Thanks for your help till now. I am a regular SIP investor in mutual funds from last 3-4 years and plan to carry on the same in future also. I wanted to check, should I diversify by investing in stocks also or if I am doing both stocks and MF then it is not a diversification. I have some extra cash and wanted to make the best use of it. In stocks as a newbie was thinking of starting with large cap stocks(with highest market cap) initially and then move to others once I have more knowledge in this area.
Any feedback from you will be of great help
Vini-It is great to know that you considered equity as an asset class to create a wealth. But when you say that you want to test direct equity for DIVERSIFICATION, I don’t agree on that front. Because in some way or another way, the existing funds and direct equity investment may create an overlap. This to much overlap is not a good diversification strategy. Second thing is, investing in direct equity needs a better understanding of company management, business, balance sheet and future growth of company. If you have time and patience to do all these activities on YOUR OWN (I am stressing here OWN, because I firmly believe that never follow any HOT TIPS or expert advice), then my first advice is to LEARN…LEARN…LEARN.
Third and important point I thought to mention is, experts of long-term equity investors believe that you need around Rs.30-40 lakh cash to invest wisely in all sectors and create a good portfolio (I never invest directly into stocks and still learning all these fundamental analysis).
Now you have to take the decisions based on the notes I shared with you. I never underestimate the power of direct equity, but underestimate the power of concentration, learning and review, people fail to do in equity investment.
Thanks Basu for your detailed explanation. I think I will stick to augmenting my existing SIPs and gather more info on the stocks for now