My Journey of Investing in Shares

Connecting some dots...

Life is dynamic in that it has different stages of personal growth: physical, mental, psychological etc. However, we experience growth in our careers as well. For aspiring entrepreneurs there are many paths that can be taken at different life stages. For me, I started programming, blogging, art and so on at an early age. I studied as well as took up several jobs in course of my studies and beyond. I’m in Australia at the moment and am working in a gaming venue (gambling venue). After graduating from my university, and working actively on a full time basis, I’m being attracted towards passive investment. If you have read my previous article Concepts You Need to Know to Increase Your Wealth!, then it becomes clear that, I'm trying to acquire some assets which means dividend paying stocks. I'll make it clear that my aim is not capital gain from short term trade.

Passive Investing

Passive investing isn’t really passive. It is passive in the sense that you are not working on the project or company you are putting your money in. Even though termed passive, it requires a lot of active efforts. Choosing where to invest your money is not easy. You have options to invest privately or in public companies, or in gold or mutual funds. The scope of this article is limited to publicly traded securities that include shares, bonds, mutual funds and the like.

As I said before, passive investment is quite an active activity and requires tremendous reading, observation of the stock market, brainstorming on various risk-taking situations and finally decision making as to which instrument to buy and in what quantity. I’m particularly interested in a mix of instruments rather than one instrument. Shares, mutual funds and bonds (or alternatively fixed deposit) are what I’m interested in. Each have own advantages and drawbacks. Shares are highly rewarding and equally risky. Mutual funds minimize risk and provide balanced return. Fixed deposits (and bonds) are highly safe but provide known return which is not as great as stocks and mutual funds.

Unfavourable market sentiment

However, at the moment NEPSE (stock market) where you buy and sell stocks is bearish (going downward or decreasing). The implication is that it is a good opportunity for aspiring investors to buy. For same budget you get more quantity of shares as shares have become much cheaper. The downside is that if this trend continues then the shares will become even much cheaper and whatever extra you paid to buy shares now, will have opportunity cost of the return if you had kept your money in fixed deposit. There is a technique which can bring down your overall cost of investment in such a situation. It is simple, buy little by little instead of buying at once, if price drops increase the investment, if goes up stop buying.

Nevertheless, it is daunting for you to put your money in stock portfolio and then watch it everyday degrade in its value. In such a situation it is wise to choose very good companies and invest such that they give yield which is similar to that of fixed deposit return (normally 10% in average). This is what I’m trying to do at the moment. Every investor faces at one point or other the problem of money. Everyone’s budget is limited. Careful management of money is therefore not a desire, it is a necessity.

Dissent from Public

We can agree and we can disagree because we are humans and we have different opinions that are unique to each of us. I have seen a lot of people worry about the decreasing stock market. However, I’m seeing this situation as an opportunity and I would be happier if the stock market goes down further, as that is the chance for me to buy more shares for the same money. The already established investors or those who are looking to start investing in the stock market, it is time to carefully optimize your portfolio. Sell the shares that are not performing well and buy the ones that are giving promising returns. As you can see passive investing isn’t passive and we need to have wide knowledge of what is going on in order to take advantage from the opportunity that is being presented by the current bearish trend.

My Journey in Short

I was curious about investing since I was a boy and my first investment was in the IPO of SADBL, where I applied for and got 50 units of shares. However, due to lack of information and awareness about the market I did not invest for a while. It was about two years ago when I became seriously enthusiastic about shares and I've been reading stock news on Mero Lagani and Share Sansar. These both websites are valuable source of information and I still scan the headlines as well as read the interesting articles from these domains on regular basis. Since then, I have setup a DMAT account and applied in numerous IPOs and FPOs online.

My Investment Strategy

IPOs are good for beginners investors like me, but we rarely get more than 10 shares from our application. Thus buying in secondary market is not a choice and lately, I carefully made a portfolio of several companies. Unfortunately, a lot of stocks have gone down from the price I bought.  I have tried to go after the fundamentals of the company and their growing potential and adopted a balance strategy. I bought some extremely low priced stocks (under Rs. 200 per share) and some mid-priced stocks (under Rs. 350) per shares. I am not optimistic at all about buying shares above 350 and when I have to I'm very cautious. The only stock I think can be bought for higher money is NIB. NABIL is good too but far more expensive.

It would be worth mentioning that despite bad rumours I applied for the FPO of NBL and NMB bank and I also look forward to investing some money in the shares of Shivam Cement. Also, I have met my investment goal for now and I won't buy any more shares from the secondary market. I would still consider applying for some IPOs and FPOs. However, for beginners, I believe that it is still a buying time  as the share prices have gone further down making them cheaper than ever to buy. Choose good companies and buy little by little now, if you are interested to invest in shares. My next goal is to invest in my own business.