When you are interested in the share market the first thing what you do is open a demat account to invest or trade. But as time passes we forget or don’t have time for trading. Then there is time you do not use your Demat account for a long time but you have to pay the charges and the demat account annually. It is the right time or good idea to close your inactive demat account. If there are active balances, they can be consolidated into one account and remaining redundant demat accounts can be closed. Closing a Demat account involves visiting the DP office or branch by any Demat account holders & submission of requisite forms & documents.
Required Information for Closing Demat Account:
DP ID & Client ID
KYC detail
Reason for closing Demat account
Is there more than one person holding the demat account ? then all holders must sign a closure form.
Procedure Of Closing Demat Account:
1. FORM:
The account holder can download the form from the website of the depository participants or DP.
2. DETAILS: The following details need to be mentioned:
DP ID and Client ID
Existing details like name & address – it should match records.
3. Transfer:
If the demat account has any balance (holdings), details of the account to which this balance needs to be transferred must be mentioned in the form. The transfer can also be carried out by filling up a delivery instruction slip (DIS) before closure of the account.
4. There are no shares in the account:
To close your account, the foremost thing is to ensure whether there are any shares in the account. If there are, you need to transfer them to another account. You need to make sure your Demat account is empty before you can decide to close it.
5. Submit The Application:
Once the form is submitted and is in order, it takes 7 to 10 business days to close the account.
Remember to this point before closing the Demat account:
If the account has any negative cash balance, it must be settled before submitting the request for its closure.
Unused delivery instruction booklet slip should be submitted back to the DP.
The financial media promotes overtrading. Because if you’re not trading you’re not trying, right? Wrong. They create exciting stories about where markets will move and why. For many investors, the desire to play outweighs the desire to win. They rather medicate their boredom by making trades and hopping on the latest hot trend. The best traders are much less active than you’ve been led to believe. They aim to profit by riding long-term trends that play out over months and years, not minutes and hours. Trading on such short time frames gets you nowhere.
THE BEST TRADERS:
On average, trade each market only 1-3 times per year
Do not make predictions, but follow trends
Do not let short-term volatility shake them out of their positions
Do not feel the need to trade every day, every week or month; only when they see opportunity
2. GOING AGAINST THE TREND:
We all need a trend to make money. If we buy at price A, then we must sell at a higher price B in order to profit. Betting against trends is not only unnatural, but inherently unprofitable. Surfers do not try to ride waves out to sea. Those that do, wipe out – and look ridiculous. Traders do not make profit by holding long positions in downtrends or short positions in uptrends. In trading, the only thing that matters is price. Our job is to measure it and align with each market’s trend. How we do this doesn’t matter.
3. LETTING LOSSES RUN:
You must have an exit point for every investment you hold. Without one, whether you admit it or not, all of your money is at risk. Ya gotta know when to let it go. This goes for everything in life. If ascertain food doesn’t agree with your stomach, stop eating it. If an exercise gives you pain, stop doing it. If you’re dating a person who makes you miserable, break up with them and move on. When you let losses run, you waste resources – namely, time and money. But you also miss out on other opportunities. Exiting losing investments frees up your capacity to be deployed to new and possibly better opportunities in other markets or stocks
4. CUTTING WINNERS EARLY:
As the old saying goes: “If it ain’t broke, don’t fix it”. Investors are too eager to book gains, especially those that come quickly. Our lizard brain likes being right and feeling smart. When one of our investments shows a profit, our lizard brain wants us to quickly ring the register. This behavior comes at a cost though. Like pulling our flowers before they bloom, cutting winners inhibits us from generating huge gains. If you want big profits, you must hold your winners and let them grow. Investments do not always grow into big winners, but you allow them that chance. One or two big winners can make your year or even your career. You may be tempted to pull a George Costanza and go out on a high note, but George was one of the biggest losers in TV history. Selling your winners keeps your profits small and, thus, from major investing success.
PROFIT-LIMITING TACTICS INCLUDE:
Selling a position soon after it becomes profitable
Selling profit targets
Selling volatility targets
Selling price targets
5. IGNORING YOUR RISK TOLERANCE:
If you know how much pain you can take, you increase your odds of survival and winning Knowing your pain threshold allows you to grow at your desired speed. If you want to grow fast, you must take on more risk, but with more risk comes higher volatility and larger drawdowns. If you’re OK with this, great! If and when your performance becomes volatile, you won’t abandon your plan. As an investor, you want to stay away from your pain threshold or “uncle point” – the point at which you lose all faith in your plan. If your plan delivers too much volatility (especially on the downside) then you risk losing your discipline.
ADVANTAGES OF RISK AWARENESS:
Lower stress
Lower risk of aborting your plan
More capable of setting and managing performance expectations
6. NOT DIVERSIFYING:
What’s the point of diversification? To reduce your portfolio’s maximum loss below that of each individual investment’s. People prefer picking winners and betting it all. The possibility of making a lot of money in a short amount of time attracts many people to this strategy. Think: the lottery. In most years, a diversified portfolio rarely beats the absolute performance of the best performing market(s) or stock(s). Consistent underperformance in the short-term can be too much to bare for some investors. So, rather than striving for steadier long-term results by building a portfolio of dierent markets and strategies, they choose to move all of their money from one market to the next attempting to catch a big winner. This strategy inherently places more emphasis on Market-timing instead of diversification.
