is required for mutual fund investing.

– Then link bank account with your investment account.

– Choose a SIP amount or lump sum amount.

– Select fund categories as per your goal.

– Invest online or through a CFP platform.

– Get statement and track regularly.

» Use Only Registered Platforms

– Avoid random apps or websites.

– Use platforms where CFPs are involved.

– These platforms offer personalised investment service.

– They also offer portfolio tracking and tax reports.

– Everything stays consolidated and simple.

» Always Keep Emergency Fund Ready

– Before investing, keep 6 months expense as savings.

– Use liquid mutual funds or savings account.

– This fund protects you during job loss or health issue.

– Emergency fund avoids breaking long-term investments.

» Take Only Term Insurance for Protection

– Do not mix investment and insurance.

– Avoid ULIPs and traditional LIC plans.

– They give low returns and poor flexibility.

– If you already have such plans, consider surrendering.

– Reinvest the money in mutual funds.

– Take only term insurance for life cover.

– It is cheap and gives large cover.

» Don’t Try to Time the Market

– Many try to wait for perfect time.

– That perfect time never comes.

– Best is to start early and stay long.

– Over time, ups and downs balance out.

– Delay only reduces compounding benefit.

» Start Small But Stay Consistent

– You can start SIP with Rs.1000 also.

– Don’t wait to save big amount.

– Even small steps lead to big results.

– Increase SIP when income rises.

– Consistency is more important than amount.

» Don’t Follow Market Tips Blindly

– Many YouTube and WhatsApp groups give wrong tips.

– These tips are not suitable for you.

– Each investor has different goals.

– Avoid such noise and stay on your plan.

– A Certified Financial Planner gives customised advice.

» Track Your Investments Periodically

– Don’t check returns daily.

– Markets go up and down.

– Check performance once every 6 months.

– Rebalance the funds if needed.

– A CFP does this with proper reports.

» Taxation Rules You Should Know

– Equity fund profits after 1 year are long-term.

– LTCG above Rs.1.25 lakh taxed at 12.5%.

– Profits before 1 year are short-term.

– STCG taxed at 20%.

– Debt funds are taxed as per your income slab.

– Plan redemptions smartly to reduce tax.

» Use Goal-Based Investment Strategy

– Set a goal for each investment.

– Like Rs.10 lakh for child’s college in 10 years.

– Then select fund as per the goal.

– This gives purpose to each rupee invested.

– It also makes tracking progress easier.

» Don’t Panic During Market Falls

– Market may fall sometimes.

– It is normal and temporary.

– Don’t stop SIPs or withdraw money.

– These corrections are part of the journey.

– Stay invested and let time work.

» Keep Your Documents Organised

– Maintain folio numbers and investment proofs.

– Save them digitally for easy access.

– Link email and mobile for alerts.

– Nominate family member for all investments.

– This avoids future legal problems.

» Learn More Slowly and Steadily

– Read about mutual fund basics from good sources.

– Follow reliable platforms and YouTube channels.

– Ask questions to a Certified Financial Planner.

– Don’t try to learn everything at once.

– Learn one step at a time and apply it.

» Stay Away from Complicated Products

– Avoid stock trading, crypto, NFOs, PMS.

– Stick to mutual funds and term insurance.

– Keep things simple and easy to manage.

– Simplicity is powerful in wealth creation.

» Have Realistic Expectations

– Mutual funds don’t give fixed returns.

– Returns change year to year.

– Expect 12% to 15% from equity over long term.

– Debt funds give 6% to 8%.

– Don’t expect miracles in short time.

– Stay calm and focused on your goals.

» Take Guidance from a Certified Financial Planner

– A CFP helps you plan investments as per your goals.

– They guide you on which funds to choose.

– They help you track and rebalance yearly.

– They give clarity and avoid confusion.

– You will get customised and unbiased advice.

– Regular plan with CFP gives complete support.

» Finally

– You have made a bold and wise move.

– Starting is more important than knowing everything.

– With right guidance, you will succeed in investing.

– Mutual funds are powerful tools for growing wealth.

– Learn gradually and invest consistently.

– Your money will work for you with time.

– Stay patient and positive. Future is bright.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You already built a solid foundation. Many investors delay planning. But you started early at 36. That gives you a strong advantage. You have no liabilities. You have long term thinking. You also have diversified savings like PPF, NPS, Emergency funds and direct stocks. That shows clarity and discipline. This approach builds wealth with less stress over time.

You also started systematic investments in equity funds. That is a positive step. Your selection covers multiple categories like large cap, mid cap, small cap, flexi cap, hybrid and precious metals. So the intent is right. You are trying to create a broad portfolio. That gives balance.

» Your Portfolio Composition Understanding
Your current SIP list includes:

Small cap

Mid cap

Flexi cap

Large cap

Large and mid cap

Hybrid category

Gold and Silver FoF

Equity and Debt allocation fund

Dynamic hybrid fund

This shows you are trying to cover many segments. But too many categories can create overlap. When there is overlap, you get confusion during review. It also makes portfolio discipline difficult. You may think you are diversified. But the holdings inside may repeat. That reduces efficiency.

Your portfolio now looks like:

Equity dominant

Hybrid for stability

Metals for hedge

So the broad direction is fine. But simplifying helps in long-term habit building.

» Fund Category Duplication
You hold:

Two flexi cap funds

One large and mid cap fund

One pure large cap fund

One mid cap fund

One small cap fund

Flexi cap funds already invest across large, mid, small. Then large and mid also overlaps. So the large cap exposure gets repeated. That may not add extra benefit. But it increases monitoring complexity.

So I suggest rationalising. Keep one fund per category in core. Keep satellite space for only high conviction.

