Wednesday, 15 August 2018

Amateur’s Guide to Mutual Fund Investment

Mutual Funds are subjected to Market Risks. Please read the offer document carefully before investing.
You must have came across the above Statutory warning, if you have seen any mutual fund add in television or on billboards or hoardings. The first impression which comes in our minds after watching this warning message is fear and confusion and hence most agree to stay away from investing in Mutual funds. A recent study conducted by AMFI’s shows that less than 1.5% of Indians invest in Mutual Funds.
Of the total 134 crore people in the country, the mutual fund industry has 2 crore unique PAN indicating that the industry has 2 crore investors. Currently, there are 29 crore PAN card holders in India. Going by these numbers, you can say that the penetration of the mutual fund industry in India is close to 7% (based on the number of PAN card holders, which is mandatory to invest in mutual funds). Also, the number of mutual fund investors is much lower than number of investors in banks and insurance.
Definitely, fear and lack of awareness are amongst the most common reasons within masses which makes potential investors stay away from this investment instrument. This fear is mostly created by a group of investors who just invests their money with improper/misleading guidance by brokers, who do not have any interest in your investment goals, rather would only recommend you the plans which would yield them more commision and brokerage.
This article would equip a prospective investor with the basic knowledge and know-how about Mutual Funds and help them select their first Mutual Fund for investment. It could also be treated as an Amateur’s Guide to Mutual Fund Investment.
Listed below are few basic thumb rules, which will help you choose a plan which will meet your investment goals.

It is always recommended to invest in open-ended mutual funds rather than close-ended.

In Open-end funds, investors enjoy greater flexibility in buying and selling shares and allow investors to participate directly in the markets, whereas closed-end funds demand that shares be traded through a broker. An open-end fund provides investors an easy, low-cost way to pool their money and purchase a diversified portfolio reflecting a specific investment objective, such as growth and income. Investors do not need a lot of money to gain entry into an open-end fund, making the fund easily accessible for investment. An open-end fund has unlimited shares issued by the fund, whereas a closed-end fund has a fixed number of shares launched through an initial public offering (IPO) and sold on the open market. Both open- and closed-end funds are run by portfolio managers with help from analysts. So you will have no hassle to manage your own funds. Also, close-ended funds have a locking tenure, meaning you will not be able to access your own invested funds until the maturity of the term. However, with open-ended funds, this is not the case. You can withdraw fully or partially your invested amount at any time if you have an urgent requirement for various reasons. Hence, it allows investors to enter and exit as per their convenience.

Always, invest in a direct plan.

Mutual Fund plans are offered by the AMC’s directly or through a broker. If you buy any Mutual Fund through a broker, you will have to pay brokerage/commision to the broker/agent every time you invest either through lump-sum for through SIP. So the agent will be paid commision on your monthly invest through SIP. Although the brokerage is nominal, and you might not bother to pay this amount for the services he is offering you. However, there is a catch. The broker is not bound to advise you if the plan in which you invested is not performing well. If the commision amount is lucrative, he might never advise you to exit the plan or advice you to switch to a better plan in future, where you can expect more returns. Also, if you continue your SIP for long-term, there is a noticeable difference in the maturity amount, investing in a direct plan compared to an indirect plan (brokerage fees applicable)

Always invest in Growth Plans rather than Dividend Plans.

It is always advisable to invest in a Growth Plan as the magic of compounding works better in a growth plan where the dividend amount is reinvested, unlike the Dividend Plan where it is paid out.

Never invest in a plan basis their past 3 or 5 years returns.

Most brokers would suggest you a fund with good past 3 or 5 years ROI record. Never judge any fund with 3 or 5 years track record. Make sure you analyze the entire past record of the fund especially during the tenure when the overall Indian economy is not performing well. If you still see that the fund has generated a positive ROI during the worst economic phase, you should definitely consider that fund.

Try to know more about the fund manager, managing the fund you are planning to invest.

Check what other funds this fund manager is managing and how those funds are performing? This is will give you a fair idea about the returns you are anticipating for your investment.