BENEFITS OF DIVERSIFICATION:
Rather than trade one market and experience all of the swings in that instrument, diversifying helps create a smoother ride.
By having a large number of markets in the portfolio, you can ride the ones on the move and avoid the choppy ones
Risking a small amount on each position, you do not have to win on every trade. You can still win even with 30-40% winners.
7. FOCUSING TOO MUCH ON WINNING PERCENTAGE:
Winning percentage matters, but so does the size of your winners. The combination of your winning percentage and average winner size tells you if you have a good strategy. No one can accurately pick winners above a 70-80% rate for an entire career. Not happening. Has never happened. Will never happen. But it doesn’t need to happen. The best traders can produce win rates of only 30-40% and still produce huge profits. How? They make up for their low winning percentage by letting their winners run. They do not cap their profit potential. If they did, then they’d have to be much more accurate in order to maintain their large profits
8. PAYING TOO MUCH ATTENTION TO NEWS AND “EXPERTS”:
Convincing media outlets can force you to jump o-your plan, often at the wrong times. TV and online personalities pitch their ideas every single day. Their job is to get you to tune in. Their strategy is selling certainty – making you believe they know what’s coming next. Investors without a plan of their own become susceptible to falling hard for convincing stock picks-jumping from one idea to the next. Media only focuses on 1) what markets to trade and 2) when to enter. They never talk about position sizing or exit methodology to protect your capital if/when the market goes against you. Investors must not concerned with pie in the sky ideas. They first must have a plan of their own and then be able to tune out other people’s opinions. When you have a plan, you already have all you need to be successful.
The Internet is stuffed with resources. You’ll find tons of data out there free of charge. However, as the count increases, it’s actually inconceivable to remember all of the websites that you simply visit even in a single day.
However, when the subject comes to acquiring the related info and the maximum information and all the related data, one always wish to persist with his favorite websites where he may get all the quality information.
Stock market investing is a risky venture. It’s worthwhile to be very cautious whereas putting your hard-earned money into it. Before diving into the dynamic stock market, you must possess the best set of information and sufficient information. So, as an investor, you should be aware of a few of the finest websites for Indian stock market analysis.
All have their own favorites! However, in terms of selecting the most effective websites for Indian stock market research, we would have a standard selection. Let’s see if our choice matches together with your short term and long term investing objectives.
The website was started by the husband and wife team of Victor and Sangeeta Fernandes. In 2000, it was acquired by E-Eighteen dot com, a subsidiary of the Indian TV channel TV18. The couple were given 7.5% of the equity capital and E-18 got 92.5% following the acquisition. In 2014, Reliance Industries acquired Network 18 and TV18. This acquisition included Moneycontrol.com and several other websites and channels owned by TV18.
Moneycontrol is definitely the preferred website among the many Indian stock investor. You’ll find all types of information on this website like market news, trends, charts, livestock prices, commodities, currencies, mutual funds, personal finance, IPOs and many others.
That is certainly one of many extremely standard stock market website for an Indian investor. In different words, it may be considered probably the most accessed website, each by potential and present stock investors.
You even have a platform to track your investments and create a wish list too. Furthermore, Money Control mobile app is much more handy to put in and use. So, an entire bundle for a stock investor, whether a beginner or a professional.
It gives numerous stock securities info like their Sensex and Nifty value. Stock securities include Equities, debts, Latest IPOs, currencies, live stocks, commodities, and derivatives. Historic knowledge and present efficiency of the various companies can also find right here.
Forums are also facilitated for doing discussions in the group. You’ll be able to refer to those boards and may update yourself with the updated information.
The National Stock Exchange of India Limited (NSE) is the leading stock exchange of India, situated in Mumbai. The NSE was established in 1992 as the primary demutualized electronic trade within the nation. NSE was the primary exchange within the nation to offer a modern, totally automated screen-based electronic trading system which provided simple trading facility to the traders spread throughout the length and breadth of the country. Vikram Limaye is Managing Director & Chief Executive Officer of NSE.
It has a complete market capitalization of greater than US$2.27 trillion, making it the world’s 11th-largest stock exchange as of April 2018. NSE’s flagship index, the NIFTY 50, the 50 stock index is used extensively by investors in India and all over the world as a barometer of the Indian capital markets. Nifty 50 index was launched in 1996 by the NSE. Nevertheless, Vaidyanathan (2016) estimates that solely about 4% of the Indian economic system / GDP is definitely derived from the stock exchanges in India.
In contrast to countries like America where nearly 70% of the GDP is derived from bigger companies and the corporate sector, the corporate sector in India accounts for only 12-14% of the nationwide GDP (as of October 2016). Of these solely 7,800 corporations are listed of which solely 4000 commerce on the inventory exchanges at BSE and NSE. Therefore the stocks trading on the BSE and NSE account for under round 4% of the Indian economic system, which derives most of its earnings associated exercise from the so-called unorganized sector and households.
