Making money in stock markets isn't easy: Nithin Kamath talks about money, jobs, entrepreneurship

Nithin Kamath, CEO and co-founder of Zerodha, India’s largest stockbroking house, feels that in order to achieve financial freedom, one should develop the habit to invest as soon as possible.

In a conversation with Moneycontrol Kamath shared some of his personal experiences with money and the lessons he learned over the years from his early days of trading to building Zerodha. Edited excerpts from the interaction:

In the world of finfluencers (Financial influencers), what is the right approach for people to equip themselves with the knowledge to handle their own finances?

Influencers have made it seem like it is very easy to make money in the stock markets, which it isn’t. We are in the middle of a bull market, and there’s a saying that in a bull market even a fool feels extremely smart because everything goes up.

In the last two-three years, we have been in a once in lifetime kind of a bull market.

It isn’t easy to make money in the stock markets. The right step here should be to start investing in an index mutual fund. And once you start tracking the market you potentially might develop a liking for a particular sector. For example, when I started, I really got into tracking the financial services market - what are NBFCs doing, what are brokers doing and so on. When you understand the dynamics of a particular sector and their business models, that is when I think one should diversify into direct stocks.

No one makes money with stock tips in the long run.

How to be better prepared for the job market amidst fears of inflation and recession and massive layoffs? 

There will always be demand for good and skilled people, irrespective of any recession fears. So when you are in college, it is important to discover what you like or love and get better at it.It could be anything niche, for example - if you like hosting a podcast, do it often, get better at it’ll open doors of opportunities for you.

Starting saving early and not being tempted to spend much will help you build financial security for yourself.

Also read : https://www.moneycontrol.com/news/business/personal-finance/zerodhas-nithin-kamaths-money-mantras-for-the-young-9500391.html 

What piece of advice would you give to someone who wants to start their own venture?

Building a business is extremely hard. Over the last three to four years, the startup boom has made it seem like starting a business is an easy thing to do. Doing business - making people pay for your products and services is really the hardest thing to do. People believe that building a business with a certain valuation is equal to building a business. Which isn’t true. A business is a business when it starts creating positive cash flow - that is what you make out of it is more than what you have put in.

Today entrepreneurs are almost looked at like heroes and everyone wants to be on the other side, it’s important to realise that the other side is really hard.

The way youngsters should think of creating a business is to come across a problem statement that you yourself associate with, and then build the bare minimum skills required to do that. Because before you go chopping wood, you need to sharpen your axe.

How can one achieve financial freedom?
Start your investing journey as early as possible. Make it a habit. Don’t borrow unless it incrementally adds to the quality of your life and manage your risks well by diversifying and not putting all your eggs in one basket.