Always stick to the basics.

Never try to get too much involved in the technicalities. Many brokers play this trick, if been asked too many questions by the investor, before investing in any fund. They try to mislead amateur investors using technical terms which makes it even more complex and confusing for a new investor and is left with no choice rather than to believe in what they say.

Start with a bluechip fund.

It is always advisable to start your investment journey with a large cap bluechip fund. Later, you can opt for a midcap or small-cap fund.

Never be too greedy.

It is always advisable to invest 50% of your total SIP allocation in a large-cap bluechip fund, followed by another 30% in a mid-cap fund. Only invest in a small-cap fund, if you too sure about the performance of any small-cap fund or else you have enough money to lose, in case, the fund does not perform. Small-cap do generate the highest returns, however, these are the funds which are most vulnerable to losses in a bear market.

Wait for the Bear Market.

If you have some money to invest a lump sum, wait for the bear phase and then invest. This will help you buy more quantity with a fixed amount. Till the time you are waiting for the bear phase to begin, you can invest the funds available in a liquid fund.

Don’t buy too many funds just for the sake of diversifying the investment.

For an average investor, investing in 3-4 different funds would cater most of your financial goals. You should start with a bluechip fund followed by a focussed large-cap fund and later invest in a mid-cap fund. Your last invest should be a small cap fund if you are sure about it.

Do your own research before you invest. 

Put some effort and research about the funds which you are planning to invest. After all it’s your money at stake. So always prefer a wise investment plan. Just don’t let others do it for you unless he/she is a pro or a seasoned investor and somebody you can rely on.
Let me be frank with you. There is never a sure shot guarantee with your investments. However, it’s always wise to stick to a plan which is safer and eventually generate wealth for you. Mix and match stuff and try to be aware of the socio-economic developments around you. Just choosing the right plan would do the magic for you as once you invest you have an expert in place (the fund manager), who would be managing your funds for you. Hope this Amateur’s Guide to Mutual Fund Investment would help you shape a better future for you.

Oil dips on rising US crude inventories, darkening economic outlook

Oil prices fell on Wednesday, pulled down by a report of increased US crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand. Front-month Brent crude oil futures were at $72.33 per barrel at 0408 GMT, down by 13 cents, or 0.2 per cent, from their last close.
US West Texas Intermediate (WTI) crude futures were down 25 cents, or 0.4 per cent, at $66.79 per barrel. US crude stocks rose by 3.7 million barrels in the week to Aug. 10, to 410.8 million barrels, private industry group the American Petroleum Institute (API) said on Tuesday. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.6 million barrels, the API said. “Oil prices ... fell after the API inventory data showed an unexpected crude build last week.
Official US fuel inventory data is due to be published later on Wednesday by the Energy Information Administration. Sentiment was also clouded by a darkening economic outlook which could start impacting oil demand, 
The OECD's composite leading indicator, which covers the western advanced economies plus China, India, Russia, Brazil, Indonesia and South Africa, peaked in January but has since fallen and slipped below trend in May and June.
World trade volume growth also peaked in January at almost 5.7 per cent year-on-year, but nearly halved to less than 3 percent by May, according to the Netherlands Bureau for Economic Policy Analysis. BMI Research said oil markets would “struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the US and China persists.”

Tuesday, 14 August 2018

Start investing with only 10,000

If you want to invest money in the market and u have lot of question in your mind regarding trading like could u trade in 10000 rs or how much money do u need for invest money so don't worry if you have a 10,000 rs its sufficient fund for your small profit or earn small profit.
Stock market is based on business cycles like as life cycle and this cycles time is 5 years, If you investment in Stock Market for less than 5 years is considered as a short-term investment.
Day trading or intraday trading, buy or any other short term trading fall under stock/share market trading but investors or traders call those trading also as shortterm stock market investing.
6 Ways to Profit from stock market
  • 1. Invest in Brokerage Firms
  • 2. Invest in Cash-Rich Companies
  • 3. Lock in Low Long-term Rates on Existing Financing
  • 4. Invest in Payroll Processing Companies
  • 5. Lock in Long-Term Supply Contracts
  • 6. Buy or Invest in Real Estate