As the company has an obligation to submit their financial reviews to the NSE, therefore you may always find the financial information of any firm right here, in case you may find it elsewhere. You’ll find details about the corporates, domestic and foreign buyers, new listings, IPO and many others. NSE India also offers programs and certifications.
It ranks effectively within the prime stock research websites in India. You get to see tons of historic information relating to NSE and Nifty as effectively. You additionally take pleasure in free technical analysis of Indian stocks, reports, charts and different website tools.
The Bombay stock exchange was founded by Premchand Roychand. He was probably the most influential businessmen in 19th-century Bombay. A person who made a fortune within the stockbroking business and got here to be often known as the Cotton King, the Bullion King or simply the Big Bull. He was also the founding father of the Native Share and Stock Brokers Affiliation, an institution that’s now referred to as the BSE.
Whereas BSE Ltd is now synonymous with Dalal Street, it was not all the time so. The first venue of the earliest stock broker meetings within the 1850s was in relatively pure environs – beneath banyan trees – in entrance of the Town Hall, the place Horniman Circle is now located. A decade later, the brokers moved their venue to a different set of foliage, this time under banyan trees at the junction of Meadows Street and what’s now referred to as Mahatma Gandhi Road. The group ultimately moved to Dalal Street in 1874 and have become an official group referred to as “The Native Share & Stock Brokers Association” in 1875.
On August 31, 1957, the BSE grew to become the primary stock exchange to be acknowledged by the Indian Government under the Securities Contracts Regulation Act. Historically an open outcry flooring trading exchange, the Bombay Stock Exchange switched to an electronic trading system developed by CMC Ltd. in 1995. It took the exchange solely 50 days to make this transition. The BSE has also launched a centralized exchange-based internet trading system, BSEWEBx.co.in to allow traders wherever on the planet to trade on the BSE platform.
The BSE can also be a Partner Exchange of the United Nations Sustainable Stock Exchange initiative, becoming a member of in September 2012.
BSE established India INX on 30 December 2016. India INX is the first international exchange of India.
That is much like NSE India. Nevertheless, you will discover extra historic information right here as BSE Sensex has been included for an extended time in comparison with NSE Nifty.
As well as, over 5,500 companies are listed on BSE whose company actions and financial information could be found on this website. You may also obtain the whole checklist of ‘public’ companies from this website.
Investing.com is a global financial portal and internet brand owned by Fusion Media Limited, registered in the British Virgin Islands, composed of 28 editions in 21 languages and mobile apps for Android and iOS that provide news, analysis, streaming quotes and charts, technical data and financial tools about the global financial markets. The editions each cover a broad variety of financial vehicles including Stocks, Bonds, Commodities, Currencies, Interest Rates, Futures and Options
Branded initially as Forexpros.com, the portal launched in 2007 with editions in four languages: English, Spanish, Hebrew and Arabic, offering free data, information, analysis, news and tools over the Forex market for traders. Six additional editions followed in 2008, growing to a total of 18 different localized editions by the end of 2011.
Investing.com currently offers 30 localized (Language localisation) editions in 22 languages including: Arabic, Chinese, Dutch, English, Finnish, French, German, Greek, Hebrew, Italian, Indonesian, Japanese, Korean, Malay, Polish, Portuguese, Russian, Spanish, Swedish, Thai, Turkish and Vietnamese. Additional editions are dedicated to the Australian, Brazilian, Canadian, Hong Kong, Indian, Mexican and South African markets.
Investing is a good site if you want to find all the information on the same website simultaneously. You can do both fundamental and technical analysis of stocks on this website. The different options available on this website are general info, chart, news and analysis, financials, technicals, forum etc.
Its wide range of tools and comprehensive data can surely incline any investor towards it. Stock screener, Fed rate monitor tool and currency converter are the biggest attractions. The live and interactive charts, stocks charts, indices and forex charts further add to its advantages.
Investing is just like the best newspaper for stock market India.The screen of the site reproduces every detail information towards you regarding the NAV value of your stocks, the index value, the peer information and many other details which can be simplified by customizing the screen according to your preferences.
Screener, a stock analysis instrument especially meant for equity traders in India. With this, you’ll be able to have entry to long term financials of various companies and additional simplify it. Thereby, turning lengthy knowledge into small helpful chunks by customised studies. So, you’ll be able to simply make your self acquainted with helpful financial info of an organization.
Furthermore, with the assistance of it’s screening instrument, you’ll be able to design your personalised display screen and get computerized alerts to trace outcomes. A mixture of a “Firm evaluation” and a “screening” instrument, this absolutely attracts readers to navigate by it.
It is among the greatest Indian stock market technical evaluation web site. It serves you normal details about the market financial system, the corporate efficiency previously and the current, their friends out there and their efficiency too, the corporate’s revenue and losses and the balance sheet, analysis studies and numerous evaluation instruments just like the charts are provided on this platform.
The sophisticated lengthy knowledge might be personalised and customised as per your selection and choice which is able to simplify the understanding.It additionally supplies display screen alerts on the person’s mobile and the websites additionally for each up to date info in the market.
“The ratio of the volume of put options traded to the volume of call options traded, which is used as an indicator sentiment (bullish or bearish).”
