Criteria for Value Investing

CRITERIA FOR “VALUE INVESTING”

OR

NORMS FOR HUNTING “VALUE” STOCKS & SHARES.

The following points to be bourn in mind while screening the entire gamut of listed Stocks & Shares. These can give superior returns in the fairly long time horizon of 3-5+ years (subject to reassessment, from time to time say, once a year)

{Not necessarily in the order of preference}

Bases on Annual Audited Accounts.

[1] Market cap is less than or equal to two-third of the net Current Assets.

[2] P/E (Price-to-earnings) ratio should be less than 15 and should also lower as compared to the sector average. Further the P/E is below its own past P/E.

[3] Current Ratio should be more than 1.34:1 preferably say1.50:1

[4] Quick Ratio should be more than 1

[5] P/B (Price-to- book) ratio should be less than 1 and should also lower compare to sector average.

[6] The gross Current Assets should be more than the net Current Assets + Long Term Debt.

[7] Consistently high dividend yield during last 5 years.

[8] Low Market – Cap to Sales as compared to peers (Sector average)

[9] PEG less than 1

[10] Debt- to- Equity ratio is less than 1 and in any case less than the sector average.

[11] Sales (net of excise & returns excluding other \ extraordinary income) rising every year – during last 3/5 years.

[12] EPS should have grown by at least 33% + during last 5 years.

[13] RoE (Returns- on- Equity) is more than the Sector average.

[14] Company should be generating sufficiently enough cash.

[15] Always look for ‘Margin of Safety’ hence buy at CMP if it is about two-third of the ‘Intrinsic Value’.

Thanks & Regards!

Prakash P. Joshi.

ppj_2001@yahoo.com

8 Investment Myths to Be Avoided

8 Investment Myths To Be Avoided

Today I am going to debunk a few investment myths. You will know ‘why individual investors are failing miserably and how you can avoid being one of them’.

I am too young to plan for retirement

Have you started planning for your retirement? You may be saying ‘who me? I am too young to be thinking about retirement”. It is not so! Rethink. You should have started thinking about it yesterday. Because time flies quickly.

If you were smart, and planned for retirement when you are young, your retirement years will be really those “Golden years”. If not you need to compromise and you need to work longer and retire later than others.

East or west FDs are safe and best

Nothing wrong in investing in FDs. FDs are really safe and it gives us fixed return. But there is no meaning in investing all your money in FD. The post tax return of an FD will hardly beat inflation. If your investments are not beating inflation, then your money is losing its purchasing power. FDs are safe but not always the best option.

I can never be as good as Warren Buffet or Rakesh Jhunjhunwala so why try?

In the words of Warren Buffet “Success in investing doesn’t correlate with IQ once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” You don’t need a super brain for making investment decisions. You only need common sense and discipline. If you don’t have enough time and expertise, then you can get assistance from professional financial planners.

Stock markets can earn me quick bucks

This is a common myth among investors. Stock market will reward the long term investors. Stock market is a system which transfers money from investors who are fearful and greedy to the investors who are balanced and rational.

You need to be calm, patient, disciplined, and rational. You don’t have to be smarter than the rest; you have to be more disciplined than the rest.

Timing the market is important

Investors often spend a lot of their time in trying to identify when the market is very low or high, and timing the purchase and sale of investments accordingly.

In other words, they want to time their exit when the market has reached its top and to time their entry when the market has reached a bottom. This not a practical idea because there are so many influencing factors to the stock market. Predicting all the factors and making investments is practically not possible. Instead of that stagger your investments through SIP, STP and stay invested for long term.

There is no such thing as too much diversification

Diversification is needed. A well diversified portfolio can be created with 10 stocks or 3 mutual funds. Having more than 20 stocks or 6 mutual funds can dilute your returns. The reason is you are not only investing in best stocks and funds, you are investing in above average and average stocks and funds. So your returns will come down. Instead of over diversification, you need to concentrate on a few stocks. It is possible to achieve the required diversification with a few stocks or funds.

