Path to your first 100k (for beginners) in Stock Market

Getting to your first 100k in stocks would give immense satisfaction. Its an awesome place to be and yes you can achieve it faster by being smart with your strategies. I will be going over a strategy that has worked for me and its an easy and more effective way to get to your goal.

Why getting to first 100k matters?

• First Step in achieving Financial Freedom

• It gives validation to your process and strategy

• It gives the capital to place bets that can show significant returns in the future.

• Helps in knocking off the any outstanding debt so that all your future earnings can all go to investments - You can be a carefree investor.

• Profits of 100K for a beginner in stock market is a milestone to celebrate.

Why reaching your first 100K should be your only goal.

There are several ways to make money in stock market. As a beginner in stock market you tend to explore various strategies - growth investing, momentum investing, dividend investing, indexing investing, value investing, day trading, swing trading, options, risky investments like cryptocurrencies, penny stocks etc. During your first year of learning the tricks and secrets of investing - you are bound to make some mistakes. These mistakes will help you learn about yourselves and also direct you to the strategy that works for you. During this period you might have bought and sold stocks in profits or loss and would have got the pulse of how the stock market behaves. Getting to number 100k in profits is a validation stage that confirms that your strategy works and is repeatable. This should be your target as it might lay foundation for your investment journey.

If you dont have the conviction that your strategy will get you to your 100k at the end of year 1, then my strategy might be the answer for you.

What was my strategy to make my first 100k?

I have tried some of the strategies mentioned above but was totally hooked to value investing as a method to go about. During last few years when people where running to growth stocks I was more inclined to pick value. My strategy was simple - I can sum it up in one word - "FOCUS".

I was lucky to identify a stock(company X) that was beaten down due to market sentiment, and was totally written off. It was trading way below the intrinsic value of the company. And I invested on this one stock for more than a year. I started buying the stock at price of $13 and over the course of a year it fell to even $5(drop of over 60%). I kept buying every other week when I was getting paid, and was able to average down my price to around $7. During that period of a year I didn't care about where S&P was going, my only focus was to read about the company X and affirm that the company is doing the right thing to come out of their debt.

Now, when I think about how I was able to withstand a 60% drop in my very first major investments, its because I knew inside out of what the company was doing. My conviction in the thesis was so strong, that I was able to ignore the noise. The company X was downgraded by most of the analyst during the drop, But I knew that there was no solid basis on their downgrades. Out of the blue moon they would one day downgrade the stock and when I look at what changed in the business - there would be nothing. So I was sure that my thesis would play out, it was the question of when.

Then we got covid and all the stocks got hit in march of 2020, and stock X tripled as it was in the sector of food distribution(Essential Services). I made 300% of my money, and was able to cross 100k with ease. It was a satisfying to see the thesis play out.

One of the reasons why I was able to get the gains is only because of focus, I was not invested in 10 companies or 5 companies; I was only focusing on 1. So it became very easy for me to eliminate all the noise and just be on top of one business. Also, investing in undervalued stock was important as I was aware that I was paying less for the business.

And one more important thing...

As Charlie Says -

"The first $100,000 is a b***h, but you gotta do it. I don’t care what you have to do – if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit."

You have to make some changes in your financial habits or make some sacrifices in order to find money to invest. But until your investments gets to 100K - don't stop, just focus and follow your strategy with conviction.