Put-call ratio (PCR) is an indicator that forecast the trend of the INDEX/STOCKS.
A “Put” or put option is a right to sell an asset at a predetermined price. A “Call” or call option is right to buy an asset at a predetermined price. Many traders use options for directional beta; buying call when market bullish & buying put when market bearish.
PCR is a popular derivative indicator, specifically designed to help traders gauges the overall sentiment of the market. The ratio is calculated either on the basis of options trading volumes or on the basis of the open interest for a particular period.
This indicator will show you which gang is dominating the market; the bearish gang (short masters), or the bullish gang (long masters).
The put call ratio can be calculated for any individual stock, as well as for any INDEX, or can be aggregated.
HOW TO ANALYSES PCR:
The put call ratio is calculated by the dividing the number of OPEN INEREST of put option by the number of OPEN INEREST of call option.
PCR (OI) = PUT OPEN INTEREST ON GIVEN DAY/ CALL OPEN INTEREST ON SAME DAY:
PCR for marker wide position can be also be calculated by taking total number of OI for all OI call options & for all OI options in a given series.The PCR can be calculated for indices, indivu
Eg.
PUT (OI)CALL (OI)
CURRENT MONTH CURRENT MONTH
NEXT MONTH NEXT MONTH
FAR MONTH FAR MONTH
PCR = PUT (OI)/ CALL (OI)
PCR = ?
A rising put-call ratio, or a ratio greater than .7 or exceeding 1, means that equity traders are buying more puts than calls. It suggests that bearish sentiment is building in the market. Investors are either speculating that the market will move lower or are hedging their portfolios in case there is a sell-off.
A falling put-call ratio, or below .7 and approaching .5, is considered a bullish indicator. It means more calls are being bought versus puts.
“A stock is a general term used to describe the ownership certificates of any company. A share, on the other hand reffers to the stock certificate of particular company . Holding a particular company’s share makes you a shareholder.”
The stock (also capital stock) of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are company known as “stocks”.
A stock is an investment. When you purchase a company’s stock, you’re purchasing a small piece of that company called a share.
A stock is a type of investment that represents an ownership share in a company. Investors buy stocks that they think will go up in value over time.
A share of company held by an individual or group. Corporations raise capital by issuing stocks & entitle the stock owners (shareholders) to partial ownership of the corporation. Stocks are bought & sold on what is called an Exchange. There are several types of stocks & the two most typical forms are preferred stock & common stock.
Owning a stock gives you certain rights & those rights can differ depending on the types of stock you own.
There are two main types of stock:
COMMON STOCK
PREFERRED STOCK
1. COMMON STOCK:
Common stock is a form of corporate equity ownership. It being primarily used in the united states. They are known as equity shares or ordinary shares in the UK.Common stock comes with voting rights; as well as the possibility of dividends & capital appreciation. Each share of common stock represents a share of ownership in a company. If a company does well or the value of its assets increases, common stock can go up in value. On the other hand, if a company is doing poorly, a common stock can decrease in value. Simply put, common stock allows investors to share in a company’s success over time, which is why they can make great long-term investments.
2. PREFERRED STOCK
“Preferred stock is also known as preference stock. The word “Preferred” refers to the dividends paid by the corporation. Each year, the holders of the preferred stock are to receive their dividends before the common shareholders are to receive any dividend”.Preferred stockholders generally do not have voting rights, though they have a higher claim on assets & earnings that the common stockholders.
Preferred shares can be converted to a fixed number of common shares, but common shares don’t have this benefit.Like bonds, preferred stocks are rated by the major credit rating companies. The rating for preferred stocks is generally lower than for bonds because preferred dividends do not carry the same guarantees as interest payments from bonds & because preferred stock holders claims are junior to those of all creditors.
Some things you need to know about stocks:
a. P/E RATIO –
The price to earnings ratio (P/E ratio) is the ratio for valuing a company that measures its currents share price relative to its pre share earnings (EPS)…. P/E ratios are used by investors & analysts to determine the relative value of a company’s shares in an apple to apples comparison.The ratio is used for valuing companies & to find out whether they are overvalued or undervalued.Earnings are important when valuing company’s stock because investors want to know how profitable a company is & how profitable it will be in the future.
b. CHART –
Chart reading is the single most important investing skill you’ll ever learn. To understand why stock chart are so valuable. Chart tells you a whole story about stocks. The weekly chart helps you see longer term trends. And daily chart helps you spot specific buy & sell signals while daily price fluctuation perspective.
c. Dividend –
If you don’t have time watch the market every day, and you want your stocks to make money without that kind of attention, look for dividends. Dividends are like interest in a savings account. You get paid regardless of the stock price. Dividends of 6% or more are not unheard of in high quality stocks. Before purchasing a stock, look for the dividend rate. If you simply want to park money in the market, invest in stocks with a high dividend. (For more, see Why Dividends Matter.)
d. Taxes Can Take A Bite Out Of Your Profits –
The FANG stocks – Facebook FB +0%, Amazon.com AMZN +0%, Netflix NFLX +0% and Google GOOGL +0% (Alphabet) — had a great run in 2015, with returns ranging from 34% to 134%, but from a tax perspective any investor who bought last year and eyeing the exits wants them to keep climbing. That’s because the one-year mark is a line of demarcation for the tax man.
Selling stocks, you’ve held for less than a year triggers a short-term capital gain, taxed as ordinary income. That could mean kicking back anywhere from 25% to 39.6% to Uncle Sam. But hold those same stocks for at least 12 months and the tax rate drops to 15% for most tax brackets.
WHY TO INVEST IN IT
Investing in the stock is the only way most people have of building real wealth. Stock is just one of many potential places to invest your money. Investing in stock is often risky, which draw attention to huge gains & losses of some investors.
One of the primary benefits of investing in the stock market is the chance to grow your money. Over time, the stock market tends to rise in value, though the prices of individual stocks rise and fall daily. Investments in stable companies that are able to grow tend to make profits for investors. Likewise, investing in many different stocks will help build your wealth by leveraging growth in different sectors of the economy, resulting in a profit even if some of your individual stocks lose value.
Stocks are risky This means they don’t have a guaranteed return and sometimes lose money. However, the long-run trend of the stock market has been undeniably upward. Stocks have the highest return of any investment asset over the long term. According to the Federal Reserve, the stock market has grown by an average of more than 10 percent a year over the past 50 years. During this same period, government bonds only grew by 5 percent a year. If you can stomach the market swings, you will see the highest return on your money with the stock market.
Purchasing stocks of companies operating in different sectors as well as segments is possible, which helps in optimizing the asset-allocation and provides diversification.
EDUCATION – COLUMBIA BUSINESS SCHOOL (1950 – 1951)
NETWORTH – 8430 CRORE USD
Warrent Buffett is an American business magnate, investors, speaker & he is the chairman CEO & the largest shareholder of Berkshire Hathway. Warren Buffett was born 30 August,1930, in Omaha, Nebraska. Warren Buffett is an investment guru & one of the richest & most respected businessman in the world. Buffett’s grandfather also ran grocery store & Buffett’s father howard, was a local stockbroker & banker who later become Republican congressman.
Warren Buffett known as “Oracle of Omaha”. When he was 11-year-old, Buffett already bought stock & by 16 he had amassed more than $53000 from various business ventures & investment. From a young age, Buffett was bound for success. Buffett purchased shares of CITISES SERVICES preferred for $38 apiece.
After graduating, Buffett applied to HARVAD BUSINESS SCHOOL. But he was rejected by HARVAD BUSINESS SCHOOL. In 1951 he received his master’s degree in economics at Columbia university, where he studied under economist Benjamin Graham (the father of value) & furthered his education at the New York Institute of finance.
He was appointed at a starting salary of 12000 a year at Benjamin Graham’s partnership in 1954. His boss was a difficult man to work with & expected strict adherence to conventional rules of investing which Buffett’s young mind questioned.
Benjamin Graham retired & closed his partnership in 1956. By this time Buffett had a large amount of personal savings with which he opened Buffett partnership Ltd, an investment partnership in Omaha.
He become the richest person in the world in 2008 with a total net worth estimated at $62 billion by Forbes, overtaking Bill Gates who had been the no.1 on Forbes list for the past 13 years. The very next year Gates regained the first position & Warren Buffett moved to second place.
When asked the key to his success, Warren Buffett pointed to a stock of books & said, read 500 pages like this every day. That’s how knowledge works. It’s build’s up, like compound interest.
On February 16,2011, Warren Buffett was awarded the highest civilian honor, “the presidential medal of freedom,” by former president Barack Obama.
WARREN BUFFETT TIP’S
Never depend on single income. Make investment to create a second source.
Saving first, spending last.
Don’t buy things you don’t need.
Create more earning source.
Think long – term & be patient.
Do not put all eggs in one basket.
If the business does well, the stock eventually follows.
Invest yourself.
Our favorite holding period forever.
It’s far to buy a wonderful company at a fair price than a fair company at a wonderful price.
WARREN BUFFETT QUOTES
“Without passion, you don’t have energy. Without energy, you have nothing.”
“The stock market is a device for transferring money from the impatient to the patient.”
“Someone is setting in the shade today because someone planted a tree a long time ago.”
“The difference between successful people is that really successful people say no to almost everything.”
“Focus on your customer & lead your people as though their lives depended on your success.”
“If you don’t find a way to make money while you sleep, you will work until you die.”
“If you cannot control your emotions, you cannot control your money.”
“I look for 3 things in hiring people: integrity, intelligence & a high energy level. But if you don’t have the first, the other two will kill you.”
“You are your best ASSET.”
“We have long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie & I continue to believe that short-term market forecast is poison & should be kept locked up in a safe place, away from children & also from grown ups who behave in the market like children.”
“Risk comes from not knowing what you’re doing.”
“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
“Read 500 pages every day. That’s how knowledge works. It builds up like compound interest.”
“Price is what you pay. Value is what you get.”
“I never invest in anything that I don’t understand.”
“Failure comes from ego, greed, envy, fear, imitation. I have success not because I am smart, but because I am rational.”
“The more you lean the more you earn.”
“The best investment you can make, is an investment in yourself…The more you learn, the more you’ll earn.”
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”
“Time is on your side when you own shares of superior companies.”
“Don’t save what is left after spending, but spend what is a left after savings.”
“Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid.”
“Unless you can watch your stock, holding decline by 50% without becoming panic stricken, you should not be in the stock market.”
“Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that causes the stock to be mis appraised.”
“The stock market is a no called strike game. You don’t have to swing at everything you can wait for your pitch.”
“If you are not thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
“Its good to learn from your mistakes. It’s better to learn from people’s mistakes.”
“Wall street makes it’s money on ACTIVITY… you make your money on INACTIVITY.”
“People who know the edge of their own competency are safe, and those who don’t, aren’t.”
“First, many in wall street- a community in which quality control is not prized- will sell investors anything they will buy.”
“I don’t try to jump over seven- foot bars; I look around for one-foot bars that I can step over.”
“Never feel guilty for starting again.”
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
“I mean, I can buy anything I want, basically, but I can’t buy time.”
“An idiot with a plan can beat a genius without a plan.”
“If you are happy every day, I think you are going to live longer.”
“Don’t pass something that attractive today because you will find something way more attractive tomorrow.”
“Stay away from credit cards & invest in yourself.”
“In insurance, as elsewhere, the reaction of weak management to weak operations is often weak accounting.”
“Don’t put all your eggs in one basket.”
“I go out & do what I believe I should be doing. And I’m not influenced by what other people think.”
“If you think being entrepreneur is risky, try working for someone else for 40 years & living off social security.”
“I learned very early in my life that my favorite employer was myself.”
“Never count on making a good sale. Have purchase price be so attractive even a mediocre sale gives good results.”
“There comes a time when you ought to start doing what you want. Take a job that you love.”
“I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”
“Remember, money doesn’t create man, its man who creates the money.”
“Predicting rain doesn’t count; building arks does.”
“Success is walking from failure to failure with no loss of enthusiasm.”
“Never test the depth of river with both feet.”
“Successful investing takes time, discipline & patience.”
“It takes twenty years to builds a reputation & five minutes to ruin it.”
“Smart doesn’t always equal rational.”
“What we learn from history is that people don’t learn from history.”
“What the wise do in the beginning, fools do in the end.”
“Charlie & I would follow a buy & hold policy even if we ran a tax-exempt institution.”
“If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But , if each of us hires people who are bigger than we are, we shall become a company of gaints.”
“The best thing that happens to us is when a great company gets into temporary trouble……. We want o buy them when they are on the operating table.”
“The most important thing to do if you find yourself in a hole is to stop digging.”
“You only find out who is swimming naked when the tide goes out.”
“It is not necessary to do extraordinary things to get extraordinary results.”
“Its better to hang out with people better than you.”
“Without passion, you don’t have energy. Without energy, you have nothing.”
“You can’t make a good deal with a bad person.”
“Honesty is a very expensive gift. Don’t expect it from cheap people.”
“Having money makes you rich, having time makes you wealthy.”
“To change your life, you have to change your mindset.”
“Forget managing the situation. Manage your mind.”
DEFINITION: “These funds buy & sell units on a continuous basis &, here, allow investors to enter & exit as per their convenience. The units can be purchased & sold even after the initial offering (IFO) period (in case of new fund). The units are bought & sold at the net asset value (NAV) decleared by the fund.”
The number of outstanding units goes up or down every time fund house sells or repurchases the existing units. This is the reason that the unit capital of an open ended mutual fund keeps varying. The fund expanse in size when the fund house sells more units than it repurchases as more money is flowing in.
An open ended fund provides investors an easy, low cost way to pool their money & purchase a diversified portfolio reflecting a specific investment objectives, such as growth & income. Investors do not need a lot of money to gain entry into an open ended fund, making the fund easily accessible for investment.
Open ended funds are available in most developed countries, but T terminology & operating rules vary. US mutual funds, UK units trusts & OEICs, European SICAVs, & hedge funds are all examples of open ended funds.
On the other hand, the funds size reduces when the fund house repurchases more units than it sells. An open ended fund is not obliged to keep selling new units all the time. For instanace, if the management thinks that it cannot manage a large sized fund optimally, it can stop accepting new subscription requests from investors. However it has to repurchase the units at all times.
2.CLOSE ENDED FUND:
A close ended fund is also known as closed end investment or closed end mutual fund. A closed ended fund is organized as publicly traded investment company by the securities & exchange commission (SEC). Like a mutual fund a closed end fund is a pooled investment fund with a manager overseeing the portfolio, it raises a fixed amount of capital through.
New shares in a closed end funds are not created by managers to meet demand from investors, the shares can be purchased & sold only in the markets, which as the original design of the mutual fund, which predctes open end mutual funds but offers the same actively-managed pooled investment.
Usually a characteristic of closed end schemes is that they are generally traded at a discount to NAV, but clear to maturity, the discount narrows.
· DIFFERENCE BETWEEN OPEN ENDED & CLOSE ENDED MUTUAL FUND:
Both open end & closed end funds have been around for many decades. Close end funds are the oldest among these introduced in the late 19th century. Exchange traded funds or ETFs are a relatively recent innovation in the fund business & were launched about 20years ago. Currently, there are 7,407 open ended funds with total net assets of $12.1 trillion. But close end fund by far have the smallest market share, with 568 funds worth about $252.6 billion. This doesn’t mean that open ended funds are always the best option & their funds types should be ignored.