The best way to make money is investing in what is hot

If you are investing in what is hot, then you are following the crowd. If you follow the crowd, you will get what others are getting. You will not get anything more. You need to be fearful when others are greedy and you need to be greedy when others are fearful. So don’t go by the market trend or the hot pick of the month. Think like a contrarian and follow value investing.

Saving tax is the only objective for me to Invest

Which group you are in? There is a group of people who invest just to save taxes. They will not bother to invest anything more than that. They will meet their objective of saving tax. There is another group which invests to save tax as well as to save for their other life goals like retirement, children’s future. They will meet the objective of saving tax and achieving other life goals. Kindly check you belong to which group.

You can be an assured successful investor if you could avoid these investment myths.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in.

TATA AIG Invest Assure II Plan Review

 

TATA AIG Invest Assure II Plan Review

Let us today review TATA AIG Invest Assure II Plan.

Well, this is the insurance cum investment product (BEWARE…!!!). Here you can get the life insurance cover along with option to invest in different fund options. Thus, you can get the life insurance cover and at the same time invest in the markets and grow your money.

This is what they claim.

The term of policy is 15, 20 and 30 years and there is no penalty on surrender after 6 years of policy.

Here are the various charges under this policy.

(i) Premium allocation charge - deducted as a percentage of regular
Equity Government Money market premium, and varies with policy term and issue age.

(ii) Mortality charge - deducted from regular premium account
Fixed Income every month, towards life insurance cover available under policy.

(iii) Policy administration charge - deducted from regular premium
account on a monthly basis, and subject to a maximum of 5% p. a.

(iv) Fund management charge - varies between 0.90% to 1.75% for
equities above five funds.

(v) Surrender or partial withdrawal charge - calculated as
in G'Secs percentage of fund value of the withdrawn amount in case of full surrender or partial withdrawal.

(vi) Fund switching charge - of Rs.250 per switch, applicable for
every additional switch the first four 'charge-free' switches, and subject to a revised maximum Rs.500.

(vii) Premium redirection charge - of Rs.1000 applicable for every
premium re-direction, after the first 2 'charge-free' premium redirections, subject to a revised maximum of Rs.2000.
(viii) Premium holiday charge - of 3% of regular premium applicable
Each of the above funds will at all times be substantially invested in for the revival period in case the policy holder is unable to pay the regular premium within the grace period.

Thus, the policy is associated with lots of charges. In my opinion, you should go for Term Insurance + Equity Diversified Mutual Funds.

Term insurance will take care of your life insurance needs while the equity mutual funds will take care of your investment needs. So go for them. No need to buy this plan.

Tips for Avoiding Investment Fraud

Tips for Avoiding Investment Fraud

An investment fraud occurs when there is a trickery regarding the investments and when it greatly affects the investor. When an illegitimate insider trades the stocks or when there are prime bank investment schemes they are labeled as investment fraud. There is also fraudulent manipulation of the stock market when the influential techniques are employed by the telemarketers to provide a clear picture of an unprofitable investment schemes as a profitable ones. The effects of these fraudulent methods are many and it is better to be careful while investing in mutual funds and all other investments.

How to prevent investment fraud

• Before you invest in any of the funds, go for an advisor or broker who has a complete understanding of your financial goals. For zeroing in on such a person you need to have a thorough understanding about investments so that you can question them about the experience and professional background. Also ensure if the broker is licensed.
• When you are called by a stranger and are told about investing in mutual funds and other mutual fund information it is important that you done go by their coaxing words. You can reply telling them you are not interested. Do not go by the words of those who pressure you into buying any investments.
• Whenever you are about to invest in any of the schemes, make sure you read the offer document and other details and understand them clearly. If you do not understand any of the statements in the mutual fund information document, do not hesitate to ask questions. When an investment scheme is echt, the person who is asked questions will answer patiently. If things are too confusing, it is a sign fro you to get away from the scheme.
• Do not judge an investment scheme by the person marketing it. The person may look or sound professional but you must make sure that the scheme is an authentic one.
• Be careful of the investments with high returns as they are too tricky, especially the ones that bring an amount that is double the principle. Proper audits should be done before investing in schemes like these.
• The reliability of the firm you are investing in must be ensured to avoid troubles in the later stages. Enquire about the firm with other agencies and previous investors whom you may know.
• Be wary of the shortcomings you face in the retrieval of the principal amount or while cashing the profits out. When you face troubles in such cases, you must be mature enough to understand that the firm is a deceptive one.

