Build a BIG PORTFOLIO (2Cr+) even with less salary | Investing Strategies

Summary

In this video, the presenter explains how to invest your salary in the stock market, with strategies tailored to different income levels. Starting with a case study on Nikhil Kamath of Zerodha, the video emphasizes personalized investment approaches and risk mitigation. It covers investing principles for various salary ranges, from 25,000 to over 1 lakh, highlighting the importance of index investing, large-cap stocks, and diversifying with volatile assets and real estate. The video also underscores the significance of generating cash flow assets and international diversification to build a robust investment portfolio.

Takeaways

• 📈 Investing style should vary based on salary levels; those earning 25,000 will have different strategies compared to those earning over 1 lakh rupees per month.
• 💡 Risk mitigation is crucial, and buying insurance is one way to hedge your investments.
• 📊 Example of Nikhil Kamat from Zerodha investing only 50% of his wealth in equities, emphasizing the importance of personalized investment strategies.
• 💼 Importance of wealth protection and diversification in investment, especially as your portfolio grows.
• 💰 For a salary of 25,000 to 35,000, aim to save and invest 20% of your salary, targeting a CAGR of 13% over 30 years.
• 📉 Focus on index investing, large-cap stocks, and understand when to invest in discounted indices for safer investments.
• 🔍 For those earning 50,000 to 75,000, take advantage of bulk buying opportunities in undervalued assets to generate higher returns.
• 💸 Generate cash flow assets such as dividend stocks or real estate to ensure reliable income streams.
• 📈 Take on more risk in your portfolio to grow it faster, but balance with safe investments for stability.
• 🏡 For those earning more than 1 lakh, diversify internationally and consider real estate investments to further diversify and protect your portfolio.

Q & A

Why is risk mitigation important regardless of salary level?

Risk mitigation is crucial because it helps protect your investments from unforeseen losses. One way to hedge risk is by purchasing insurance.

What are the two central reasons Mr. Nikhil Kamat invests only 50% of his wealth in equities?

The two reasons are: 1) His core business, Zerodha, profits when the equity market is up, so he diversifies to mitigate risk. 2) As portfolios grow larger, wealth protection becomes a priority.

What should be the primary goal for someone with a salary between 25,000 and 35,000 INR?

The primary goal should be wealth preservation in the stock market while focusing on increasing active income through their primary job.

How should someone with a salary of 25,000 INR invest their money?

They should save 20% of their salary, which is 5,000 INR, and aim for a CAGR of 13% over 30 years, focusing on index investing and large-cap stocks available at discounts.

Why is index investing considered safe?

Index investing is considered safe because it involves investing in a collection of stable assets, such as the Nifty 50 Index or ITBees, which are less likely to lose value significantly.

What strategy should be followed to make 13-14% returns in the stock market?

The strategy includes investing in discounted indexes, buying large-cap stocks at a discount, and allocating a small portion to volatile assets like small and mid-cap stocks.

What additional steps should someone with a salary between 50,000 and 75,000 INR take when investing?

They should take advantage of bulk investing opportunities, generate cash flow assets like dividend stocks, and add more risk to their portfolio for potential higher returns.

What are bulk investing opportunities?

Bulk investing opportunities involve investing a significant amount of money in assets available at a discount, such as Nifty IT or HDFC Bank when they are undervalued.

Why is international diversification important for someone with a salary above 1 lakh INR?

International diversification is important to mitigate risks associated with economic shifts and volatility in the domestic market, ensuring a balanced and secure portfolio.

How should someone with a salary above 1 lakh INR segment their portfolio?

They should create segments for different goals, such as retirement planning with stable large-cap stocks and bonds, and growth with diversified international investments and real estate.

Outlines

00:00

📈 Introduction to Salary-Based Investing

The video begins with a greeting and introduces the topic of investing salaries in the stock market. The presenter explains that different salary levels require different investing styles and emphasizes the importance of risk mitigation. The segment also introduces Ditto Insurance as the video sponsor and highlights their services and hiring opportunities.

05:02

🧑‍💼 Case Study: Nikhil Kamath's Investment Strategy

The presenter discusses Nikhil Kamath, co-founder of Zerodha, and his investment strategy. Kamath invests only 50% of his wealth in equities, with the rest in debt, gold, and real estate. The presenter explains that this is due to risk mitigation and wealth protection, highlighting the importance of personalized investment strategies based on individual circumstances.

