Smart Investing..

Hi Had been a bit held up with lot of traveling this side so was out of blogging since few days. Today am keenly observing and tracking the volatile situations across the globe. Markets across the globe took a beating today due to concerns of housing and credit tightening which can slowdown the US economy, as there will be less money/ liquidity for the economy to grow. When this concerns is on US economy, which holds more than 30% of the world GDP, then it’s a concern. US are the biggest market and since we are in a global village the happenings in the US market affect us. The US housing and credit concerns might spread to the other economies too. This concern makes the traders, stockbroker’s world wide to jitter and sell off to be safe. The sell offs include US, Europe and Asian markets, which took a cue via heavy selling on Wall Street. Japan's Nikkei 225 index ended the morning session down more than 2.3%, to 17,291.23, share indexes in Taiwan, South Korea and Singapore all decl

Yesterday I received a mail from one of my blog readers Mr Kamlesh which I am sharing with all of you as the same doubts exists in most of the investors mind and it might make some sense for all. His question goes like this : Hi, I am new to the investing field. I have few questions (might be unusual) 1. Why should I invest ? 2. Where to invest ? 3. How to invest ? 4. What to take care before investing ? 5. What should I avoid during investing Any other basic knowledge that you can share with me will be very helpful. I am bit confused with investment planning. Dear Sir, Thanks for the mail & let me tell you its a very genuine concern lot of clients have and no your question is not unusual. I was reading in one of the newspapers today that in India out of the total salaried/self employed people hardly 3% invest into equity (direct + via mutual funds) and the rest goes into savings bank/ fixed deposit, ppf, post office etc. Amazing…. Don’t you think so? Now why is it happening is bec

Hope you have read the earlier article named mutual funds demystified. part 1. basics which explained mutual fund and its types. Now lets look at the taxes on mutual funds. The Tax on mutual funds can be divided into the following three heads Capital Gains Tax ( Short term capital gains- STCG & Long Term Capital Gain- LTCG) Dividend Distribution Tax. ( DDT ) Securities Transaction Tax ( STT ). Equity Mutual Fund: As per Indian tax law an equity mutual fund is a fund with more than 65% invested into equity or equity related products. Most of the balanced funds like HDFC Prudence or DSPML Balanced etc take this advantage by investing more than 65% in equity related instruments. This 65% of the fund is calculated by the weekly average net assets method. So what are the tax rates for equity MF? STCG – 10% (11.22% with surcharge, IT@10%+ surcharge 10%+ Education cess 2%) LTCG - 0% DDT - 0% (Dividends from equity MF are totally tax free) STT -.25% Debt Mutual Fund A fund with les

Daily we are fed with so much news, views and ideas on markets and economy via news Channels, Newspapers or the Broker/Bank channels that we get confused and our eyes pop out. Though we made our investment plan for the long term but due to all the confusion we panic in the short term and dump our plan. We rightfully forget that we are investors and not traders. I have come across this type of confusion with lot of my clients and I have spent long time in teaching them to filter the incoming news and views. So we come to our main question, How to filter all the news?? What to keep track of?? Many a times you would have noticed that any movement in the stock market in the short term is mostly unexplained by lot many experts because in short term it’s the fear or the sentiment which works. Its something like in short term the heart thinks and in long terms the brain. That’s the reason why we advise that the investment plan should be properly diversified across asset classes, as it will he

So you just invested into the last MF NFO. Congrats, but was it according to certain plan or some advisor told you it’s the best plan, the amazing concept it has or as usual the India growth story. If it’s the latter then you might be in trouble. Every year millions of investors worldwide fall into this kind of trap created by the marketing departments of various investment companies. Beware!! Here I am not trying to say that the India growth story is not happening but my simple understanding of an investor is a person who knows where the money is going, approx how much it will grow to by certain date and what are the risks involved. So are you an investor? By an investor I mean a person who has planned and will execute the plan to satisfy his need, wants, desires over a period of time. I am not speaking about those people who buy few mutual fund or insurance plans thinking its investment or save some amount of money or buy some stocks because somebody else is buying it. Investing is a

My wife forwarded the below short story and she aptly named it too as the Red Indian way of analysing the stock market. I will say this happens every time in the market and we just have to be careful about the happenings and the impact of various incoming news,views and opinions. Any decision which we make should at least be based on part self research. Lot of my clients ask me what is that an investor should look in the market, the ideas, opinions, company news, economy, projections, growth numbers etc that's lot of it how to filter it. I will soon be coming up with an article the things an investor should look at in a stock market till then just enjoy the short story and as usual keep reading. The Red Indian way of analysing the stock market. It was autumn, and the Red Indians on the remote reservation asked their new Chief if the winter was going to be cold or mild. Since he was a Red Indian Chief in a modern society, he had never been taught the old secrets, and when he looke

The Indian rupee has appreciated by nearly 10 % from its level in 2006 What does it mean is for each dollar we will have to shell less of rupee or in other words rupee has appreciated. Say for example if we are an exporter selling goods worth $ 1 to overseas customer we will get Rs 40 now than 48 earlier so it’s a concern for them as they will loose in the exchange rate. To be profitable exporters will have to increase the price of goods, which will make their products more expensive in abroad markets and they might loose their competitiveness. But what is actually fuelling this rupee rally. I think we should attribute it to the demand and supply game in the currency markets. The main reason for this appreciation can be attributed to the inflow of $ into India. There are lot of reasons for this inflow, companies borrowing via ECB route from international market which land up or the FIIs and FDIs coming into India looking at the growth in our economy or the ADRs/GDRs issued by companies

I was going through the portfolio of a new recently married client who is in his early 30s with a balanced risk profile (50% equity and 50% debt) and total investments of 40 lakh spread across 21 mutual fund schemes. On my questioning him as to why the whole money is invested into equity mutual funds the client answered with a smile, I have bought almost all the NFOs which had hit the market since last 1 year at Rs 10 NAV. Is it right?? Is this the way we choose mutual funds to buy? Are low NAV funds great?? Lot of questions with one simple answer NO… NO… NO… To understand why NO we should first understand What is NAV and why is it important? NAV or Net Asset Value is the value (total asset value) of the mutual fund which is calculated daily and published by the asset management company. In simple words the value of all the scrip’s in the mutual fund is calculated and from it all the expenses are removed. The remaining value is then divided by the total number of units of the fund. The

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An ETF or exchange traded fund is a basket of securities which tries to imitate/ track the index. Though an ETF and index fund is different lot of people get confused between the two. An index fund is a mutual fund which tries to imitate the index and its value is the closing day NAV. ETFs are traded on the stock exchange like other scrip’s and the price of it usually fluctuates every second. ETFs also have lower expense ratio than mutual funds but it attracts broking fees as it has to be bought from the stock market. It also has the same tax structure of an Equity mutual fund wherein the STCG is 10%.Due to it flexibility to be traded on the exchange with less charge and tax it can be a product in the portfolio to time the market. Example, If we had invested during the last market correction when sensex was down more than 18 % to 12000 levels from its peak, our money now at sensex of 14600 would have grown by an absolute return of 21% (pre tax and 19% post tax) in just 5 months. I have