BASIS FOR COMPARISON
OPEN-ENDED FUNDS
CLOSED-ENDED FUNDS
Meaning
Open-ended funds can be understood as the schemes that offer new units to the investors on a continuous basis.
Closed-ended funds are the mutual funds, which offer new units to investors for a limited period only.
Subscription
These funds are available throughout the year for subscription.
These funds are available only during specified days for subscription.
Maturity
There is no fixed maturity.
Fixed maturity period, i.e. 3 to 5 years.
Liquidity provider
Funds itself
Stock market
Corpus
Variable
Fixed
Listing
No listing on stock exchange, transactions are performed directly through fund.
Listed on a recognized stock exchange for trading.
Transactions
Executed at the end of the day.
Executed in real time.
Determination of price
Price can be determined by dividing NAV from shares outstanding.
Price is determined by supply and demand.
Selling price
Net Asset Value (NAV) plus load, if any.
Premium or discount to Net Asset Value (NAV).
3.INTERVAL FUND
DEFINITION : “A non- traditional types of closed ended mutual fund that periodically offers to buy back a percentage of outstanding shares from shareholders. Shareholders are not required to sell their shares to the fund.”
Interval fund shares typically do not trade on the secondary market although many interval funds do offer shares for sale at current net asset value (NAV) on a continuous basis.
Fess for interval funds tend to be higher than for other types of mutual funds as do returns. High yields are the main reason investors are attracted to interval funds. Here is a closer look at these investments. Minimum investment are often between $10,000 & 25,000 & have expense ratio as high as 3%.
B. BY INVESTMENT OBJECTIVE
1.GROWTH FUND & EQUITY FUND:
These fund invest in stocks. Wealth creation & capital appreciation is the primary objective of equity fund. They have the potential to generate higher return & are best for long term investment. These funds goal is to grow faster than money market or fixed income funds with higher risk comes higher reward. There are many different types of equity funds because there are many different types of equities.
I. DIVERSIFIED FUND
A diversified fund is a fund that is broadly diversified across multiple market sectors or geographic regions. It holds multiple securities, often in multiple asset classes. Its broad market diversification helps to prevent idiosyncratic event in one area from affecting on entire portfolio.
a. SMALL CAP
Small cap funds invest primarily in stock in companies with sizes between &300million & $2billion. Small cap fund that invest in small sized companies. Mutual funds have restrictions that limit them from buying large portions of any one issuers outstanding shares, which limit the risk while giving an investors exposure to this segment of the market.
b. MID CAP
A mid cap fund invest in companies between $2billion to $10billion in the market cap. These are established business that are still considered developing & thus have a higher growth rate than large cap fund. Mid cap which invest in mid sized business.
c. LARGE CAP FUNDS
Large cap funds invest in stocks in the largest companies in the world, with market caps in excess of $10billion. These can include apple,exxon,&google.
II. INDEX FUND
These funds aim to track the performance of a specific index such as the S&P/TSX COMPOSITE INDEX. The value of the mutual fund will go up or down as the index goes up or down. Index funds typically have lower costs than actively managed mutual funds because the portfolio manager doesn’t have to do as much research or make as many investment decisions.
III. SECTORAL FUNDS
Sectoral fund invest mostly in a particular sector or along the lines of a defined theme. Since the investment are concentrated on a single sectors or theme, sector funds are considered extremely risky. It is very important to time the entry into & exit from them as the fortunes of sectors changing in different cycles in the economy. They are meant for investor should take only a small exposure in them.
Sectoral funds have performed have done well over the period of 10 years & better than other equity funds, but there is risk associated with it & you need to stay invested in the fund for longer period for a economy & sectors like IT. So if you are convinced that these sectors will move forward in the long run, then you can invest with long term return in your view.
FOREIGN EQUITY FUNDS
Foreign equity funds or global/ International funds, invest in a specific region outside of an investors home country. These funds sometimes have very high returns, but it is hard to classify them as either riskier or safe than domestic investment.
2.DEBT/INCOME/BOND/FIXED INCOME FUNDS
These invest in fixed income securities, like government securities or bonds, commercial papers & debentures, bank certifications of deposits & money market instruments like treasury bills, commercial paper etc. These are relatively sufer investments & are suitable for income generation.
3.HYBRID FUND
These invest in both equities & fixed income, thus offering the best of both, growth potential as well as income generation. They try to balance the aim of achieving higher returns against the risk of losing money. Most of these funds follow a formula to split money among the different types of investments.
4.MONEY MARKET FUND
The money market fund (also called a money market mutual fund) is an open ended fund that invest in short term debt securities such as U.S. treasury bills & commercial paper. Money market funds are widely (though not necessarily accurately) regarded as being as safe as bank yet providing a higher yield. Regulated in the UNITED STATES under the investment company Act of 1940. Money market funds are important providers of liquidity to financial intermediaries.