10:05

💼 Investing Strategy for 25K-35K Salary Range

The video outlines an investment strategy for those earning between 25K and 35K. It recommends saving 20% of the salary and targeting a 13% annual growth rate through index investing and large-cap stocks. The emphasis is on wealth preservation and focusing on increasing active income rather than seeking high returns from the stock market.

15:07

📊 Investing Strategy for 50K-75K Salary Range

For those earning between 50K and 75K, the video suggests taking advantage of bulk investing opportunities and generating cash flow assets like dividend stocks. It advises adding a bit more risk to the portfolio to achieve higher growth and maintaining a longer investment horizon to manage volatility.

20:11

💰 Investing Strategy for 1 Lakh+ Salary Range

The final segment addresses those earning over 1 lakh. It recommends segmenting the portfolio for different goals, such as retirement planning and international diversification. The presenter also emphasizes the importance of real estate investment for asset class diversification and maintaining a well-rounded investment strategy.

Keywords

💡Investing Style

Investing style refers to the strategy or approach an individual adopts when allocating their finances to investments. In the video, the speaker discusses different investing styles based on various salary levels, emphasizing the importance of aligning investment strategies with one's income and financial goals.

💡Risk Mitigation

Risk mitigation is the process of identifying potential risks and taking steps to reduce their impact or likelihood. The video highlights the importance of risk mitigation in investment, suggesting strategies such as buying insurance and diversifying investments to hedge against financial risks.

💡Insurance

Insurance is a risk management tool used to provide financial protection against future uncertainties. The video mentions Ditto Insurance as an example of a platform for purchasing insurance, indicating that insurance is a component of a comprehensive financial plan.

💡Portfolio

A portfolio refers to a collection of financial assets such as stocks, bonds, and cash equivalents held by an investor. The video discusses the importance of building and managing a portfolio to generate wealth, with different strategies for different salary levels.

💡Equities

Equities represent ownership interests in companies, typically in the form of stocks. The speaker uses the example of Mr. Nikhil Kamath's investment in equities to illustrate the concept of personalized investing and risk diversification.

💡Debt

Debt, in the context of investing, refers to fixed-income securities such as bonds or fixed deposits. The video explains that a balanced portfolio should include a mix of debt instruments to ensure stability and risk mitigation.

💡Index Investing

Index investing involves buying a collection of stocks or bonds that represent a particular market index, aiming to replicate the performance of that index. The video suggests index investing as a safe and effective strategy for wealth accumulation, especially for those with lower salaries.

💡Large Cap Stocks

Large cap stocks refer to shares in companies with a market capitalization of over $10 billion, typically considered stable and less risky. The video advises investing in large cap stocks, particularly when they are available at a discount, as a means to achieve wealth preservation.

💡Volatile Assets

Volatile assets are investments that experience significant price fluctuations and carry higher risk. The script mentions small cap and mid-cap stocks as examples of volatile assets that can potentially offer higher returns but require a longer investment horizon to manage risks.

💡CAGR (Compound Annual Growth Rate)

CAGR is the rate of return that would be required for an investment to grow from its initial to its final value over a specified time period, compounded annually. The video uses CAGR as a benchmark for expected returns on investments at different salary levels.

💡Asset Class Diversification

Asset class diversification is the strategy of spreading investments across different types of assets, such as stocks, bonds, and real estate, to reduce risk and enhance returns. The video emphasizes the importance of including real estate in addition to stocks for those with higher incomes.

Highlights

Understanding how to invest your salary in the stock market.

Investing styles differ based on salary levels.

Importance of risk mitigation and buying insurance.

Case study on Mr. Nikhil Kamath, co-founder of Zerodha, and his investment strategy.

Mr. Kamath's portfolio: 50% equities, 40% debt, 5% real estate, 2% gold.

The need for personalized investment strategies.

Focus on increasing active income at lower salary levels.

Index investing as a safer investment strategy.

Investing in large-cap stocks and their benefits.

The significance of bulk investing opportunities at higher salary levels.

Creating cash flow assets through dividends and real estate.

Adding risk to the portfolio to achieve higher returns.

The importance of international diversification.

Real estate investment as a diversification strategy.

Understanding the concept of generating alpha through smart investing.

Different salary levels and corresponding investment strategies.

The role of financial acumen in successful investing.

The impact of inflation on long-term investment returns.

Strategies for generating 13-14% CAGR at various salary levels.

The importance of wealth preservation in investment planning.

Transcripts

Hi, everyone. Welcome to today's video.

So in today's video, I'm going to help you

understand how to invest your salary in the stock market.

Now, if you are sitting on a salary of 25,000, then your investing style might

differ drastically compared to a person who makes more than 1 Lakh rupee a month.

So what investing style should you adopt as per different salary levels?

I'm going to help you understand in very simple, easy to understand language.

More importantly, I'm going to help you

understand how you can generate real wealth and how much real wealth can you

generate at each salary levels if you follow this investment plan.

Now, before jumping into the core of the video, please understand that irrespective

of your salary level, risk mitigation is extremely critical and important.

Now, one way of hedging your risk is to buy insurance.

Which brings us to the sponsors of today's video, which is Ditto Insurance.

They are a wonderful platform for buying insurance.

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and comment box in case you are interested in this opportunity.

With that said, let's move over to the main video.

Let's jump right in.

Before discussing each salary level, let

me first and foremost discuss a very interesting case study about Mr.

Nikhil Kamat. Mr.

Nikhil Kamath is the co founder of

Zerodha, and this is how he invests his money.

Now, when this data was released in the

market, many people started commenting that, you know what, Mr.

Nikhil Kamat is the owner of Zerodha, and it's a big equity investment platform.

He has a lot of data on equity investors,

and he himself is investing how much money in equities.

He's only investing 50 % of his money in equities.

40 % are debt, that means fixed deposits.

So he has done fixed deposits so much and

government bonds, and gold only 2 % and real estate, 5 %.

So does it make sense?

That person who deals in the equity stock market almost every single day, he's

investing only 50 % of his wealth in equity market.

So why is it that people like you and me

should invest more money in the equity market?

This is a very important question.

So let me help you understand that it will

drive a very important point home that investing is a very personalized subject.

So here is my understanding of why Mr.

Nikhil is investing only 50 % of his money in equities.

Why not more? So there are two central reasons.

So first and foremost, his core business is what?

His core business is Zerodha.

So when would Zerodha's profits go up?

Well, Zerodha's profit would go up when the equity market is running.

Because when the equity market runs, a lot of investors jump in, they start doing

F&O, they start doing trading, they start doing investing, bus tree.

Let us just invest, invest, invest.

So when will Zerodha make money?

Well, when the equity market goes up. Now, if Mr.

Nikhil Kamat is investing his money in equities, and if a situation comes when

the profits of Zerodha starts going and also his wealth in the market starts going

down, so it might become a problematic scenario for him.

So basically, because his core business, which is Zerodha, has a direct correlation

to stocks, so what he needs to do is that he needs to create an inversion.

There is a direct correlation between Zerodha and equities.

But in terms of Zerodha and debt, there is an inverse relationship.

So investing less money in equity is a risk mitigation strategy for him.

It's not as if that he does not believe in equity.

So that is my understanding.

Second key point is that as your portfolio grows, from a small portfolio to a bigger

portfolio to a really big portfolio, your goal also changes.

For example, if you're sitting on a

massive portfolio, then a part of it needs to be protected.

So wealth protection becomes a very critical goal for almost any investor,

especially when you're setting on a huge portfolio.

So these are two central points why I think that Mr.

Nikhil Kamat invests only 50 % of his money in equities.

I hope you would agree with this viewpoint.

And also, please press the like button so

that these type of videos reach out to more people.

I teach stuff in a highly conceptual manner.

I also give you view logic, rationale behind it.

Of course, you can agree, disagree with me.

Also, I know that you haven't pressed the

like button, so please press it and we will continue the video.

And now, let me start discussing four

salary points or four salary levels as to how you should be investing your money.

So the first salary level might be a salary range of 25, 30K.

This might be happening if you are in the

middle of your career or if you have just started your career.

So you might not be getting paid a lot.

Now, if your salary falls below 25K, should you think more about investing?

Yes, you can apply some of the principles that I'm talking in the video.

But the first part that I'm going to

discuss is how to invest a salary of 25 to 35K.

Now, the first point is that many of you

would think that 25, 35K is a very low salary level.

It's not going to be I will not be able to make any savings only.

So why even bother about investing?

Now, of course, that can happen depending on your expenses level.

I can't comment on that.

But to a general investor, I would always

recommend that please save 10 to 20 % of your salary.

I am a big proponent of frugal living, so

I will work with the assumption that you are able to save 20 % of your salary.

That becomes your discretionary level of income that you can invest.

Again, if your salary is less than 25K,

now, many comments might come that my salary is $5,000 and 10,000, then don't

worry, at some stage it is going to increase.

Then come back to this video and apply this plan.

Point number 1 is that I will assume that

you will be able to save 20 % of your salary at 25K levels.

Now, 20 % of 25,000 is 5,000.

That becomes your investable level.

Now again, please don't complicate the video by bringing taxation.

I'm trying to simplify the video, not complicate the video for you.

So let's work with the assumption that at

25K level, you will be able to invest 5,000 salary.

Now, our goal at 25K level easily becomes, especially when you're starting out in the

stock market, is to grow your portfolio at a CAGR of 13 %.

Now, how to achieve that 13 % gains?

I will talk about it in a minute.

Many of you would say that you have done 13 % gain.

Yes.

So please take a look that I am sitting on a big portfolio that if I can get 14, 15 %

returns on my mutual funds, stocks, my stock's worth more than that.

So I can definitely tell you that by

adopting the following investing style, you will be able to make 13 % returns.

So you are investing 5,000 at a CAGR of 13 % for a period of 30 years because you

might be young, you might be 25, 30 years old, making 25K.

So at least 60 years of age, you will be investing your money.

So how much is the total corpus?

So the total corpus comes out to be 2.21 cr.

So this is the eventual money that you will have.

Now, many of you might say, 2.21 CR is what I will get after 30 years.

So what is the value of that money that I will have now?

Inflation will eat into that money, 100 % agree.

But see, what happens is that, for example, if this year your salary is

25,000, probably next year there will be an increment, it will be 30,000.

Then year after that there will be another increment, it might become 35,000.

I'm assuming in this model that your increase in salary will offset inflation.

So this 2.21 CR is the real wealth that

you can generate with a salary level of 25,000 as of today.

So okay, if you are at a salary range of

25,000 to 35,000, then basically, the target that we are assuming is that if

you're making a 13, 14 % return, then you will be setting on a healthy portfolio.

Now, here, what is the primary goal that you have?

Well, your primary goal, first and

foremost, is wealth preservation in the stock market.

This is a critical goal for you. Why?

Because majority of your time right now, when you are at 25,000,

35,000 salary range, should be to actually increase your active income.

So rather than spending crazy amount of

time understanding which stocks to buy, which stocks not to buy, et cetera.

The strategy that you should follow in the

stock market is that you make 13, 14 % returns.

That is very doable, that is sensible for you.

Plus, invest the time in terms of doing your primary job.

If you're a software engineer, if you're a

digital marketer, whatever that job is, increase your salary level.

That is your primary goal right now.

Your primary goal is not to make crazy returns from the stock market.

So how you can make 13, 14 % returns?

For this, I will tell you three very simple points.

First and foremost, please learn how to do index investing.

Now, there are different types of indexes.

For example, there is Nifty 50 Index, which is the collection of top 50 stocks.

There is something called as ITBees.

So this is the collection of IT stocks.

Similarly, there is a PSU Bank Index.

Similarly, there is Nifty Bank.

So when you go and invest in Index, what

ends up happening is that it is very unlikely, please notice the word unlikely,

it is very, very unlikely that you are going to lose your money.

Why?

Because these are some of the most stable assets, so to say.

For example, if you buy Nifty 50 or

ITbees, it will get crushed by 50, 60 % all of a sudden.

That can happen in a bear run when some

major year crisis happens like COVID, 2008, et cetera.

So leaving those exceptions aside, in general circumstances, index investing is

considered to be one of the safest form of investing in the stock market.

Please notice the word, safest form of investing in the stock market.

Otherwise, there's only FD and no option.

Now comes the more important and interesting question here is that should

we invest our salary in whatever index we see?

The short answer is no.

It's not as if that nifty 50, you just continue to invest whatever levels.

No, right now, for example, take a look at this chart.

This shows that Nifty 50 right now is at its record levels.

Now, if you go and invest your money right now in Nifty 50, should you be doing it?

In a lot, especially in bulk, the answer is no.

On the flip side, if you pick Nifty IT, it

is trading roughly 25 %, 30 % discount, should you pick that index?

The short answer is yes.

So this is the first critical point that you should understand that invest in

index, but primarily pick indexes that are somewhat undervalued.

Then comes the second second key question

that you should go ahead and invest in a large cap stocks.

Now, what are large cap stocks?

These are blue chip stocks, which you keep listening to.

Hindustan Unilever, HDFC Bank, Bajaj Finance, this that.

Now, here what happens?

Now, again, these companies have clean management.

There is no major problem going on.

Now, as long as you are getting these

large cap stocks at a discount, you should go ahead and buy it.

No problem there. So for example, take a look at HDFC Bank.

Now, HDFC Bank, is it overvalued, undervalued?

You will not be able to analyze it whether it is overvalued or undervalued.

But you can run basic understanding.

For example, if you learn economics,

finance, stock markets from my videos every day, hardly 20 minutes of investment

every single day, you will understand all these techniques.

For example, this is a channel trading technique.

I'd applied this on Nifty 50, bought Nifty

50 in bulk at 15,500 levels, applied it in Hindustan Unilever, applied it in a bunch

of stocks, and now I'm sitting on Handsome Profits.

Now, from that perspective, HDFC Bank, we

know that it is a fundamentally good stock.

And one could argue that if you take a

look at from a long term channel perspective, why are we picking long term?

Because see, right now, when you're at

25,000, 35,000 salary level, what is the goal?

The goal is to increase your salary first.

You don't have time to keep rotating your portfolio, this, that.

But yes, if I make a video, you get to see

that, it is at somewhat of an undervalued level.

Let's understand his rationale.

So the rationale that he's giving is that

from a long term perspective, if you take a look, 2018, up until now, this is the

channel that HDFC Bank has followed, and it has broken this channel as of now.

So this was discounted here definitely, and here also it is discounted.

Then one could argue that it is discounted.

No, it's not as if that you just need to

trust me and buy the stocks, do your due diligence after this.

But at least I'm explaining you some funda, some logic there.

I'm not just doing this that, yeah, this is undervalued, yeah, this is overvalued.

No, I'm giving you some logic there.

Similarly, there has been so much noise

made on DMart said, Bro, I don't know what happened.

Dmart is not going to stay alive only

after five years because it missed analysts' expectation on results.

So it's not like that.

So whenever you see certain stocks trading outside its channel, if you understand it

that, Okay, this is a large cap, a blue chip type of a company.

Yes, there is an understanding why it is trading at a discount.

You should buy these large cap stocks.

So the first two points are that buy index

at a discount, buy large caps at a discount.

So this way you will be able to generate an above average market return.

For example, if Nifty is growing at 12 %,

which it typically grows at 12 %, then you might be able to make 13 %.

Now comes the final bit that when it comes

to volatile assets, for example, I have been saying for a while now that small

caps and midcaps, those stocks, they are going to outperform the market.

Why is that? Because studies tell us that during a bull

run, if the Nifty grows by 100 points, then small caps grow by 200 points.

That is what history tells us.

Now, of course, this is not as if that is 100 % we followed.

But the chances are that volatile assets...

Volatile assets means slightly risky assets.

So small cap, mid gaps are riskier than large caps.

So these assets should also be added on your portfolio.

So very quickly, let's say that you have

to invest 1 lakh in the stock market, and if your salary range is 25, 35,000, then

how much of it should go to index versus large cap versus volatile?

Then I would give 80 % wealth preservation and 20 % growth.

So 20 % growth will come from here, this volatile bit, and 80 % wealth preservation

depends on opportunities that are there in the market.

So if you just simply follow this

strategy, then this is a low risk strategy.

It allows you to grow your wealth also.

And also you don't need to sit and keep tracking markets every single day.

Please note the final point that when I

say that you don't need to invest crazy amount of time in the stock market, I mean

that it's not as if you're lying on your computer.

So that is not the point.

But you will still have to do basic research.

You still have to understand where your money is going.

You have to develop that financial acumen.

I hope this first level is clear to everyone.

By following this simple strategy, you will be able to make 13, 14 % CAGR.

If you take a 3,2,5 year horizon.

Now, let's discuss the second salary level, which is between 50,000 to 75,000,

you might be like around 30, you might be making this amount of money.

Again, you get a good 30 year investment period.

We will assume again that you will at

least be able to save 20, 25 % of the money.

The worst case that we are looking here is that if we are assuming a salary of 60,000

and if we pick 20 % of it, so let's fill it up to 12,000.