6 Financial Gifts For Your Sister This Raksha Bandhan

With the start of 'Shravana', the holiest month in the Hindu calendar, begin a number of festivals and events. Nag Panchami, Narali Purnima, Krishna Janmashtami to name a few.
However, the most cherished festival celebrated is Raksha Bandhan.
Raksha Bandhan, as you may know, signifies the brother-sister bond. On this ceremonial day of sibling love, a sister knots a sacred thread, Rakhee, around her brother’s wrist and wishes the best for him. The brother in return promises to protect her through every situation of her life.
Do you reminiscence the celebration and excitement of this day and waiting for it? The exchange of goodies, sweets, chitchat, etc.
Just a few days before Raksha Bandhan, it is common to see men flocking to the market to get the best possible gift for their beloved sister/s. The usual things one thinks of are accessories, smartphone, jewellery, apparel, cosmetic kit, boxes of sweets or dry fruits, and so on. 
But this year, why not consider a unique gift for your sister? Something unconventional.
Here’s a list of financial gifts you could consider this Raksha Bandhan:
  1. Start a SIP 
    Systematic Investment Plan (or SIP) a mutual fund scheme can prove to be an effective medium to fulfil your sister’s dream of travelling to a certain holiday destination by planning in advance.
    Maybe, she always wanted to establish her own enterprise. And, helping her make that dream possible will bring her the utmost joy no other materialistic gift would.
    So, the way you can help her build that corpus systematically is via SIPs. 
    SIP is a contemporary and effective mode of investing in mutual funds, available at just one click with a robo-advisory platform. It allows you to invest a certain sum of money regularly—say monthly or quarterly—instead of all in one go, allowing you to simultaneously plan for many financial goals. 
    And who says you need to do something big. You can start with a monthly SIP of Rs 500 and gradually increase the amount with a ‘Step-up SIP facility’. But selecting the right mutual fund/s to SIP in is crucial. Choose one that has a proven track record of generating consistent returns across diverse periods and market cycles. Further, ensure the fund house follows robust investment processes and systems.
  2. Purchase a medical insurance in her name 
    Your sister dedicates most of her life to her biological family before marriage and continues to selflessly shower care and love on her in-laws as well. Often, she often ignores her own health while making things possible for everyone else. 
    The threat of facing a major ailment is always present, considering today's lifestyle of long working hours, stress, lack of physical exercise, skipping meals, indulging in junk food, and so on. This lifestyle is the primary reason that a critical illness cover is required today as it takes care of the rising cost of healthcare.
    So, go ahead and buy a medical insurance for your sister and ensure she is adequately insured. Today, you can purchase and renew the health insurance online, effortlessly.
  3. Open a bank account for her
    The money you wish to gift can be deposited in this account and could even be invested in a term deposit. This will earn her interest; provide her with a source of income, perhaps pocket money.
    And the bank’s debit card can empower her to use the money lying in the saving account as per her will.
  4. Present her a gift card
    Gift cards are prepaid cards offered by banks and widely accepted today at merchandise outlets and online shopping portals. The choice of adding a particular amount is completely yours.
    A gift card can give your sister a chance to choose her gift within one year from the date of issue on account of validity.
    However, cash withdrawals are not permitted. You don’t need to worry about the security of the money, as a gift comes with a unique PIN, plus it’s easy to handle as opposed cash.
  5. Consider investing in paper gold
    Gold as an asset class illustrates the trait of being a safe haven, a saviour in times of economic volatility. This can strengthen your sister’s financial security over the long-term, and it is, indeed, a deserving gift for Rakhsha Bandhan.
    But, as far as possible, hold back from gifting physical gold as it carries a high holding cost. Instead, consider investing in gold ETFs and/or gold saving funds on her behalf.
    Gold ETFs and gold saving funds are two smart as well as efficient ways to invest in gold.
  6. Help her pay-off liabilities
    Well, this can prove to be an unforgettable gift and a huge relief for your dear sister, to whatever extent you can.
    Besides, help her restructure liabilities, and if you don’t possess the competence, guide her to a credit counsellor or a financial guardian. Pay the professional fee and then pave a corrective course for your sister to follow in the interest of her long-term financial wellbeing.
  7. These thoughtful financial gifts for your sister will not only be cherished but add to her financial security and financial freedom.

