Trading Rule – “Always keep an eye on your pay-back period”

WHAT DO WE UNDERSTAND BY A PAYBACK PERIOD? OBVIOUSLY, IT IS THE TIME IN WHICH YOU RECOVER YOUR PRINCIPAL. YOU MUST HAVE HEARD OF THIS CONCEPT IN LARGE PROJECTS BUT HOW IS THIS IDEA RELEVANT WHEN IT COMES TO EQUITIES. FIRST LET US UNDERSTAND THE CONCEPT OF PAYBACK PERIOD. LET US ASSUME THAT YOU HAVE INVESTED RS.10 LAKH IN AN EQUITY SHARE AND THE YIELD ON THE STOCK HAS BEEN AROUND 10% ANNUALIZED. THAT MEANS YOUR PAYBACK PERIOD JUST TO RECOVER THE PRINCIPAL IS 10 YEARS. THAT IS OBVIOUSLY NOT TOO EXCITING

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Precautions to take before trading on the internet

Internet trading has picked up in a big way across India with nearly 20% of the trading volumes being accounted for by the internet. That is hardly surprising. Internet trading is cheaper, it is quicker and it is a lot more transparent. Having said that, it is after-all driven by technology and hence you need to exercise caution while trading on the internet. Here are 10 precautions you must use while you trade on the internet. Continue reading

Mutual Funds versus equities: Which is the better tax saving option?

Equities as an asset class have not only emerged as a wealth creating asset class over the long term but they are also extremely tax efficient. As a stock market investor you have two approaches to equities. You can opt to directly open an equity trading account with a broker and buy equities into your demat account. Here you can select the stocks you want to buy and also take decisions on churning your portfolio. The second method is to invest indirectly through equity mutual funds. Here you allocate a certain corpus to the equity mutual fund and the fund manager decides what stocks to buy and what stocks to sell. Of course, this is a transparent process and you can see the portfolio of your fund each month in the fact sheets published by the fund. While equities have a stock price, the mutual fund will have an NAV (net asset value). Both equities and equities have emerged as solid wealth creating asset classes over the long term. For tax purposes, an equity share and an equity mutual fund are given similar treatment. But there are some very subtle differences between the tax treatments of direct equities versus equity mutual funds. Continue reading

Sector-Picks 2018

 

What will be the key sectoral stories to watch out for in 2018?

Come year-end and the general question is, “What about markets”? This time will be no different. Let us look at 6 sectors that will be big stories in 2018 Continue reading

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