Stocks or mutual funds where to invest ?

Dear Friends, it is always a good debate on Stocks Vs Mutual funds. I am a long term investor in both stocks and mutual funds. There are advantages and disadvantages in both cases, although both are linked to market risks and fluctuations. The decision is mostly influenced by factors like investors knowledge, risk taking power and maturity goals. So lets see what are the factors - 

Mutual Funds Vs Stocks  - 

1. 💰 -Risk to rewards  : In mutual funds investment, one takes a calculated risk and gets rewarded moderately based on fund performance. The advantage is- limited risk of losses in mutual funds when markets turn volatile and bearish. In case of stock investments, fluctuations will be more in both directions- gains and losses. so it is a high risk high returns investments. If one is having good knowledge and sufficient financial back up, he can take advantage of fast growing stocks like mid-caps to grow his capital at faster pace. 
2. $$ -Expenses : When you invest in mutual funds, your investment expenses in terms of brokerage and various fees is less compared to stock investment. The reason is, in stocks you have to trade multiple times to diversify and optimize portfolio, profits and loss. But in mutual funds, this aspect is taken care by the fund manager, so one do not need to watch and trade frequently that saves money for investors.
3. ℀ - Demat account:  For investing in stocks, one has to open a demat and trading account. Demat account is where your securities are deposited in electronic format just like your savings account. For investing in mutual funds you do not need to have demat account. You can invest directly with asset management companies. You can chose any asset management companies available to invest on web.
4. ⏰ - Time management: If one invests in stocks, one needs to invest in time and resources to screen good stocks. It is important to monitor the fluctuations, financial performances as well as observe and follow the news related to stocks, business and global scenarios. Also one needs to diversify the portfolio to avoid the risk. It requires lot of reading and understanding, which comes over a time, so one need to invest in time more, if trading in stocks. In mutual fund, things are taken care by funds manager to do research on these things and make appropriate changes in holdings, which is his domain. But it does not mean mutual funds will always perform well, you need to study mutual fund portfolio and performances as well. However, it takes less time compared to stock studies.

 I hope this article was helpful for you.. If you have any questions and comments please feel free to ask....
Happy investing and Enjoy !

Things to check before you open your- best Demat account

Hi Friends-
Back with one more important topic- Things to check before you open a demat account. 

1. Search for the reviews & feedback's: Very important to spend some time to understand what the demat service provider offers. There are plenty of reviews available on the web, go through some trusted reviews to understand and compare the services offered. Based on your investment requirements, you can screen some of the demat services, call them and verify the actual services offered.

2. Ask upfront about charges and get written confirmation: One common mistake investors do is  not asking further details about all the charges. That's where demat service providers take advantage. They will discuss about brokerages charges, but there will also be some hidden charges, you need to understand before taking final call. You will sign a bunch of documents, and thus agree to all the things without even reading ! For example some banks or companies charge DP charges on every sold securities on top of brokerage, for this they will charge minimum amount or a certain percentage whenever investor sells securities. These charges many people will not know. Once they start trading, slowly they realize, they are losing much of money in charges and brokerage and finally nothing is left as profit. I personally experienced this. So advice is to get written clarity on all the charges.

3. Negotiate on charges and services: There are many banks and companies, which will keep you charging at higher rates, you committed long back. Unless you bargain, they will keep on charging at these rate. There are many new demat & trading service options available now, and if you see an alternate demat & trading account with good services and fees, you can plan to shift. Before making final call ask for discounted brokerage, and annual maintenance fees in written. There is a SEBI circular available on web where guidelines pertaining to charges from service provider is mentioned clearly, so investors can make use of this circular and negotiate.

4. Customer care support and consumer complaints: Important to know the customer care service is better, as you would be frequently interacting with the bank for clarifications and other queries. Opt for the bank/ companies which are handling the customers with priorities and respect. There are banks an demat services which do not follow proper customer care service and it will be very disappointing and waste of time for you. Also do check for existing complaints on various consumer complaints boards, and you will come to know many things where customers are facing issues. The less consumer complaints your see on web for a bank, the better !

Hope I provided you some good information ! Feel free to put your comments and questions, Happy Investing and Enjoy !



 

Why to invest in mutual funds- Explained

New investors frequently tend to ask – Why should one invest in mutual funds? What are the benefits it offers and is it safe or risky to invest in mutual funds? Here are the explanations one would expect to have to clarify.

Benefits of investing in mutual funds-

🔓 1. No minimum locking period: The most important benefit I tell to the investors is- there is no minimum or maximum duration of investments. Many government investment tools like EPF, PPF, NSC or postal investments where investor has certain number of locking periods. But mutual fund investment can be redeemed any day when you need. But one need to understand, in order to have tax benefits on the gains from mutual funds, you have to keep invested for the period of one year. That is it; no more locking period is required.


💰 2. Start investing as low as Rs. 1000: Most SIP mutual funds have option of investing at very low monthly contribution of Rs.1000, so you do not have to bear the sudden burden of investing, and your investing will be systematic and disciplined. Why I use this term is, we generally tend to be casual and do not seriously think of importance of investing for long term goals. By the time we realize, much of the time is already wasted due to lack of awareness.