» Core and Satellite Strategy
A structured portfolio follows core and satellite method.

Core portfolio should be:

Simple

Long term

Stable

Satellite portfolio can be:

High growth

Concentrated

Based on your thinking level, you can structure like this:

Core funds:

One large cap

One flexi cap

One hybrid equity and debt fund

One balanced advantage type fund

Satellite funds:

One mid cap

One small cap

One metal allocation if needed

This division gives clarity. You can continue SIPs with review every year. No need to stop and restart often. That reduces behavioural mistakes.

» Your Current SIP List Review with Suggested Streamlining

You can consider continuing:

One flexi cap

One large cap

One mid cap

One small cap

One balanced advantage

One equity and debt hybrid

You may reconsider keeping both flexi caps and both gold silver funds. One of each category is enough. Because too many funds do not increase returns. It complicates tracking.

Precious metal funds should not be more than 5 to 7 percent in your portfolio. This is because metals are hedge assets. They do not create compounding like equity. They act as protection during cycles. So keep them small.

» How to Use the Rs 6 Lakh Lump Sum
You asked about lump sum investing. This is important. Lump sum should not go fully into equity at one time. Markets move in cycles. So use a staggered method. You can invest the lump sum through STP (Systematic Transfer Plan). You can keep the amount in a liquid fund and set STP toward your chosen growth funds over 6 to 12 months.

This reduces timing risk. It also creates discipline. So your Rs 6 lakh can be deployed gradually. You may use 50% towards core equity funds and 30% toward satellite growth category. The remaining 20% can go into hybrid category. This gives balance and comfort.

» Regular Funds Over Direct Funds
One important point many investors miss. Direct funds look cheaper. But they demand deep knowledge, discipline, and behaviour control. Most investors lose more through emotional selling and wrong timing than they save on expense ratio.

With regular funds through a Mutual Fund Distributor with Certified Financial Planner qualification, you get guidance, structure and correction. The advisory discipline protects you during market extremes. That is more valuable than a small saving in expense ratio.

A personalised planner also tracks portfolio drift, rebalancing need and category shifts. So regular fund investing gives long-term benefit and behaviour coaching.

» Actively Managed Funds over Index or ETF
Some investors choose index funds or ETF thinking they are simple and cheap. But they ignore drawbacks.

Index funds or ETF will not avoid weak companies in the index. They will invest whether the company grows or struggles. There is no fund manager decision making. So when markets are at peak, index funds continue aggressive exposure. In downturns also they fall fully. There is no cushion.

Actively managed funds work with research teams. They can avoid bad sectors. They can shift allocation based on market and economy. Over long term, this gives better alpha and stability. So continuing with actively managed funds creates better wealth compounding.

» SIP Continuation Strategy
Once the rationalisation is done, continue SIPs every month without interruption. Pause and restart behaviour damages compounding power. SIP works best when you go through all market cycles. You benefit more during corrections because cost averaging works.

So continue SIP amount. You can also review SIP increase every year based on income. Increasing SIP by 10 to 15 percent every year helps you reach large corpus faster.

» Asset Allocation Based Approach
One key point in wealth creation is having the right asset mix. Equity gives growth. Hybrid gives balance. Metals give hedge. Debt gives safety. Your asset allocation should stay aligned to your risk profile and time horizon.

Since you are young and have long term horizon, higher equity allocation is fine. But as time moves, rebalancing is important. Rebalancing protects gains and restores allocation.

So review your asset allocation every year or during major life events like child birth, home buying or retirement planning.

» Behaviour Management
Many portfolios fail not due to bad funds. They fail due to bad decisions. Selling during correction. Stopping SIP when market falls. Chasing past return performance. These mistakes reduce wealth.

Your discipline so far is good. Continue to stay patient during volatility. Equity rewards patience and time.

» Financial Goals Clarity
Since you have no children now, you can decide your long-term goals. Typical goals may include:

Retirement

Future child education

Dream lifestyle purchase

Health care reserves

When goals are clear, investment purpose becomes stronger. So you can map each fund category to goal horizon. Short-term goals should not use equity. Long-term goals should use equity with hybrid support.

» Role of Review and Monitoring
Review once in a year is enough. Frequent review can create anxiety. Annual review helps check:

Fund performance

Expense drift

Category relevance

Allocation balance

Then adjust only if needed. This progress helps you stay confident and aligned.

» Taxation Awareness
Equity mutual funds taxation rules are:

Short term (below one year holding) taxable at 20 percent

Long term (above one year holding) gains above Rs 1.25 lakh taxable at 12.5 percent

Debt mutual funds are taxed as per your income slab.

So always hold equity funds for long term. That reduces tax impact and gives better growth.

» SIP Increase Plan
You can create a simple plan to increase SIP over time. For example:

Increase SIP at every salary increment

Increase SIP during bonus time

Use rewards or extra income for investing

This habit accelerates wealth. So by the time you reach 45 to 50 years, your investments could reach a strong level.

» Insurance and Protection
Before investing large, ensure you have term insurance and health insurance. If not already done, it is important. Insurance protects wealth. Without insurance, even a small medical event can impact investment plan. So review this part also. Since you are married, cover both.

» Wealth Behaviour Mindset
You are already disciplined. Just keep these simple principles:

Invest without stopping

Review once a year

Avoid funds overlap

Follow asset allocation

Avoid reacting to media noise

This helps you reach long term milestones.

» Finally
You are on the right track. Only fine tuning and simplification is needed. Your discipline is visible. Your portfolio will grow well with structure, patience and periodic review. Use the Rs 6 lakh with STP approach. And continue SIP with rationalised categories.

With time and consistency, wealth creation becomes effortless and peaceful. You just need to stay committed and avoid overthinking during market movements.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment