My simple way of growing capital base leading to Wealth creationThis is how I grow my capital base leading to wealth creation
Note: This post is meant specifically for retail traders and or investors like me who may not have or may not have and or deploy a significant part or entire capital to the stock market. So please read the post with this in mind.
I am sharing my way of doing things or what I would do to better manage my available capital and progressively grow and eventually compound it.
One of the better ways to manage gains and compound wealth is to invest gains made back into the markets in the shares of companies that have growth potential and or offer good dividend yield. Sometimes such companies are also known as those that belong to the Sunrise sectors.
This may not be entirely applicable to those who trade for a living.
For example, I have of late been investing my gains in the following:
Burger King
Westlife Development
EI Hotels
Zomato
IRCTC
Idea
and would like to add:
NTPC
Powergrid
BPCL
REC Ltd
PFC Ltd
Pidilite
Jubilant Food
Dmart
And there could be many more
to the list.
Some of the above are trading around good price levels so even more attractive than others.
There may be several more names but my gains are not infinite at the moment and I "trade for a living" in reality so I have to first take care of my monthly outgoings and then the remainder gains are only eligible for reinvestment. This sounds very easy but it is not so as one can never say that trade may always go in the intended direction right from the word go. It is quite possible that the trade may hit my SL and then go in the intended direction and I may not be on board. These uncertainties are part of the life of a trader whereas an investor may be able to wait for the price to rebound or may have spare funds to deploy at lower levels.
If you believe that you like this approach, you may follow these names or find the ones that you feel may be the future leaders!
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Another approach that I prefer to follow is to do content-based trading --- where there you need to identify a scrip in which you would like to invest. Preferably for positional or long term.
Plan trades such that you can buy at least 1 share of the chosen scrip once the share price moves in your direction. This will help you track the share in a better manner and add the quantity that you are comfortable with as soon as the price starts going up.
For this to be successful, the share price should ideally be between 200-500 and the daily movement or the volatility should be good enough for the prices to generate a modest to decent return in INR terms.
This is meant specifically for traders/investors with low capital or low-risk appetite. I got this idea last year when going was extremely hard for many of my friends and acquaintances. Several of them asked me to help them find a job - when there were no jobs, the only thing that I could suggest was this and I taught them how with the help of technical analysis, one can attempt to make two ends meet and put food on the table for the family.
I had at that time guided them to follow the above approach with very limited capital deployed. This helped many to fund the weekly needs without taking on too much stress on the head and in the heart. I was very satisfied that my thoughts and suggestions were effectively put to use by many of them and they were able to relieve their family members of worries and anxieties as well.
On the auspicious day of Diwali and the New Samvat Year, I thought of sharing the above-mentioned thoughts that I and a few others have put into action.
I wish you and your loved ones brighter and sparkling times ahead!
🙏🙏
Umesh
5-11-21
