FAQs on Finance
Confused about where to start off in Finance? Wait, what is Finance?
What are the different careers in Finance? What do we IITians do in Finance and several other questions…
Hold your breath and read on. I have received several such questions in the past few months (more so recently) and I will try to answer them patiently in this one post. While I haven’t done a degree in Finance nor am I a master at it, one year ago I was standing at a level which I would call as Financial illiteracy, and I would like to believe that I have learned a lot in this past one year. Well, enough to share my bit of two cents at least.
Many people ask me about my story and my journey in Finance and I would like to give them all a big fat DISCLAIMER. Not everyone walks the same path in life, so although I’ll do share my story, don’t try to follow it to the “T”. Hunt for what suits you and pursue it. (Enough with the ‘ philosophical gyaan’ Adit) Getting down to business (cause that’s what life is about)
My Journey…
Just like this blog, starting things for the first time is always a huge effort. There pose hundreds of questions before you and there is always just one answer to all of them. Get to doing it!
I had always wanted to explore Finance right from my first year and like many of you, even I was baffled about where to start from. As a starter, I had taken up MG403 ( Basics of Accounting and Financial Management) as an Elective in my sophomore year. In hindsight, the course had really good content and I had taken it prematurely with no understanding whatsoever. I didn’t learn much theory wise, but the course strong footed my decision of exploring Finance full-fledged. Months passed by and I still didn’t get a chance to capitalize on what I had realized. Although in my subconscious, I just kept giving excuses to avoid the effort. It was as if I needed someone to push me through the hustle, but its always gonna be you. A lost Institute Elections set the fire I needed in me. Failures and losses generally do tend to bring out the best in you.
Next, I took up a course offered by on Equity Portfolio Management via our own Finance Club. It gave me a good headstart and decent guidance on how to get started with things. As vast as finance is, I believe, the majority of one’s learning is going to be self-taught. I have picked up keywords and just Googled them most of the time. Investopedia has been a good companion throughout. The course offered by AlphaBeta covered key Portfolio Management Strategies like Momentum Trading, Pairs Trading, and Accrual Trading. Thereafter, I started Virtual trading last March and went on to build up a portfolio of my own. It was a rough start with all the innumerable jargons present in the Stock Market. I started following the Stock Market slowly and things started to make sense. Whatever little experience I had in the same, however, helped me bag my 2nd Year Summer Internship at IIFL Markets. I plan to write a separate blog on my experience at IIFL, shortly after the completion of this one.
During the summers, I leveraged my internship experience to gain a lot of knowledge in a span of 2 months. Other than my internship, I did 4 extra courses on Udemy and read several books on finance during the summers. I used to day trade (this is discretionary stuff) to get a knack of the markets. I followed Technical indicators and Price charts day in and day out. I completed YTC Price Action Strategies complete set of 6 books by the end of Summers. I don’t think I had ever been as productive in my life as I was back then, and then came the Internship Semester. After a grueling 4–5 month period, everything made sense, when I could use all the knowledge to get myself an internship at Barclays Investment Bank (praying COVID-19 doesn’t play a spoilsport).
Overall, I would say, what has helped me the most is- Talking to people. I remember connecting with working professionals on LinkedIn just to know the work prospects in Finance. I used to sit and talk with different employees during my lunch breaks at my internship. Be it about theory or about the industry, I was unafraid of asking the silliest of questions to people. What might take hours of Googling can simply take 10minutes if explained by someone. In the end, it’s up to you of how you assimilate all the information, but be rest assured that the journey will always be beautiful like mine has been.
FAQ’s
1) I want to learn about stocks and share market. Where should I start?
When I am asked this question most of the time, I feel there is a common misconception among people that Finance and Stock markets are one and the same. There is a lot more to Finance than just the Markets. It’s important to know the difference and even more important to know where your interest lies. Stock Market can be viewed from many different perspectives. Some say it is a market where you lose money while some say its a gamble. In my opinion, the market requires patience and enough study.
There are hundreds of online courses teaching you the basics of the Stock Market. I had tried my hand at few too. I had searched and gone through innumerable videos on Youtube as well. Although, what made things crystal clear for me was this one website I strongly recommend to anyone and everyone:- Varsity by Zerodha It has explained the terminologies in the simplest way possible and that would be an absolutely good place to start.
Among all the courses available online on the Stock Market, I find a course by Kundan Kishore to be quite comprehensive and thorough, not forgetting cheap as well. This course is more inclined towards investing than trading. Investing and Trading are two different things which people often mix up. If you are interested in making quick money out of the markets, trading is what you are looking at. If you are looking to make a portfolio for your long term future, investing is what you are looking at. This is just the fundamental difference between the two. However, the basics of the stock market are very essential in both and it has been well explained in the above course. Having said that, feel free to choose as per your wishes.
Other than this, reading the newspaper ( Economic Times ) regularly would certainly help stay up to date with business news. I can’t exactly layout an entire path for anyone wanting to pursue these fields, but I feel doing the above will take you to a good level to make further decisions.
2) Should one venture into day trading? Is it safe?
One thing I have learned and I would like to quote,
“ Losses are necessary, as long as they are associated with a technique to help you learn from them.”
Day trading is certainly risky and if not done correctly could blow your account up. At the same time, losses are inevitable. One should certainly not trade with money dear to them. If that’s the case, I would not advise anybody to trade as it brings in a lot of emotional factors.
I started my day trading experience by picking one stock and trading one share of it and I would try to end my day in the greens. Why I insist people to trade with real money over virtual after a point of time, is because you don’t learn otherwise. You get to know the nuances of trade execution only when you go to execute it. When you see your money run into losses and the panic sets in, is only when you learn to manage it well.
Other than this, I believe one learns faster when there is something put at stake. I have been a slow reader otherwise, but when it came to this, I completed an entire set of 6 books in a month’s time which I would strongly recommend every beginner in the market to read. YTC Price Action Strategies is considered as the Holy Grail to intraday and swing trading.
So answering the question, it is totally your choice if you want to venture into day trading. Yes, it is safe (safer than COVID-19). On a lighter note if you are worried about running into losses, give yourself a fixed amount to start off with. I have been using and I find it extremely user friendly. It charges minimum brokerage and has a robust platform in my opinion.
NOTE:- All of this isn’t going to ensure your profits. I myself am a budding trader and learning along the way :)
3) What are the job prospects of Finance? What is the kind of work expected of us? Is coding necessary?
To put things into a picture, I might not be the best person to answer this question. I will share whatever I have heard as I have no first-hand experience in the industry as yet. To start off, one can search up the difference between Private Equity Firms, Investment Banks, Venture Capitalist Firms, Hedge Funds, etc. Questions like:-
→What is a Buy Side and what is a Sell-Side?
→What is a front desk job and what is a back-office job?
There are several videos explaining the differences which might give you a slight insight about the same. You need not make a choice today of where you are heading, but knowing the differences helps get a better perspective of things. If you are too keen on knowing more, I would recommend connecting with people working in the industry and speaking to them.
People with a strong interest in Finance can consider giving one of CFA or FRM certifications.
When it comes to coding, I haven’t got my hands dirty with it as yet. There is certainly a growing importance of coding, machine learning, and artificial intelligence in the industry, and all I would say is, be prepared to learn it whenever necessary if expected of you.
I have tried to answer most of the doubts to the best of my ability. If after reading this blog, you still have any persistent questions, please leave a comment below. I will try to include them in my blog at the earliest.
~Adit
