Monday 20 January 2014

The Various Options to Invest in Equity Shares

Finance, Capital, Investment words like these usually make people get confused and scratch their brains. The complexities of the terms, the risk factor involved or call it lack of knowledge; people are usually apprehensive to deal with it.
The scenario however seem to be changing with each passing time, and the completely open knowledge and investment education available hands on. The apprehensions are shedding off and the avenues of investments are pondered upon. 
Let us try to simplify the fuss over equity shares and how to deal with. There are two modes you can invest in equity shares; one is with the help of a broker another being online commodity trading. Equity shares commonly called as the ordinary share also happens to be a kind of representation of a minute ownership. Therefore the shareholder undertakes the maximum entrepreneurial risk associated with a business venture
There are various types of equity shares such as follows:
  • Rights Issue/ Right shares, issuing of fresh securities to existing shareholders at a ratio to those already held.
  • Bonus shares are the shares issued by the companies to the already existing shareholders with no extra cost by bringing to use the reserves accumulated from the profits earned in the previous years of investment.
  • Preferred Stock/ Preference shares are the kind of shares where the owners are entitled to a fixed dividend or the dividend calculated at a fixed rate to be paid in respect of equity share. They also share a preference over equity shareholders in payment of surplus. But in the case of liquidation, the company creditors, bondholders/ debenture holders are given the preference
  • Cumulative Preference Shares: A sub category in the preference type of shares on
    which if remains are unpaid dividends get accumulated. Before paying the dividend on equity shares the preference dividend have to be paid.
  • Cumulative Convertible Preference Shares: Another sub category in the preference type where the dividend  payable on the same accumulates if not paid. Over a  period of specified date these shares will be converted into equity capital of the company
  • Government Security (G-secs): These are issued by the Reserve Bank of India on behalf of Government of India, more of a sovereign coupon bearing instruments, in the position of the Central Governments market borrowing programs. These are to be paid on half-yearly basis specific dates as they are more of fixed coupons. These securities come in a varied range of maturity dates, from short dated to long dated.
  • Debentures: These are bonds that a company issues usually which are payable half yearly on specific dates bearing a fixed rate of interest. The principle amount on particular date on redemption of the debentures is repayable. 

Tuesday 7 January 2014

3 Tips to Survive the Indian Stock Market

India is a vast country, with numerous industries emerging in various sectors. Blessed with ample resources and huge workforce, the scope for the proliferation of industries is huge here. If there is one noticeable thing that coincides, with this huge potential for industrial growth; it is the lucrative opportunity of investing in the stock market.

India is blessed with diversity in industries and recent years have showed the growth of several sectors. So, any investor will surely look forward earning huge profits in the Indian Stock Market. If you are among the high risk-taking investors, who are looking forward to gain some substantial amount of returns, then you should definitely brush up on the basics, help you in making smart, but careful choices.

Here are some share market tips that will help you get started.

Plan your exit strategy

“Anything that goes up is definitely ought to come down.” Follow this saying completely, and always be careful while determining the ceiling for a particular stock. Based on the estimated ceiling, carefully draft your limit orders. Remember, volume plays a key role along with stock price, while determining profits.

Diversify your investments

“Whenever a sector collapses, all the industries within it collapse.” Follow this popular saying while choosing your stocks. By choosing companies from different sectors, you will get a better market exposure and you can implement several trading strategies, for hedging the risk associated with your investments. Always remember, you don’t have to be the person who earns highest amount of profit, from a particular sector; you have to be the person who earns maximum amount of overall profit.

Stay updated and follow the latest market trends

Indian Stock market is not ruled by principles of general trade; it is ruled by the speculations of people, who are emotional about their investments. While playing with stocks, always be wary about the changing market trends and latest news. Any significant news about a company will drive the market bearish or bullish, and your investments, will get affected, accordingly. So, keep a hawk eye on such news, and implement your trading strategies accordingly.