Monday, 13 August 2018

Opinion | Could the Turkish contagion affect Indian markets?

Is the meltdown in the Turkish lira a foretaste of things to come in emerging markets? Apart from the lira, how are the currencies of the other “Fragile Five” economies of 2013—Brazil, Indonesia, India and South Africa—doing? What are the chances of India being affected? These are some of the questions doing the rounds, as the plunging lira resurrects long-buried fears.
But while the problems in Turkey may have come to a head only now, they were far from hidden. In April this year, the International Monetary Fund’s (IMF’s) annual assessment of the country’s economy warned: “the economy now faces clear signs of overheating: a positive output gap, inflation well above target, and a wider current account deficit.” The IMF added that “large external financing needs, limited foreign exchange reserves, changes in investor sentiment towards emerging markets, and persistent domestic and geopolitical risks also pose challenges.”
Unfortunately, Turkish President Erdogan believes a conspiracy is being hatched against his country. He says, “if they have their dollars, we have our people, our God.” At the moment, the dollar seems to be winning.
But while Turkey, like Argentina, has serious problems, the core concern is whether the contagion will spread to other emerging markets. Some are clearly more vulnerable than others—last week the South African rand fell 5.5% while the Brazilian real lost 4%.
The Indian economy is far stronger than when it was a member of the Fragile Five—our current account deficit is much lower and our foreign exchange reserves much higher than what they were in 2013. And unlike Turkey, our external debt is low.
Investors have recognized India’s strengths. Year to date, as on 10 August 2018, the MSCI India equity index was down a mere 1.9%. Compare that to the MSCI Emerging Markets index, down 8.3%. Among the erstwhile Fragile Five, MSCI Brazil is down 14.3%, South Africa down 18.6%, Indonesia down 15.5%, while MSCI Turkey has plummeted an eye popping 52.3%.
Emerging markets have been buoyed by the surge of global liquidity unleashed by the central banks of the developed economies since the Great Financial Crisis of 2008, in many cases aided by lax fiscal and monetary policies in their own countries. Now, as the tide of global liquidity ebbs, some economies will be caught swimming naked.
Indeed, this time it could be worse than 2013, because of two reasons. One, monetary policy is being tightened in the US and dollar liquidity is lower. As RBI governor Urjit Patel has pointed out, US government is issuing Treasuries to fund a rising fiscal deficit at a time when the US Federal Reserve is shrinking its balance sheet. This has led to an international dollar shortage, strengthening the greenback. Secondly, President Trump has unleashed trade and other wars. Turkey, Iran and Russia are now openly talking of an economic war against them. Chinese stocks have been severely battered by the trade war. The days when we thought that closer integration of the world economy through globalization and multilateral trade pacts would foster peace and shared prosperity are behind us. It’s now every country for itself and woe to anyone who defies the US. The gloves are off.
To be sure, if Turkey is the canary in the coal mine, we could say the Indian economy has managed to scramble out of that mine. But this time, it’s not just five countries that are fragile—the entire world economy is becoming increasingly unstable. In June 2018, IMF deputy managing director Mitsuhiro Furusawa said the global economy faced three risks: high debt, increasing financial vulnerabilities and protectionism. Add to that the fraught geopolitical situation. The more the contagion spreads from Turkey to other vulnerable economies, the more will investors take profits on their good assets to pay for their losses elsewhere. Decoupling is impossible in financial markets.
Let’s hope sense will prevail and Turkey may, like Argentina, approach the IMF for a bailout. But this is no time for chest thumping. India, with its rising current account deficit, its pressures to spend in an election year and with looming political risks, should be cautious and focus on macroeconomic stability.