A money market fund is an investment whose objective is to earn interest for shareholders while maintaining a Net Asset Value (NAV) of $1 per share. Money market funds portfolio is comprised of short term, or less than one year, securities representing high quality, liquid debt & monetary instruments. Investors can purchase shares of money market funds through mutual funds, brokerage firms & banks.
A money market funds purpose is to provide investors with safe place to meet easily accessible.
It is types of mutual fund characterized as a low risk, low return investment. They have no loads, which are fees mutual funds may charge for entering or exiting the funds.
A money market funds might also hold short term U.S. treasury securities, such as T-Bills, certificates of deposit (COD); & corporate commercial buyer & other instruments specified by RBI. These funds have a minimum lock in period of 15 days. Till recently, the RBI regulated money market funds but they now come under SEBI.
“A mutual fund is a professionally managed investment scheme, usually run by an asset management company that brings together a group of people & invests their money in stocks, bonds & other securities.”
INTRODUCTION:
Mutual funds are the most popular investment types for the everyday investor. Because they are easy to use in many in many ways, investing for dummies. A mutual fund is a kind of investment that uses money from many investors to invest in stocks, bonds & other types of investment. A fund manager decides how to invest the money & for this he is paid a fee, which comes from the money in the fund. All the MUTUAL FUNDS are registered with SEBI.
In simpler terms, mutual funds are like baskets. Each basket holds certain types of stocks, bonds or a bland of stocks & bonds to combine for one mutual fund portfolio.
Eg: An investor who buys a fund called XYZ international stock is buying one investment security, the basket that holds dozens or hundreds of stocks from all around the globe, hence the “International” monike.
TIP’S FOR BEGINNERS INVESTING IN MUTUAL FUNDS
Start saving & investing early in life.
Try to understand the fund in which you are investing.
Check the past performance of your mutual fund.
Don’t avoid Index fund.
Experience of fund managing team
Do not commit common mistakes
Understanding the risk involved
Keep your investment objective clear.
The NAV does not matter.
Diversify your investment over time.
Have an investment discipline.
Invest in stocks if you are prepared to take risks.
Never forgot your mutual fund investment.
Stay invested for a longer period of time.
NAV ( NET ASSET VALUE )
NET ASSET VALUE is the total asset value (net of expenses) per unit of the fund & is calculated by AMC (asset management company) at the end of every business day. In order to calculated the NAV of a mutual fund, you need to take current market value of the funds assets minus the liabilities, if any & divide it by the number of share outstanding. NAV is calculated as follows.
NAV Rs. = MARKET/FAIR VALUE OF SECURITIES + ACCRUED INCOME + RECEIVABLE + OTHER ASSETS + ACCRUED EXPENSES – PAYABLES – OTHER LIABILITIES
/ NO.OF UNITS OUTSTANDING OF THE SCHEME/OPTION
Eg. If the market value of securities of mutual fund scheme is Rs. 500 lakh & the mutual fund has issued 10lakh units of Rs. 10lakh each to investors, then the NAV unit of the fund is Rs.50.
ADVANTAGES OF MUTUAL FUND
DIVERSIFICATION
Mutual funds provide the benefits of diversification across different sectors & companies. A single mutual fund can hold securities from hundreds or even thousands of issuers. This by investing in a mutual fund, you can gain from the benefits of diversification & asset allocation, without investing a large amount of money that would required to build an individuals portfolio. The diversification considerably reduces the risk of serious monetary loss due to problems in a particular company or industry.
AFFORDABILITY
You can begin buying units or shares with a relatively small amount of money.
Eg. Rs. 500 for the initial purchase.
Some mutual funds also permits you to buy more units on a regular basis with even smaller installments.
Eg. Rs.50 per month.
LOW TRANSACTION COST
Due to economics of scale, mutual funds pay lower transaction costs. The benefits are passed on to mutual fund investors which may not be enjoyed by an individual who enters the market directly.
TRANSPARENCY
Funds provide investors with updated information pertaining to the markets & schemes through fact sheets, offer documents, annual report etc.
DISADVANTAGES OF MUTUAL FUNDS
· High Expense Ratios and Sales Charges
If you’re not paying attention to mutual fund expense ratios and sales charges, they can get out of hand. Be very cautious when investing in funds with expense ratios higher than 1.20%, as they will be considered on the higher cost end. Be weary of 12b-1 advertising fees and sales charges in general. There are several good fund companies out there that have no sales charges. Fees reduce overall investment returns.
· Management Abuses
Churning, turnover and window dressing may happen if your manager is abusing his or her authority. This includes unnecessary trading, excessive replacement and selling the losers prior to quarter-end to fix the books.
· Tax Inefficiency
Like it or not, investors do not have a choice when it comes to capital gain payouts in mutual funds. Due to the turnover, redemptions, gains and losses in security holdings throughout the year, investors typically receive distributions from the fund that are an uncontrollable tax event.
· Poor Trade Execution
If you place your mutual fund trade any time before the cut-off time for same-day NAV, you’ll receive the same closing price NAV for your buy or sell on the mutual fund. For investors looking for faster execution times, maybe because of short investment horizons, day trading, or timing the market, mutual funds provide a weak execution strategy.
