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3 Things to research before you invest

Investing can be daunting, especially when you’re new to it. It’s only natural to be overwhelmed by the number of variables that must be considered before deciding whether or not a company is going to offer its investors a worthwhile return. Between production margins, personnel, geographical conditions, and competitors’ pricing strategy, there’s a lot that goes into determining the fate of a firm. And while each of these does affect a business’ performance, there are a few variables that are just as indicative of its financial health, while also being uncomplicated enough for retail investors to understand. So, if you’re still new to equity investing, here are three essential items that you must research, before you place your bets on a company: The Captains of the Ship Irrespective of how fertile a market is, no business can be successful without able leaders at the helm. In fact, even the best of personnel, favourable economic conditions and most receptive of customers c...
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Stock Market Trading Tutorial – A Share Market Education

There’s nothing more exciting than playing the stock market. Playing is the key word here. When you can invest $1000 and within 24 hours make it become $1500, then you develop a hunger for the game. If you dream of doing this, but are afraid to take your first step into the world of stock trading, don’t worry. Here’s a little stock market trading tutorial that should whet your appetite enough to open a brokerage account. Every stock market trading tutorial needs to begin with the language of the trade. Of course, you know what the stock symbol is; it’s the letters that represent the company. You should know what stock shares are. If you don’t, it’s actually part ownership in a company. When you make a trade, there are two types. The first type is the market trade; you buy or sell the stocks for the going rate, whatever it is at the moment. The second is a limit trade and one of the most important types in the stock market trading tutorial. Here you set the price to you’ll buy or sel...
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Should you invest directly in equities?

However, there are a few things that you should keep in mind. #1 You cannot become rich watching CNBC or by acting on stock tips You need to have the skill to pick up the right stocks and you should be willing to research the stocks before you invest.  And you need time to do all the research. You can’t take a shortcut and watch CNBC or other business channels to pick up stocks. You will never make money this way. There is just too much noise on business channels. Another shortcut is to take tips from friends or experts in your circles. This is another recipe for disaster. Frankly, there is no short-cut. If you are an investor, you need the skill to read and understand financial statements, understand the underlying business of the company, understand industry dynamics and competitive structure etc. You can just rely on Price-Earnings multiple to pick up your stocks. If you are a trader, you need to understand chart patterns, risk-reward, trade sizing and trade manage...
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Stock Tips: Learn From The Masters

Investing in stocks is serious business. You have to dedicate a lot of time to research the Companies you plan to invest your hard earned money. 1. You must always invest in a business and not in a Company This is what Warren Buffett has to say, "If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” What do you learn from this saying? Never buy the stocks of a Company whose business you don't understand. Check if the business offers a unique product. Just like a moat (ditch built around a fort protects it from enemy attacks), a competitive advantage like patents or a cost advantage helps a business beat its rivals. Do take a look at the management and leadership which runs the business before buying its stock. 2. Learn from your mistakes The mistakes you make in the stock market are your best teacher. It's said you learn from the bears and not the bulls. For those ...
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Investing smart, earning big

1. If you want predictable returns with minimum risk, invest in tax-free bonds that offer attractive yields for 10 to 20 years when held to maturity. 2. As we go higher in the risk spectrum and investment horizon, debt mutual funds offer better tax adjusted returns than traditional fixed deposits, if held for more than three years. Within debt mutual funds, there are sub-categories to suit your investment horizon, starting with liquid funds, ultra short-term funds, short-term funds, credit funds and long duration debt funds. 3. Higher still in the risk spectrum, consider investing in equity mutual funds-managed by professional money managers-for achieving long-term goals, which come at a risk of principal and volatile returns, but have consistent track record. These are also tax efficient as gains from equity mutual funds held over one year are currently tax exempted. Dividends declared by such funds are also tax free. You can go for simple strategies like SIP (systematic investme...
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Golden principles of successful investing

Often saving is confused with investing. Many unaware individuals stop at savings never taking the next step of investing, wondering why their wealth has not grown in real terms. If you park all your funds in saving instruments like savings bank account, bank fixed deposits (FDs), post office monthly income scheme, Kisan Vikas Patra, National Savings Certificates and provident fund, you have only saved some amounts and you have not invested it and hence do not expect any growth in your wealth for fulfilling your future goals like education of children, their marriage or comfortable retirement, etc. However, taking a calculated risk with a strong discipline of following some time tested strategies can actually help you grow and create wealth over a long period in a sustained manner. You have to allocate your savings to various asset classes like debt, equity, gold, etc. If you just confined to one of these, then either you are taking too much risk or you are being overly conservati...
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It's never too late to start saving for your retirement

First, seek control over household spending, even as the income from employment continues to flow in. As the number of dependents drop and the need for newer physical assets like a house and car reduces, expenses as a percentage of income should ideally drop. In retirement the income ceases, but the spending persists. If the assets one uses in retirement to generate income do not cover the expenses that a household is used to, an inevitable compromise in the quality of life will follow. Expenses can be classified as mandatory and discretionary. Mandatory ex penses are the ones that the household cannot do without, discretionary expenses are those driven by the lifestyle and leisure preferences of the household.  When income increases and more money is available after meeting mandatory expenses, many households increase the discretionary expenses. When these expenses are habitually incurred, they create a lifestyle creep, or the insidious conversion of discretionary expenses int...
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