🤑 3. More reward for optimum risk: We all know, without risk it is difficult to have good rewards. So one must understand the risk taking capability of oneself. Since mutual funds are linked to market fluctuations, there will be risk associated. However, if one invests long term and systematically in good funds, surely, the risk to reward would be in favor of investor, and investors can build good capital. But again, learn and learn before you invest. Mutual funds offer better reward to risk ratio compared to stocks investments due to diversified portfolio, which is difficult to maintain for a small investors.


🔄 4. Several Options and variations: One thing I really like about mutual funds is the vast choices investors have, to choose based on one’s suitability and knowledge. There are hundreds of funds schemes available with very good fund houses. One has to spend some time to understand one’s needs and preferences and you have many options available.


I hope you liked the blog, please feel free to ask any questions you may have and I would be happy to answer them. By then, happy investing and Enjoy!


To know more on how to invest in mutual funds and where to search for resources regarding mutual funds, keep reading my blog!

What returns mutual funds will give with Rs.1000 SIP?

SIP is a short form of - Systematic Investment Plan, where in an investor makes a periodic investment in mutual fund for appreciation of wealth. One of the new investor asked me this simple question –What returns can I expect investing in mutual funds with as low as Rs.1000. Here I tried to answer it in simple manner for every new investor’s benefit.

Mutual funds returns are dependent on three main factors- 

 

1. Appreciation of the fund you invested in
2. Amount and frequency of SIP you invest in that fund
3. How long you stay invested

Let me give an example-

Mr. X has Rs. 1000 as SIP at monthly frequency. He decides to invest in a fund, which historically shows average returns of say 25% for this case, which is possible and well proven historically for many funds. Considering the scenario remains the same and Mr. X is capable of taking the market risk, at the end of 10 years:

•   Amount Invested by Mr X: Rs.1.2 Lacs
•   Future value of SIP of Mr X: Rs. 5.22 Lacks
•   Total gains : Rs. 4 Lacs

That means income of Mr. X has multiplied more than four times in just 10 years, which is very good returns scenario. Similarly, if Mr X considered investing Rs. 10000 in the same situation, would have yielded 52.2 Lacks in just ten years. Isn’t it lucrative? Of course, mutual funds and stocks are risk and rewards based investments, but given the facts, it is advisable that you should invest in mutual funds if you are capable to manage risk associated with market fluctuations.

 

Hope this article was helpful to all the new investors! Happy investing and Enjoy!

Mutual Funds Screener for Better investments

Selecting right mutual funds is the key for your successful and growing portfolio. Investors always search for good web resources to screen & evaluate mutual funds. This is an important exercise prior to investing in any mutual funds. There are plenty of fund houses and thousands of mutual funds available for investing. A smart investor has to screen the best suitable funds for his investments. In this article, I am suggesting two important web resources where you can thoroughly study & compare the performance of different mutual funds.
So lets have a look at what are those resources-

1. Value Research- click here for visiting the website
This resource is literally your complete guide for mutual funds, as they say it in their tag line. One need to create a login id and password to use all the features of this resource. Spend some good amount of time and explore the enormous data available on this website. You have option of screening your mutual funds in many different ways- such as best performing mutual funds, AMC's or fund houses, annual returns, type of mutual funds, and so on.

2. Money Control- Click here for visiting the website
Money control is well known resource and gives you a list of mutual funds with Crisil ratings. Here you can screen down mutual funds based on several options like historical performance at various years, net worth of the fund and also you can compare the performance of different funds. There is an option of selecting category funds like banking, infrastructure, healthcare, technology etc. Option for selecting and screening large cap funds, midcap funds, multicap funds and so on.

I hope you will explore these two resources and use them, for screening the right funds for your portfolio. Let me know if you have any specific questions on the same. Soon I will share with some resources for  screening mutual funds. Meanwhile, happy investing and Enjoy!

Where to search good mutual funds and stocks

In the ocean of internet resources, investors always try to search for authentic information related to stocks and mutual funds. And rightly so, it is always advisable to conduct your own thorough research on funds and stocks before you invest your hard earned money. This would help you reduce the risk and increase your profits. I observed that, depending solely on paid services for stock tips and recommendations usually fail due to mismatch of timings and possibility of hidden agenda which is quite difficult to judge or identify. And hence it is recommended that one should do his or her own research and then invest, instead of depending on paid services.  Now the question is where to search information for studying the stocks and mutual funds.

Although there are many useful resources available, I will share my experience with two such excellent websites I use, when I invest in stocks and mutual funds. 

