Let me take you to my investment journey: 10 Stocks; 10 thousand each month; 10 thousand each stock & a journey of last 5 years! Know what I earned with an exclusive video!

-Dheerusha Tiwari

The urge to earn more and the agony of losing more; it all started with my first entrance in the broker house. I still remember observing the red and green colored display screen, listening to the noise in the broker house, when I felt completely dumb and clueless for next two hours. But there was something else that brought a thrill and excitement in me that particular day. I wanted to join the crowd. I wanted to talk to those people in that room. I wanted to understand what people were discussing. Moreover, I wanted to fall in love with those numbers on the display chart. That was exactly back in 2013 when I decided to take this journey- My investment journey.

As it is said new calves are not afraid of tigers, I immediately entered into the trading pit. In the beginning, it wasn’t easy. I committed a lot of mistakes. I bought shares that I was not supposed to. I bought stocks because the person beside me bought those. Coming from a religious background, I bought shares of the companies just because they resembled the name of gods and goddesses. Eg: Prabhu! (Disclaimer: Nothing wrong with the company) I know, how can someone be so stupid? I even avoided shares of companies whose names were lengthy and unappealing at least for me. In fact, once I tried buying shares that were not even listed in NEPSE. But all in all, I do not regret those mistakes or say, that stupidity. After all, I was just a beginner trying to be the next person who has finally figured out the capital market.

When I was done losing my every next penny in the trading pit, I almost became the character “fox” from one of my childhood stories. That fox who gave up on picking the grapes from the tree and instead started blaming the grapes as “sour” just because it could not grab those. Meaning I started blaming stock market as a casino or something that was not my cup of tea. Yet, I wanted to give one last try. So, I joined some of the fundamental and technical analysis classes where I learnt about investment procedure. Indeed, truly said, learn before you earn.

I won’t boast that I figured out the whole stock market after these classes but I understood majority section of secondary market. I was certain that long term investors preferred fundamental analysis whereas short term investors prefer technical analysis usually. I understood emotional and psychological biases of these investors often become hurdles in their investment decision. I came across several books from investor gurus such as Warren Buffet. So, I thought why not take the same direction!

With my salary,I spent 30% of my income and saved 70%, I decided to utilize my 60% of income on investment. To be precise, I would rather say- long term investment. Among a long list of alternative stocks, I preferred purchasing 10 of these stocks:

My motive behind buying the scrips such as CBBL, FMDBL, ICFC, MNBBL, PCBL, SHL was the cheap rate offered by these stocks which was below NRs 500. Similarly, my motive behind purchasing scrips such as CHCL, NLIC, NTC and SIC was the brand value of these companies back then. Nevertheless, I also looked into other aspects such as company’s performance, management team, and board of directors, company’s history and background, fundamental indicators such as net profit, reserves, capital and dividend. The purchase price and quantities purchased in between May and June of 2013 of these companies were as follows:

I continued investing every single month in each stock with NRs 10,000. I usually invested on the last day of each month regardless of the rumors and price consideration. I allocated NRs 10,000 to each stock at the end of every month. I applied for every right shares proposed by the company. There were moments of satisfaction when I received bonus shares and cash dividend from the respective companies. As of 30^th May, 2018, the right shares that I have applied in and bonus shares and cash dividend received are as follows:

The top three companies that provided best return so far are FMDBL, CBBL and MNBBL. However, CHCL provided a negative return in these five years and SHL provided the least return among the ten scrips. Here is a snapshot of annualized internal rate of return of these companies in descending order:

FMDBL with an initial investment of NRs 6,00,000 provides an Internal Rate of Return (IRR) of 73.94%. CBBL with an investment of NRS 6,00,000 provides an IRR of 54.66% and finally, MNBBL with an investment of NRs 6,00,000 provides an IRR of 53.94% . These IRR are the return until 23rd June, 2018. 

The detailed report of my investment in one of the companies i.e. CBBL is attached herewith. Please download for your study:

When an investor adopts this method of investment, it is called as Systematic Investment Plan (SIP). This method of investment helped me accumulate a market capitalization of NRs 1.13 crore with mere 10 stocks, an initial investment of NRs 1 lakh in the first year and a total investment of NRs 60 lakhs (excluding right shares investment) in these five years. This procedurre of investment has proven to be effective in terms of cost, time and effort for a 10 to 5 job holders.

However, I  wouldn’t brag that the journey has been a smooth one. It was rather a roller coaster ride of emotions. There have been several moment of doubts during this journey. I questioned each time when my friend gained enormous profit through speculation. As I adoped this process when the market was in bullish trend, I somehow felt that I was losing more. Besides, I almost gave up on my investment process during the earthquake. While people were mourning about their lost property and closed ones, deep inside, I was scared of losing all that I have earned till that date. I almost gave up when the price of these stocks reached to a minimal point in the recent bearish trend. But what kept me going was an utter belief that something good is awaiting for me on the other side of the rainbow.

As I write this journal, I have no intention to put my dear investors in a dark edge. So, the provided picture is not my complete investment journey. I have established several assumptions while calculating the value of my portfolio for simplification and convinience of the readers. For instance,

1) Any cash dividends received in the five-year period (2013 to 2018) were not reinvested,

2) Capital gains tax was also not calculated considering 5% capital gains on profit will not matter much in the long-term (due to adjustment of average base prices),

3) Amount invested for right share was also adjusted in the overall value

With all this, what matters the most is my lessons that I have gained over the period of my investment journey. The first lesson that I learnt is investment decision affects the emotion and psychology of a person as much as the psychology affects the investment decision. The loss, one faces during an investment is likely to affect the quality of life, one lives in. Besides, the second lesson I learnt is maximizing wealth is not a fortnight job. It takes time and one must have patience to wait. Thirdly, I learnt, one does not need to be right every single time. It is completely fine when you make an investment error. But one must try his/her best to avoid incurring the same mistake in the future. Fourthly, it isn’t wrong to say that making money in secondary market is not as important as learning how to make money. As a consumer, one thinks more than twice when purchasing a product. When it comes to secondary market, we are investing our hard work and lifelong earnings into it, so why not devote time and effort in understanding the functionality of this market? Finally, my five years of journey with ten stocks, ten thousand each month; ten thousand each stock is rather a journey of 5Ps: The journey of patience, perseverance, persistence, practice and preparedness which I shall always cherish.

Disclaimer: The provided story has no relation with author’s investment strategy. The author does not suggest investors to imitate the same investment approach but rather seek financial advice from independent professionals, study financial reports and make an investment decision on the investor’s own capability. The readers are requested to perceive the journal as simply a descriptive form of SIP strategy written for the convenience of readers rather than a real time story.