Bear Market Tips for Investors

Bear Market Tips for Investors

As all of you know that Stock market is cyclical and constantly swings like a pendulum between the two points (Up & Down). The only problem is problem with Investor’s psychology.

Even though all of us know that we have already invested in fundamentally strong companies, we become panic when we see the price of stocks in our portfolio touching the bottom.

This is the common human psychology and an intelligent investor should learn to handle it. Many of my friends invest in the stock market when its all time high hoping that the price will go up further but when it comes down, they become panic and start selling their stocks.

Well, in my opinion one should not exit from his/her stock investments before completion of time horizon or if the fundamentals of the company change.

Say for Example, if you have invested your money in the stock market for the time horizon of say 10 years and after 2 years if the stock prices go down than it is not the sign of exit from that stock. This is because one business cycle is of around 7 years and businesses grow and show gains in their profits during one business cycle and that’s why you MUST hold the stocks for at least one business cycle.

And yes, if you think that the fundamentals of the company are deteriorated than its surely a time to exit.

Otherwise, an Investor should not focus on day to day market fluctuations. Just think that how many times a day you do the valuation of your home? Not even a single time right? You do the valuation of your property every 5 years or maximum once a year right? Than why you check the valuations of your stocks on the daily basis?

It will gain nothing except the stress. In fact, bear market is the opportunity to buy the stocks of fundamentally strong companies at low valuations. Bear market means SALE in the stock market and you should take advantage of this SALE.

So don’t panic of bear market and stay invested even during the bear market.

What are the Best Investments for 2011?

What are the Best Investments for 2011?

Year 2011 is coming and I started receiving emails from lots of readers that, Which are the best investments for the year 2011? So I thought that I should make a separate post on this issue. So that you can take highly informed investment decisions in the year 2011.

So here are the best investments according to the chronological order.

01) Start your own Business (Online or Offline) -

This can be the real investment for year 2011. I personally advise young generations to start their own business (online or offline) as early as possible in your life especially when you are single and have no liabilities.

This is because once a business is developed, it can provide you a steady and growing cashflow endlessly for the rest of your life and even after that. If you invest your time, money and energy to promote your own business than nothing is best than this.

Many youngsters ask me that, they want to start their own business but they don’t have enough capital to start their own business. Well, I advise these youngsters to start their own online business. This is because the online business requires very less capital to start and it can grow like anything over a period of time.

Many people argue with me that, but starting an online business is difficult for people who don’t know anything about internet. Well, let me tell you that, nothing is easy in this world. If you want to make money and really want to start your own business and don’t have much capital to start with than you must have to learn it and everything about the internet.

02) Equity -

Equity will be the second best investment for the year 2011 as the world equity markets will skyrocket in 2011 because of the currency wars between the developed nations. Developed nations are printing more and more money to dilute the purchasing power of their currency to get out of the recession and that’s why the stock market will continue to rise.

If you are not the stock investor than simply invest in good equity diversified mutual funds.

03) Gold -

This is the third best investment of the year 2011. Well, yes. The gold price has to rise at least up to mid 2011 because the US Government will print US $ 75 Billion every month up to mid 2011 totaling US $ 600 Billion. This will dilute the purchasing power of the dollars and thus the price of gold will shoot up.