Thursday 2 January 2014

What Makes A Term Insurance Premium

Ever since its inception, term insurance plans have been gaining momentum and becoming a huge attraction for insurance seekers out there. In the urban India, due to unseemly lifestyle and increasing awareness, buying a life cover has become a must. People are becoming more and more prone to various illnesses and accidents etc. To counter this, a term insurance protects a person from suffering from huge losses incurred during unfortunate events.

A premium rate is the money charged by the company for the coverage they provide with. With so many providers in the market today, each one of them is coming with their own unique set of plans and cover benefits. While searching for a term insurance policy, it is important to calculate your premium rate beforehand; which can be done using online term insurance calculators, available almost on every insurance website these days.

There are a bunch of factors that go into determining the premium cost for an insurance policy. Age is one imperative factor. The younger you are, the cheaper will be the insurance. This is simply because you are less likely to pass away while you are young. That is why most agents would recommend buying one at a young age.

Another deciding factor that comes into play here is you medical records. You might have to undergo a medical exam to look for things that might raise health concerns or future problems like high blood pressure etc. So, the healthier you are, the lower will be the rates.

It’s a wonderful thing to have gender equality, but there is something our gender indicates, its our life expectancy. Women tend to live longer than men as a general rule. This means, women will pay generally lower rates for a term insurance policy.

When it comes to term insurance, the tenure is fixed. So make sure that you select a long tenure considering your current financial and physical situation. But remember, if you select a long duration, you need to be having the finance to be able to pay the premium also.

Last but not the least, if you know what a term insurance is, you will know that the sum insured is the most decisive factor. To put it simply, higher the sum assured, higher would be the premium and vice-versa.

Now that you know all the factors that come in to play, make your decision like a master! 

Retirement Planning Tips For The Twilight Years Ahead

Retirement Planning
Planning for retirement has become an integral part of every person’s planning process. Considering the fact that a person is left with no source of income with expenses remaining constant post-retirement, planning becomes all the more important. It is likely to bridge the gap between expenses and income.

In the Indian context, proper planning for retirement years can only be understood after considering the rising prices of basic necessities. As a major number of retirees in the country are from the government and public sector, the ones who are employed in the private sector or are self-employed need to make their own provisions to live a comfortable financial life in the later years.

Retirement Planning Survey
With the process of retirement planning being a detailed one, it requires an extensive analysis of the financial aspects. This process can however be simplified by following a number of easy steps. So if you are at similar stage where planning for retirement seems important to do, here are some tips to help you in this cause.

Most of us make a mistake of not saving in our younger years, especially when we are newly employed. Saving money for future proves beneficial if done at any stage of life. If you start thinking about retirement plans at the age of around 45, you are already pretty late. Even, if you start out planning for enrolling for retirement, you can figure out the returns by calculating the investment, monthly installments, and interest rates, through the online retirement calculators, which are available very easily and free. Starting out early allows you to make full use of the magic of compounding.

Even though it seems kind of impossible to predict as to what you will need after retirement, it makes ample sense to make a rough sketch or estimate according to your current situation. For example, will your children be done with their education when you retire? What would be the marriage expenses for them? These questions need to be answered in terms of definite money amounts.

After you retire, your health remains a major concern. The medical expenses tend to increase as you get older. It would be advisable to buy a good health insurance policy to protect you at uncertain times. Some companies also offer plans that aim at finance after retirement. Make sure you select one of the top rated retirement plans that help you in your cause.

Tuesday 31 December 2013

Building Up A Savings Plan For Retirement Years

Planning for retirement has somewhat become mandatory these days. Especially in a country like India, where we don’t have any real social security system in place, future planning needs to be done. We see so many people getting worried about retirement that they even feel like continuing their job or profession beyond the age of retirement. Adding to the facts, there are around 70% individuals who claim to not be able to meet finances after retirement.

So, if you want to avoid being in a similar state later, it’s advisable that you start with a savings plan from now itself. First and foremost, you need to start investing as early as possible. An early start will give you the benefits of compounding later in life. After years and years of savings, you might be having more than sufficient wealth to live with.

The habit of investment should come before spending. Each month, we have some or the other expenses to pay off like electricity bills, phone bills etc. So make sure you have some money kept aside for such payments beforehand.