Thursday, 9 August 2018

Being financially free

It’s the month of India’s financial independence and I can only think about what it takes for us to be free, as people.
We’re either dependant on our jobs, relationships, traps of habits, or emotions.
Taking a route on viewing how we can be financially free and how relatable it is to each one of us.
There isn’t a person I know who hasn’t watched queen! Or wanted to watch it again. I run out of words that could describe this movie. It isn’t a movie it is an entire experience.
For those 2.5 hours I got involved with her joys, her sorrows her heartbreak, the condescending nature in which she was treated by her Fiancé and most involved in her evolution within that time period and her courage to break free from the shackles of social standards( Who is this society anyway?).
While watching the movie I couldn’t help but wonder, what could be the financial implication of such a situation in any young girls life…
1. Heartbreak is a big deal! As much as you hear:‘ It is for the better’, ‘ He didn’t deserve you’ etc… it always hurts. Shopping is a solution! So is taking a holiday with your girlfriends and so is pursuing your hobby, taking up a course. None of which comes free, unfortunately. Word of advice, start saving for a worst case always!
A Monthly SIP (Systematic Investment Plan) could go a long way in bailing you out of any situation that suddenly looms on your head.
2. Do not let past bad experiences affect your future decisions- In a state of self-pity, it may have been very easy for her to slip into that life again by accepting a not so positive partner.
However, she chose to step out of that territory and find one of her own. Often, we struggle with investments we have made in the past, regret them, curse the person who sold them to us, stop any future investments and sit cushy with the money in the bank feeling comfortable.
Sometimes a bad experience should be used to leap into the future with more gathered wisdom. Research/ understand the options of investment well before getting into them.
Use the guidance of an expert on this route to financial freedom.
3.Change / Transformation – she transformed from her a meek quiet under confident submissive girl to one with a spark in her eyes, a skip in her step and confidence oozing off her. This she gathered only through going through different experiences and finding herself. The same could be associated with your investments.
Evaluating options and then finding those that make you comfortable. Whatever they may say, savings, investments and going to bed knowing that your money is working hard for you, gives you confidence like no other!
4. Self Discovery – Her journey only helped her realize what her dreams were for herself. Something as simple as cooking which gave her a sense of joy when she realized she could sell what she made!
Often, we don’t pursue our smallest dreams cause we don’t put down and road map our goals or don’t have the money to fund them! Put it down and start working towards it! You never know how these small steps help you realize your biggest dreams! Start building a small investment fund to just help you pursue your goals, whatever they might be.

Tuesday, 7 August 2018

Gr8 Time To Invest- Its Now Or Never

Why This is a Gr8 Time To Enter The Market and or Add Up More to your portfolio.. Remember, Every Delay will Cost You and Can cost You Even Rs. 1 crore for Even A 1 Year Delay..:-
1. There are some gr8 mid and small cap funds which has gone down by over 40% but has the potential to bounce back due to robust quarter earnings... Opportunity to get these stocks and funds at discounted valuations...
2. China is down over 35%. As a result FII's are pulling out of China market and is focusing more on the Indian Economy.
3. The hike in interest rate by RBI has been absorbed by the market in a positive manner... A Check on Inflation would help the economy to grow.
4. The IT Industry in USA is reviving which is a very good news for the Indian IT companies. Apart from that there is a long list of US FDA pending which once through can add up gr8 value to the Pharma stocks...
5. The Indian GDP is expected to grow better then other Emerging Economies.
6. The "Consumption" Story of India is growing at a rapid space which will help the Economy to achieve a robust growth.
7. Inflation is well under control
8. The Implementation of GST and Bankruptcy code would help India in the long run.
Sectors To Avoid:-
Aviation/ Automobile/ Metals/Real Estate
Happy Investing.