Monday 20 January 2014
The Various Options to Invest in Equity Shares
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.
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.
Retirement Planning Tips For The Twilight Years Ahead
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.
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.
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.
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.