Here, if you are investing 12,000 at an expected return of 13 % for a period of 30

years, then your total corpus becomes 5.3 CR as of today.

Now, why am I saying as of today?

Simply because of the viewpoint that, again, I assume that if you're 30, making

a salary of 60,000, then your salary will grow at least at inflation level.

Therefore, I'm not accounting for inflation here.

I hope that point is clear.

Now, I can create very complicated financial models.

It does not work.

So doing more math will drive the point home.

Okay, so if you are in this salary range,

there are three additional critical points that you should remember.

Additional because those old ones will be applicable.

But three additional points you should remember.

So first and foremost is that you are playing with good amount of money.

If you are investing

12, 15,000 a month, or if that is the capacity at which you can invest, then you

should definitely take advantage of bulk investing opportunities.

Now, what are bulk investing opportunities?

For example, right now, I see a bulk investing opportunity in Nifty IT.

I see another bulk investing opportunity in HDFC Bank.

I see another bulk investing opportunity in something like SBI cards.

I see another bulk opportunity in something like page industries.

Why? That video will be very long.

So I will link one of my videos down.

You can go and check it where I have discussed all these stocks.

So if you are at this salary range of 50-

75K, then you are putting enough amount of money in the stock market.

Additionally, your emergency expenses might be sorted out.

You might be okay in terms of investing

your money in a slightly longer term perspective.

Let's say that if you are getting a good, safe asset.

Now, if you are buying Nifty IT, right now it is trading at a 25 % discount.

Now, it might happen that it goes sideways for a little bit.

But is Nifty IT a high risk asset?

Now high risk means what?

That, for example, if starting tomorrow, Nifty corrects by 10 %,

do you see Nifty IT correcting by 10 % more?

I doubt it simply because it is already

available at a 25 % discount, but Nifty is already at its all time high.

Therefore, this is a lower risk asset which is available at a discount.

So whenever you have the opportunity, I and if you have some cash lying around,

you can take advantage of these bulk buying opportunities.

By taking advantage of bulk buying

opportunities is how you generate an additional alpha.

What is the meaning of additional alpha?

Well, historically speaking, Nifty 50 gives a CAGR of roughly 12 %.

But if you are able to grow your portfolio at 16 %, that's additional 4 %.

Now you'll say, What difference does 4% create?

So do the math here. If 25,000 is invested monthly in the stock

market for a period of 30 years at 12 %, it comes out to be roughly 8.

Something CR.

But if the only number that changes on

that math is 16 % return, your portfolio become 22.

X cr. So yes, it looks only 4 % difference, but

that is the difference between wealthy and ultra wealthy.

It's almost three times your portfolio.

So you should definitely work a little bit

smarter in terms of generating this 16 % return.

Now, how will you generate this 16 % return?

Well, by doing some amount of bulk

investing on safe assets from time to time.

Now, the second critical point that you

should remember is that you should generate some cash flow assets.

Now, what are cash flows assets?

So one would be dividend stocks because this money gets back to you.

So you will get some more money to invest.

So this is one.

Second key point is that you go outside the equity asset class.

For example, it could be debt,

it could be real estate if you are finding some good deals.

So it gives you reliable cash flows.

For example, you know that you are going

to get FD money at the end of the year, or you know that your rent is coming out to

be like 20, 25,000 from a flat that you have purchased.

So the point is that once you own these cash flow assets, taking advantage of

these bulk buying opportunity becomes much easier.

So please focus on that.

Third and finally is that you need to add

a little bit more risk on your portfolio at this stage.

Here, according to me, your goal should be to grow your portfolio.

And one of the fastest way of growing your portfolio is to take more sensible risk.

For example, in the previous section when I was discussing 25,000, 35,000 salary, I

said that go 80 20 on safe versus volatile asset.

Here it should be 75, 25 of your equity investment.

Now, if you are fairly young, then you can play around with this number.

It could be 60, 40 or whatever you choose to decide, whatever that comfort level is.

But please understand the point that as

you add more units of risk on your portfolio, it becomes critical for you to

have a slightly longer horizon on your portfolio.

Now, please don't say that, I purchase small gaps and then it fell by 10 %.

Small gaps can fall by 10, 15, 20 % very quickly.

So please don't get stressed by all that.

And the only reason why you will not get stressed by all this is that if you have a

little bit of horizon, I do not need the money forr 3-4 years.

So therefore, I'm cool with it.