04) Web Properties (Domain names, blogs & websites) -

Web properties are the valuable assets of the internet. Domain names, blogs and websites are the great web properties. They not only appreciate in its price but also generate cashflow for you. Sedo.com and Flippa.com are the great online marketplaces to buy the web properties.

This time, try something new and invest in the web properties for 2-3 years and see how much you gain and compare these returns with equity and gold.

Indian 25 Paise Coin

Indian 25 Paise Coin

Because of the inflation, the value of money may be gone down but the value of small denomination coins like 50 paise and 25 paise has gone up.

The 25 paise coin which is of now no value in buying anything has become the choice of coin collectors. Indian 25 paise coin is now the asset class and coin investors invest in it for great profits.

According to Times of India,

"Just like you have kabariwallahs buying old newpapers and other disposables, the coin collectors also do the rounds of shops, temples and houses in search of coins.
Payment is made on the spot. While 100 one rupee coins of the heavier variety fetches Rs 140, the later version (minted in the 80's and early 90's) sells for about Rs 110," says a paanwallah who carefully segregates the older coins from the new before handing over 'change' to customers.

The costliest item is the old 25-paise coin which is hardly seen today. Rs 100 worth of these 25 paise coins fetches Rs 160 while 50 paise coins (Rs 100 worth) sell at Rs 120.

Well, Yes. The value of 25 paise coins is not going down but basically going up and up day by day. Small denomination coins are now the choice of collectors and coin investors.

So if you have 25 paise coin than preserve it. After all who knows the future? May be this small coin make you a Fortune?…!!!

Best Investments for 2011 – Equity and Gold

Best Investments for 2011 – Equity and Gold

Let us do some predictions with my crystal ball about the best investments for the year 2011.

Well, in my opinion, the best investments for the year 2011 will be equity and gold. And in my opinion, It’s the death of the FDs, Post-office savings schemes and PPF now.

This is because recently the US Government has announced US $ 600 Billion of QE2.

This means that the world economy will be filled with tremendous amount of liquidity and this newly printed money will dilute/shrink your wealth in the fixed income instruments silently by causing higher inflation.

Right now in India, the inflation rate is 10%+ and the Fixed income instruments are giving just 8.5% annual returns so right now you are actually making –2.5% annually from your Bank FDs, PPF & Post-office savings accounts in terms of the purchasing power.

Thus, basically your wealth in these financial instruments is shrinking and making you poor. Very soon, your retirement will be difficult because you won’t be able to live on the income from your these fixed income instruments anymore.

But well, the Equity and Gold will flourish like anything in the future because everytime, the central banks and governments will print new money, it will chase equity and gold and shooting up the price of gold and equity by several folds.

Thus, in my opinion, people should increase their financial IQ and learn how to invest in the stock market in the year 2011 and start investing in the stock market for the long term rather than pampering yourself that, Equity is risky and FDs/PPF/Post-office savings scheme will make you financially free in the future…!!!

Never Borrow to Invest in IPOs & Gold

Never Borrow to Invest in IPOs

Recently Coal India has listed on the stock exchange with 20-25% premium price. Not only this but during this Diwali, several banks are giving women loan to buy a gold coins/gold jewelleries for 9 months EMI.

In fact, many people are borrowing money at 21% for just 10-12 days of loan against their savings accounts balance and mutual funds portfolio to invest in IPO.

But wait….!!!!

Don’t you think that there is something wrong here?

I mean ideally you should invest with your surplus money right? Well, Yes. The basics of investing is that, you invest your surplus money and not with the borrowed money.

Unfortunately, financial awareness in India is very low and that’s why right now many people are borrowing money from banks to invest in IPOs as well as in gold.

Well, remember that the first principle of successful investing is that, you should be get out of debt first. You can not invest with borrowed money.

Of course, the Hedge funds invest with borrowed money (Leverage). But well, they are hedge funds and their investors afford to loose money. But not you.

After a great success of Coal India, many people are preparing to borrow money for the future IPOs like Lodha Developers, Reliance Infratel, Neptune…etc..

