How to build a good portfolio:
Consider you have Rs 1 lac to invest in stocks.
These are the mistakes usually one do while investing in stocks.
1. Buying a large number of scrips ( say 30-100)
2. Buying stocks which are quoting at a small value. Many people prefer buying a stock trading at Rs 7 thinking that it may quote sometime at above Rs 100 instead of buying a stock quoting at Rs 600 which will surely appreciate to Rs 1000 in next 1 year.
3. Buying all those stocks which your friends at the stock broker's office.
You need to carefully go through following example
Case 1: Divide your Rs 100000 into 25 parts of Rs 4000 each and invest in 25 stocks.
1 stocks appreciate by 200% = Rs 12000
4 stocks appreciate by 100% = Rs 32000
15 stocks appreciate by 30% = Rs 78000
3 stocks decline by 50% = Rs 6000
2 stocks disappear from the market. = Rs 0
Now after this period (say 1 year), your portfolio stands at Rs 128000. (28%)
Consider the amount of time spent by you to place the buy orders, follow ups, looking at the price of all these 25 stocks etc..
Case 2: Devide your Rs 100000 into 5 parts of Rs 20000 and invest in 5 stocks
1 stock appreciate by 200% = Rs 60000
1 stock appreciate by 100% = Rs 40000
1 stock appreciate by 30% = Rs 26000
1 stock decline by 50% = Rs 10000
1 stock that dissapears = Rs 0
Now after this period (say 1 year), your portfolio stands at Rs 136000. (36%)
Consider the amount of time you saved from minimizing your stock numbers to 5. You can use your saved time on quality research and you can even avoid those stocks which will possiby hurt you. This way your 36% can grow much more. |