While going about searching for an investment and retirement planning, you much select a tax free investment plan. Over the years, PPF (Pension Protection Fund) has been proven to be one of the best savings plan that is retirement friendly and a tax free instrument. Pretty similar to PPF there are ELSS (Equity Linked Savings Scheme) that might serve you well as an investment plan along with being tax-free. Also, if you are thinking of investing money for retirement purposes, it is recommended that you not put all the money under one scheme. Rather consider diversifying your portfolio. If you don’t diversify, there is a risk of losing all your investment and limit returns over it.

When calculating the retirement corpus, people often tend to forget some of the important future expenses. These may include essentials like medical cost, household expenses and much more. So make sure each one of these are included.

Sometimes all of this planning process might not be possible by only you. It is always good to hire a financial planner who helps you out in planning and portfolio management. He brings in his expertise and knowledge so that you build up a safe future ahead.




Monday 30 December 2013

Basic fundamentals of Share Market trading

If you are a stock market trader or plan on investing in shares, there are certain basic principles that need to follow to become successful. By educating yourself regarding each one of them, you are able to achieve success for sure.

Virtual stock trading-
Before investing into actual markets, it is advisable for you to spend some time on virtual stock market trading or on stock market trading games. With the help of this you can familiar yourself withal the terms and working of the market.

Small Investments-
Once you are ready for stock market trading, make sure you don’t invest large sum of money. Rather make a small investment and then increase the amount slowly according to your progress.

Trading Plan-
In order to become a successful trader you must have a trading plan or at least design one. You will have to do some homework before trading. This includes study of various charts and diagrams.

Market Trends-
Time and again you should be keeping check on the on-going trends in market before making any hard decision regarding trading or investing. See to it that you understand the strong and weak sectors out there.

Research-
Any decision you make regarding buying or selling of stocks should be dependent on your financial goals. If you seek for a long-term return or short-term gains, choose your stocks accordingly.

Avoid over trading-
In order to become a successful trader in the live share market world it is crucial that you avoid over trading. It is always beneficial that you gain less rather than lose more. 

Keep a positive attitude-
As a trader it should be your prime objective to aim for profits. However, if a plan doesn’t seem to work for you, you must reduce or close positions and watch what’s happening. If a trade seems to fall on a day, there is no need to become mood out.


No Impulsive Trading-
Impulsive trading is best avoided. It might result in the loss of large amount of your investments. And if you believe that you have made a bad trade, you must exit from the trade or keep a strict stop loss so that losses are minimal.

Friday 27 December 2013

Online Trading Sites Making Trade Easier Than Ever



Ever since its inception, the stock market has been an attractive market for investors. However, with the advent of paperless trading, share trading has gone to the next level. Especially for regular investors for whom it’s a burden to maintain reams of stock certificates, opening up an online account has become a necessity. In today’s times, having a depository in this arena has become solved the biggest barrier of investing in equities. No wonder, more and more investors are moving into this form of trading.

 A depository is something similar to a bank account. Unlike cash, this one holds shares that belong to the investor in an electronic or dematerialised form. The shares that are bought or sold are reflected in the demat account of the online trading site chosen. This way, any shares that an investor holds in paper form can be dematerialised and maintained by way of electronic credit. 

The account at regular intervals will also provide with an account statement showing the balance of shares in the account and the transactions carried out during that period. They also offer many other services such as electronic settlement of trades in stock exchanges and much more.

When it comes to opening up an online trading account, it can be done with any bank or with brokers and financial institutions. In most cases, banks will offer attractive rates for an account to be opened if you already have a savings account opened with them. But, if you choose to go for online stock trading, it would be recommended that you open a DP account and a trading account with the same broker or financial institution.

It’s important to know that DPs charge annual maintenance fees, transaction charges, and other miscellaneous charges for dematerialisation. Make sure you look through them carefully so that you are not in a state of shock later.

By having a demat account, you always have an opportunity to carry out trade in a much quicker, smoother and safer way. This way you can keep a check and monitor your transactions from time to time.