But well, this is the wrong investing. Someday you will suffer a great loss. So better to avoid investing with borrowed money. You should only invest with the surplus money and not with the borrowed money.

Believe me, investing in Gold & IPOs with borrowed money is not the true investing. So better to avoid such things.

The Power of Long Term Steady Investing

The Power of Long Term Steady Investing

Let me give you one real time example of me and my friend. In January 2008, the Sensex was at its all time high level of 20,870 and after that it crashed because of the news of global economic slow down. Today in November 2010, it is again the level of 20,890.

Now, after Jan 2008 crash, one of my very close friend told me that he is going to book a loss and exit from the stock market. He told me that he will invest again in the stock market from the bottom of the market levels.

After that in the end of 2008, the market was at 8000 level. Nobody knew that it was the bottom of the Sensex but my friend told me at that time that, the market will still go to 6000 level and from that level he will do the bottom fishing. The news papers were flooded with the news like, the Sensex may see very low from this levels also.

But well, nobody knew that, it was the bottom of the Sensex and from that level Sensex rebound back. My friend was very hopeful that the Sensex will again come down to 8000 level again and he will do the bottom fishing from that level. But that level never come back.

Now, let me tell you about me. I has invested in 4 equity diversified mutual funds at that time and I did not exited after Jan 2008 crash and I continue doing SIP through out these two years. And today at the level of 20890, my wealth is almost triple than the wealth of my friends.

Moral of the Story

- Never try to time the market

- The market is like pendulum. It will swing between two points (up and down) forever.

- The best time of investing in the stock market was 20 years before and the second best time is now. So Start Investing Now no matter what the market levels are right now.

- Stay Invested for the long run in Equities and you will definitely make lots of money from it. This is a century old theory.

- Nobody has crystal ball. So nobody can predict the next movement of the stock market. So don’t waste your time to predict the market movements. Rather than that focus your time and energy to analyze and find out fundamentally strong companies from the market.

Best Investment Ideas for 2011 India

Best Investment Ideas for 2011 India

The year 2011 is coming and the readers started asking me that which are the various investment ideas for 2011 in India? Well, still the USA is not out of the recession completely and it will do massive quantitative easings (Sophisticated word for printing money by the federal government) in the coming year. And this newly printed money will flow into the emerging economies like India and China and inflate all the asset markets.

This year the India has seen US $ 23-25 Billion of Capital inflow which is the highest capital inflow till now. And this trend will continue in 2011 also. So here are the best investment Ideas for 2011.

01) Equity & Equity Mutual Funds -

Equity will be the best asset class in 2011. This is because the newly printed money in the western world will chase the equity of Indian market. The fundamentally strong companies (Large, Mid and small cap) can give you excellent returns. Well, yes. Equity will be the best asset class in the coming year.

If you don’t have any expertise in the equity than simply invest in 4/5 star rated equity mutual funds selected from Valueresearchonline.com.

02) Gold -

Traditionally gold has direct correlation with the US Monetary base (Money Supply). And the USA is going to expand its monetary base massively in the next year. And that’s why the price of this precious metal can shoot up still high.

You can either invest in physical gold or simply buy some good Gold ETFs.

03) Start your own Business -

This is my favourite investment. In fact, I advise young generations to start their own business as early as possible in life. This is because your own business can give you a steady cashflow as well as excellent returns when you sell it. Many people develop a successful business out of scratch and later on sell it for huge profits.

04) Web Properties -

I know that for Indians this is a new concept. But well, web properties like Domain names, blogs and websites are the digital assets. They are just like any other assets such as stocks, bonds, gold..etc… and can appreciate much faster than the traditional assets.

Flippa.com is the online marketplace for buying and selling web properties. You can buy a Domain name from GoDaddy.com. In 2011, give a try to this asset class also. You can buy the already established blog in your favourite niche from Flippa.com and later on sell for huge profits after keeping and maintaining it for a year or so. Many people around the world have made fortunes by investing in web properties.

