Like most of you, I have heard and read about Stock Market or Share Market (one and the same thing) but never dared to touch it, probably for two reasons 1) I spent all my income and 2) I didn’t know how to do it and did not bother either. But now, that I have changed my priorities, I think the best investment you can make is investment in equity (shares or stocks). In this writing I will share my experience buying my first stock (share) which I hope will pay off in the long run. I will try to keep everything as simple as possible and for that matter may sometimes choose to write words or sentences that may be technically incorrect, to save you from complex jargons.

Read: How to Buy Your First Share?

It was in September last year (2023) I bought my first stock. To invest in stocks, you need a Demat Account. There are many Broker apps in India through which you can open your Demat Account. Most popular ones are Groww, Angel One and Zerodha. I wouldn’t recommend Zerodha because many have faced losses due to their frequent server issues.

I chose Groww for buying my first stock, because its interface was clean and simple and there was no annual fees. The process for signing up is simple but not as simple and easy as opening an Instagram account. If you have not yet decided which Broker to go with then here is a simple guide for you.

to Buy or not to Buy – PSU Stocks

Only buy something that you’d be perfectly happy to hold if the Stock Market shut down for 10 years. – Warren Buffett

PSU Memes circulating on the Internet

After opening my Demat Account, it was time to buy my first stock. I was super excited as this was my first step towards Financial Freedom but then the million dollar question – which stock to buy?

One of my friends who traded in stocks, recommended a few PSU stocks. PSU stands for Public Sector Undertaking and are companies owned by Government of India.

At the time PSU stocks especially railway and defense stocks were in flavor and trending big time. The railway stocks like RVNL, IRFC, Titagarh and even IRCTC were going up like rockets.

I almost bought IRFC by looking at how much the price has gone up in the past few months (a very bad and wrong way to pick a stock) but somehow I couldn’t make up my mind buying my first stock.

Although I had Zero experience in Stock Market, I remember something that Warren Buffet said, that we should buy stocks if only we can hold it for life. With the railway stocks it was quick money but I wasn’t convinced I can hold the stock for long time.

I did not like PSU stocks because they are Govt. owned and is dependent on the regulations and decisions of the Govt and most importantly, on the Govt itself. If the Govt change, the horoscope of the Stock will change too. This is called Cyclicality and these stocks are called Cyclical stocks. Cyclical stocks are those that are dependent on other entities or factors for its performance. They are usually unstable (volatile) and not very predictable. 

Read: What are Cyclical Stocks and Should you buy them?

I got it! Found my Stock!

Another stock that was buzzing in news was a company that had demerged from it’s parent company and was listed separately. “Demerge” is the term used when one business of a big company is separated from it. The separated company gets fair share of the main company, just like what happens in a divorce, except that a Demerger isn’t a bad thing and a well planned process.

The company was not operational but had big plans. It’s parent company had a great track record and hired a well known top gun (who had taken another company to great heights), to manage the company.

The company had also partnered with big multi-national company. Although I did not know how to analyze stocks and read its financial numbers I thought it was a pretty safe bet and a pick since everyone was talking about it and everything looked Picture Perfect for buying my first stock.

Most people can’t figure out whether to make Quick Money or Big Money, you cannot do both.  – Basant Maheshwari

One fine afternoon in September, I bought my first stock. It was Jio Financials. The company had big ambitions to shake the finance sector and had partnered with Black Rock, the Biggest Asset Management Company in the World! Reliance has already proved it can disrupt a market when they launched Jio and shook the entire telecom sector and it had the potential to do the same in the financial market too.

At the time Jio Financials was trading around Rs.230 and I bought only 10 shares. Seeing my stock not going down, I bought 30 more the next month and then the stock price dropped to Rs.206 (almost down 12%). 

For beginners and First time investors like myself, we only look at the price action to determine if our decision was right or wrong. LOL. Even though I did not understand much, I was confident that it was a good bet or at least a safe bet since it was an entity of Reliance Industries, the largest conglomerate in India.

I knew I should not get affected by what’s happening in the market so even when the Railway stocks were going up like rockets, my conviction was only in Jio Financials, although now when I look back, I sometimes regret not buying any of the Railway or PSU stocks. Did I pick the right company for buying my first stock? Hmm Let’s see.

Short Term Vs Long Term Investing

There are mainly two types of investing, a Short term investing and Long term investing. In short term investing, usually you don’t dive deep into company’s fundamentals, instead look for ways to make quick profits; where as in Long term Investing, you have a longer vision so you check the company’s fundamentals properly and all the numbers before investing. All top guns like Warren Buffet and Charlie Munger are Long Term Investors.

PSU stocks may have given huge returns in the recent year but if you look at it’s 10year chart, it had generated very poor returns so in reality, they have given below average returns. It is a little complicated and I have tried to explain it in my another post.

Read: Short Term Investing or Long Term Investing, which is better?

The Fall of Paytm – a Blessing in Disguise

Another stock that was buzzing was One 97 Communications (Paytm), Warren Buffet had also invested in it. [Many companies are listed on stock market with their parent company which may be different from the one it is popularly know by.] The stock took a plunge after RBI took action on Paytm in December and then on Feb 1 when Paytm had passed the deadline given by RBI.

Interestingly Warren Buffet sold Paytm just two months before the action. Could it be a mere coincidence or something else, no one knows but here is a good article on it on LiveMint. When Paytm fell, there was rumors that it was partly because the incumbent govt wanted to make way for Jio Financials since Jio Financials also had plans of launching payment solutions just like Paytm.

After months of slumber, on Feb 1, 2024 the day when Paytm stock plunged down, my stock Jio Financials finally started climbing up and touched Rs.387 in April. That is 60% up since I bought it. I only wish I had bought more. 🙂

The only reason I did not buy more of Jio Financials is because I read somewhere that the valuation of Jio Financials is still not clear since the company was fractionally operational. In stock market investing, the earning of a company plays a huge part. It is what is used to measure a company’s valuation.

Did I buy the Right Stock?

Ten months on, I think I picked the right company for buying my first stock. I am very positive on the company and will invest more in Jio Financials whenever it’s stock price dips at good levels.

What do you think did I pick the right Stock?? Feel free to share your views in the comments. I am still very young in this business and would love to learn from you, especially from experienced investors. I hope you enjoyed reading my experience on buying my first stock.

Please note that this is not a stock recommendation. I am writing this blog to document my investing journey and for anyone to learn from it.