Are you ready to trade in the stock market? Part-2

First of all, my sincere apologies for writing the post after a long time.
I have been preoccupied with my daily work and trading myself.

So I guess by now you would have filled the answers to questions that I asked in the first part of this blog.

Let us assume that your answers are like this:

Questions	Your answer (Fill your answers)
My risk appetite	high-risk appetite
Goal for trading	Buying Royal Enfield Desert Storm (₹2.5Lacs)
Current financial status	No liabilities, no dependents, No credit-card dues.
My initial trading capital	₹100,000
The money I am willing to lose in a single trade(Drawdown)	₹5000(5%) maximum
The time I can spend each day analyzing the chart patterns and planning my next trade	2 hours
My monthly return target	3-4%( This is a fairly optimistic return)
The time it will take to achieve my goal based on my projected return	₹2.5lac/3000 per month ~ 84 Months ( Cost of bike/ profit per month) excluding taxes and brokerage charges.

Good work there. So now, should I start trading? WAIT WAIT WAIT!!! We are first going to design a portfolio( a fancy term for deciding where all to invest/trade) for you.

We will distribute your capital into what is called a CORE-SATELLITE PORTFOLIO.
Assuming you have Rs.100,000 as the initial capital for trade, we are not going to use all the money to do trading. 
This amount will be split into two parts, in the ratio of 60 : 40. The 60% of capital which is Rs.60,000/- will be invested for a long term period in fundamentally strong companies(Large Caps, Blue Chips, Large Cap focused Mutual Funds, etc.). This 60% of the investment will make up the core of the portfolio. One can expect the core portfolio to grow at a rate of at least 12% to 15% CAGR year on year basis.

The balance 40% of the amount, which is Rs.40,000/- will be utilized for active short term trading on equity, futures, and options. The Satellite portfolio can be expected to yield at least 10% to 12% absolute return on a yearly basis.

Don't worry if the terms like Large Caps, Blue chips, equity, futures, options, etc. sound alien to you.

We will talk about them as we move forward in our investment/trading journey.

Simple Core Satellite Portfolio

There is also an advanced version of the Core-Satellite portfolio model.

For now, we will focus on the simple Core-Satellite portfolio and discuss the advanced Core-Satellite portfolio in a separate blog.

Let us begin by focusing on building our Core portfolio first. Spoiler alert!!! NO trading here.

As we are totally new to the stock market, we will not jump into buying stocks. We will begin by buying either low-cost index funds or if you are comfortable then we will buy stocks of  Large Cap companies.

I request you to read about Nifty and Sensex and understand what do these terms mean. Feel free to post your questions if you have any doubts.

Also, open a trading and DEMAT account with a discount broker such as Zerodha or Upstox 

Their brokerage and annual charges are extremely low compared to traditional brokers and their platform is far superior and user friendly because they operate like Tech companies.

In the next blog, we will learn how to buy index funds and/or stocks of large-cap companies to start building our Core-portfolio.

Disclaimer: I am NOT a SEBI registered advisor. All my blog posts are written for educational purposes only and do not constitute specific financial, trading, or investment advice. The blog is intended to provide educational information only and does not attempt to give you advice that relates to your specific circumstances. You should discuss your specific requirements and situation with a qualified financial adviser.