Thus, the above are the best investment ideas for 2011. So What are you waiting for? Start investing now.

Investment Tips for people in 20s

Investment Tips for people in 20s

Are you in your early 20s? Than according to Suresh Sadagopan, here are the 3 best investment tips for you.

01) Start Investing in Equity/funds

02) Medical Insurance

03) Insurance Against Accident

However, I would like to add one more investment tip here. According to me, if you are in your early twenties than you should invest your time and money both in starting your own business.

This is because nothing in this world can give you more financial security than owning your own business. Your own business once grown can provide financial stability and security to your future generations also.

Let me give you the example of myself. I have started this blog business in March 2008 at the age of 25 years and today I am 28 years old (As of 2010) and this blog business is giving me good monthly income.

I have invested my time to develop this business and today this business is providing me the financial security and safety. My other friends still have to study in the medical schools to get those degrees and start earning money.

And this is the reason why I advise young generations to start their own businesses as early as possible in their lives means probably in early twenties.

Today because of the internet, the entrepreneurs can start their own online business also and target the entire world population. Today because of the internet even a high school going kid can also start his own business online and earn more money than his/her principle.

Anyways…So what I advise people in their twenties is, don’t waste your time behind un productive things. Rather than that invest your time, money and energy to build your own business empire.

Top 5 Investments for 2011

Top 5 Investments for 2011

The year 2011 is coming and readers have started asking me that which are the best investments for the year 2011? Well, let me tell you in detail about the best investments in the year 2011.

Here are the best investments for 2011.

01) Stocks: Equity will be the best asset class in the future and will continue to generate highest profits in the future. Because of the quantitative easings by the US Government, more liquidity will be generated in the entire world and this liquidity will flow into the Indian markets.

02) Gold: Gold will continue to rise because the dollar is going to weaken. The US Government is going to weaken the US Dollar by printing more money out of thin air and that’s why this precious metal will appreciate over the time. However, keep in mind that your portfolio allocation in gold should not be more than 10% of your over all portfolio net worth.

03) Mutual Funds: Mutual Funds are one of the best financial product. This is because they are managed professionally. Mutual funds have their own fund managers who manage your money on behalf of you and generate excellent returns. In India, since the launch of mutual funds, they have managed to beat the Sensex and give the excellent returns.

04) Corporate Fixed Deposits: AA and AAA rated corporate fixed deposits are the best fixed income instruments. This is because they offer 2% higher returns than the regular bank deposits. So investors can invest in company fixed deposits to generate higher returns.

05) Start Your own Business: This is my favourite investment. I mean I simply love to invest my time and money both in my own business. Well, if you have never think of starting your own business than think it in 2011. This is because people who own their own business are financially more safe and secure than those who don’t own their own business.

Many people argue that, business is risky. But well, the truth is that, owning a job is risky if you know how to read the financial statements.

So the above are the top 5 investments of the year 2011. So What are you waiting for? Start vigorously investing in the above investments to get rich and financially free in the year 2011.

Safe Investments for Seniors

Safe Investments for Seniors

If you want to sale any Financial product in India than add a pre-fix “Safe” on the name of that financial product and people will buy it. The word “Safe” is a Magic Word. You can sell any Investment product to literally anyone in India by applying a pre-fix “Safe”.

This shows the lack of Financial Literacy countrywide. Senior citizens are also targeted. The market is full of financial products like “Safe Investments for Senior Citizens”. Now, the question is that, how Safe the “Safe Investments” for Senior Citizens are?

Well, almost every financial product ultimately divert your money towards the equity or at least part of the money towards equity and part of it in a debt. Well, see. Growth is not at all possible without Equity.

Now, what my argument is that, if you are a senior citizen and want to invest your money than why not invest that money in starting your own Business? I know that you will now tell me that but it’s risky and I am looking for Safe Investments.