So if that viewpoint is there, then good

enough, then this is an investment plan that will work for you wonderfully well.

So okay, so if you are making a salary of

more than 1 lakh and if you are investing somewhere around, let's say, 25,000 ruppey

monthly, then I think you're already at that very good investing level.

And here you need to understand a few more critical points.

So before discussing those two, three

critical points, let's do the fun exercise and let's see how much money you can make.

So if you are making 1 Lakh plus, so let's assume that you are doing a monthly

investment of 25K, you can grow your portfolio by 15 %.

How? I will talk about it in a minute.

And if you see then you are setting on a portfolio of 17.5 CR.

So this is a fairly substantial portfolio.

So what are additional points that you

should remember in addition to section 1, section 2 that I spoke about?

So there are three more critical points that you should remember.

So at 1 Lakh plus, first level, you need to segment your portfolio.

For example, this is your portfolio.

Now, create different segments out of it.

For example, one segment of your portfolio could be retirement planning portfolio.

Now, what is the meaning of retirement planning?

That, for example, if you are investing, let's say 25,000, then you are probably

investing, let's say 8,000 per month for your retirement plan.

So what type of stocks should you purchase for retirement?

So these should be fairly large cap, stable stocks.

You can do index investing.

All that stuff makes what?

It caters to your retirement planning.

So this is not for growth growth.

This is for stability.

This is for preserving your wealth in a way.

Also, you can go to bond investing.

So have a little bit of diversification.

But why should you do bond investing given the current climate?

Well, you should do bond investing in the current climate for retirement planning.

Bond say, you will not be able to preserve your actual wealth also.

So bond is okay in terms of preserving your wealth up to a certain limit, but

inflation, adjusted return, you will not get.

So this is point 1.

Point 2 is that you need to diversify internationally also.

You are putting in good amount of money.

So at this stage, start thinking about

that I will put 20 % of my money that I'm investing in equities into US stocks.

Now, why is it critical that you have international diversification?

Well, it matters from a wide range of reasons.

Right now, I can have that concentrated

portfolio versus diversified portfolio debate.

See, the world is getting more and more volatile.

It is given that economic shifts are happening.

Countries are moving away from US dollar.

There will be a lot of pain involved.

You need to be a diversified investor if you're coming from my school of thought.

I'm a highly diversified investor.

I always encourage diversified investing.

The thing there is very simple that, see,

as retail investors, we don't know what the internality of things are.

For example, you guys go and read annual reports.

You guys go and read con calls.

You know that company is not telling the truth, right?

Half of the accounts are like, for example, take a look at Byjus.

Take a look at a bunch of other listed companies also.

There is no transparency, clarity, right?

Similarly, a lot of people are saying that India's GDP is growing at 5 %.

Do you know how much of that is fiscally deficit sponsored?

So India itself is running a fiscal deficit of five years.

All these small, small points are there which you might miss.

So I'm not saying that this is good or bad.

All I'm simply telling you is that, see,

being diversified is a very critical issue.

You must understand it.

So from that respect, it is critical that you do international diversification also.

I will at least recommend that you get started with 20 %.

Over time, I would diversify 40 % of my portfolio outside India.

Not because I do not trust the India growth story.

I'm very much 60 % I'll be invested in India.

So I do trust the Indian growth story, but

at my portfolio size, I need to be highly diversified.

On that note, the final point is that you

must have a real estate investment also at this stage.

1 Lakh plus income level is a good enough

income level where you can start thinking about purchasing real estate.

It gives you what? It gives you asset class diversification.

Asset class means stock becomes asset class.

Similarly, real estate becomes an asset class.

The biggest problem in real estate is that it is an illiquid asset.

Illiquid means that it is not very easy to sell off.

But the point is that by this stage, your stock portfolio would already get built.

From that perspective, you can afford that illiquidity, so to say.

Many people say, Real Estate doesn't have return.

Well, the problem is that people do not know how to buy real estate.

There is a post that I've done on LinkedIn.

I will link it in the description and comment box.

You can go and read it.

Almost every single property that I've purchased, it's a cash flow property.

I'm making a rental yield of more than 5 %.

So it's not as if that you don't make money from real estate.

You just have to scout for good deals.

So I hope you enjoy this conversation.

It was a slightly deeper conversation.

Also, check out this video if you are investing in mutual funds, then this video

will give you clarity as to how to design your mutual fund portfolio.

Thank you so much for watching and I'll see you soon.