How to invest in stock markets? Here is how simple it is, watch video

How to invest in stock markets? If you're someone who wishes to invest in equity markets, but are scared of taking the plunge over the uncertainty of the process and the risk involved, then you should know what renowned investor Warren Buffett had to say about it. The Oracle of Omaha has long been saying 'it's impossible to lose money in the stock market'. All you have to do is trust his words and understand his idea of investing. To explain the procedure, Financial Literacy Expert Varun Malhotra, who is also a keen Warren Buffett follower, shed light on the simplest way of investing in the stock market  in an interview with Zee Business. This will not only help you gain wealth at a faster than usual rate, but also secure your financial goals.
 
Malhotra says that there are two types of risk. One is volatility, and the other is the actual risk of losing money. He explains this by saying that investing in a particular company does involve risks, because it may or may not go out of business however, if one invests in a basket of fifty companies, the risk involved reduces to a great extent.
 
"If you are investing in a very passive way, which is if you are investing in the Gross Domestic Product (GDP) of the country, you're always safe. To explain, if India's GDP is $2.5 trillion, then out of this $2.5 trillion, about $1.25 to $1.5 trillion would belong to top fifty companies. These companies are what Sensex and Nifty are made of. Now, if you invest in these companies, you're always safe, because nothing is going to happen to GDP. As and when GDP increases, your invested money too will do so," said Malhotra.

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Explaining the difference between trading and investing, he said the word investment by definition means investing in something and believing in its future cash flow, while trading involves speculating on the prices without any fundamental backing of a rise or fall in the prices.

To really put the first time investor at ease, he further suggested how much a 20-year, 30-year and 40-year old individual needs to invest each month to kick off and continue with his or her investment journey. Interestingly, he reveals that all a 20-year old needs is Rs 2500 each month to secure his or her future and retire as a crorepati.

The expert also explained why investing in property is not always a good option.