  

1. Google Finance (https://www.google.com/finance ) :

Google Finance is a wealth of information for stock market lovers. One needs to explore its full potential by spending some time on this website. I always keep the window of google finance opened in my laptop when the market is trading. The reason is, in a single page you get whole lot of information in front of your eyes, that too in a very simplified manner and without any clutter of unwanted information. You will get all the detailed information such as : 

• Live updating of all major global stock market numbers
• Click on your desired market and further details will appear
• The graphical representation is very nice and can be optimize for axis view as per convenience
• One interesting thing is- it shows past performance of not only stocks but also the mutual funds
• Historical performance not only limited to few years, & shows real past numbers for decades
• On the right side, upper corner – you see news related to stocks and indices
• Option of making your own portfolio to keep track of your interested stocks and funds
• Live updates on currencies and bonds 

 

2. Ratestar.in : ( http://www.ratestar.in/ )

This is again a tremendous source of technical information on thousands of stocks, mutual funds and interestingly the big investors. The additional information this website gives you is quarterly holdings of popular investors in the stock market, which you can search by simply typing the investor name. You can search for portfolio & holdings of top investors like Rakesh Jhunjhunwala, Porinju Veliyath, Dolly Khanna and so on. If you think to invest in the stocks where these top investors are investing, this website is helpful. Nevertheless, remember that, successful trading comes not by following an expert but more from learning the market dynamics and educating yourself to take decisions on timings and picks. The information you get here is

• Search stock holdings of top and famous investors
• Search thousands of companies for detailed technical information
• Apart from usual numbers, like market caps and PE, several key technical things to explore
• Quarterly and annual results, Key financial ratios and debt and profit status
• Assigned ratings (zero to hundred, hundred being best) associated with all stocks which is attributed to factors like financials performance & trends
• On the home page, you also see list of stocks with high performance ratings for quick review
• Also available as an android App. as beta version so you can use it on phone
• Less clutters and unwanted material which usually distracting the focus 

I hope this information is useful for you! Let me know if you have any comments or questions. Happy trading and Enjoy.

 

Five mistakes to avoid in your early career

To be financially independent and autonomous is one of the important goal in everyone's life. In achieving the financial goals we, unknowingly or due to lack of knowledge, do many mistakes, and believe me we pay heavily for those mistakes. Through this article, I would like to share with you about few important things, so you can think before making crucial financial decisions and make your life successful.   

1.  Investments in buying home early: It is everyone's dream to buy a home or flat as soon as we start earning. But hold on, have you ever done a little maths and some study before you invest in a home very early. Let us take an example, you buy a flat worth Rs. 60Lacks which is a reasonable price of a new flat today in most metro cities. You opt for a homeloan say for 20 years, and your EMI will be Rs. 54000 for 20 years at 9% interest which can be calculated at http://emicalculator.net/. So at the end of 20 years you end-up with paying Rs. 12956054 out of which around Rs. 7000000 is interest only. You might be thinking whats new here, we all know this. Now consider, you postpone buying your home by few years say 5-7 years, and instead live in a rented house where you pay Rs.20000 rent. Interesting part is here- You invest the rest of the money from your supposed EMI of Rs. 54000 which comes to Rs. 34000 per month in to a mutual fund. Now you can refer any mutual fund returns calculation website such as http://www.moneycontrol.com/mutualfundindia/. If you see past records of most of mutual funds performances, A good mutual fund will give you anywhere between 25 to 45%  minimum returns annually. Not only that, over the years it gets compounded. Here you generate a good corpus in five years to buy your sweet home, may be with a very much reduced EMI, since now you have a bulk amount savings with you. 
2.  Buying a fascinating car in early carrier: Please remember,  things are always relative. Some one with a good financial backings may not find these factors relevant. Now, buying a car has become a necessity in the bigger cities. The important reason for buying a car I give is - safety. So you should buy a car for yours and your family's safety. But the catch here again is, instead of buying a big car & investing heavily in that, I would consider buying a small car for few initial years. I will tell you some benefits of doing it that way. First is, you can have surplus amount of money  in your hand by buying a small car and you can utilize this amount or invest it wisely. Second, you or your spouse may be newly learning the car and may find it difficult to drive big car initially and also chances to have scratches and damage will be more. So the car's value will go down quickly. With big car depreciation loss will be more. So buy a small car, use it for few years, get your hands on it and then sell it and buy bigger one !
3.  Health Insurance and health checks : We all say that health is wealth, and it is literally true.We all buy a good life insurance policy, but today health insurance is very important. The hospital expenses have become very high now a days. Fortunately, most of the corporate employees are covered with some health insurance but they vary in their coverage, so understand the policy well. Make sure each one of your dependent member is covered in health insurance to avoid sudden burden of illness expenditure. Similarly, regularly do health checks specially parents should do health check at least once in a year.
4. Diversify your income: This one is most important. Never ever invest all your money at one place. Diversify it in various investing opportunities.  Ideally it should be combination of Mutual funds or stocks, land, gold and liquid cash. Proportion of each investment must be decided based on individual's ability to take risk and his knowledge in various opportunities. But make it more diversified, it will minimize the risk. 
5. Get Knowledge:  This one is equally important. You should spend some time to gain more knowledge. Read more and more about investing & things that fascinates you. Personally I read more about Stocks and Mutual funds and believe me its very addictive. You can also use https://www.youtube.com/results?search_query=investment+ideas. All the best and happy investing !