Well, owning your own Business is the Safest Investment in the world. This is because you have a management control over that business. Say for Example take the example of this Blog. This blog is my Internet Business and it’s my safest investment than the mutual fund investments or fixed deposits in my bank. This is because I have a full control on the management of this Business.

I can hire and fire “N” number of writers and Internet Marketers for this Business. And not only this but this business runs even without my presence if I hire a team of writers for it. So I think that my own Business is the safest Investment for me in this world.

And so is for you. Remember, your own Business is the safest Investment for you in this world because you have a full control over that business. So according to me the Safe Investment for Seniors is – Your Own Business.

Investment for Senior Citizens

Investment for Senior Citizens

Are you a Senior Citizen and want to invest your Money? Well, than there are lots of Investment Products available in the market which are ment only for the senior citizens. All of them have the advantage of 80C, tax benefits, higher interest rates than the regular products and many other advantage.

This is because it is belived that Senior Citizens need the safe and secure investments for their retirement. It is belived that now they are old and disabled and that's why they can't take more risks while investing. And keeping in mind this need all the Senior citizen Financial products come with one word - "Safe"...!!!!

But well, I don't think that all the senior citizens around the world want to invest in "safe & secure" investments. What My Question is that, Why Can't a Senior Citizen start his own Business? What about starting your own Blog Business? What about starting your own Home based Business? What about starting some Internet Business?

I mean why can't a Senior Citizen start his own Business? After all, Investment is not risky, being uneducated is risky. Why don't many sebior citizens think about starting a new business and creating jobs in the economy?

what I personally think is that, there is no as such rule that Senior Citizens should always do the "Safe" Investments. Of course, if you like to play it safe than play safe. But if you want to take some more risk and start your own Business than there is nothing wrong in that.

After all, developing a business in the economy means creating jobs in the economy and it's a good thing i think. So try this new strategy if you want to do something new and creative in your post-retirement life...!!!

How To Trade Debt Instrument?

How To Trade Debt Instrument?

Debt Instrument market is very huge market. It is the larger market than the stock market. First of all let is understand what it means by Debt Instrument?

A debt instrument is any type of documented financial obligation that describes a debt that is assumed by the issuer of the document. Here are the types of Debt Instruments.

- Notes
- Bonds
- Certificates
- Mortgages
- Leases
- Commercial papers
- Treasury Bills
- Certificate of Deposit...etc...

Debt instruments are a way for markets and participants to easily transfer the ownership of debt obligations from one party to another. Debt obligation transferability increases liquidity and gives creditors a means of trading debt obligations on the market. Without debt instruments acting as a means to facilitate trading.

Recently the Government of India has started the Interest rate futures. However, Road to Vibrant Debt Market is not easy. In Countries like India a retail investor can not trade in the Debt Instruments. Only the Institutional Investors like Mutual Funds, Large Corporations and Insurance Companies can trade in the debt instruments.

However, in the developed markets like USA, it is really easy to trade Debt Instrument. Because of the highly liquid US Debt market, it is really easy to trade in the debt instruments. Many Real Estate Investors in USA trade in the mortgages and make lots of money.

However, India is in the Nascent stage of Debt instrument Trading...!!!

How to Multiply Rs.1 Crore?

How To Multiply Rs.1 Crore?

Do You have Rs.1 Crore of Corpus? Well, than it's really a great thing. This is because very few people in India can reach up to this mark. And if you have achieved this much level of wealth than you are financially free (Keeping in mind that your expenses are under control).

Most of the people ask me that they have 1 Crore rupees and now they want to multiply this money like anything. Some ask me that Should they go for the Wealth management or Professional Portfolio Management Services (PMS)? While some people thinkg about investing this much capital in some high rish high return (But lack of Transperancy) schemes.

But well, my back fire question to all of you people who want to multiply their Rs.1 Crore is that, "How did you make your first 1 Crore? I mean where did you used to invest your money when you had just Rs.10,000 in your pocket?"

Most probably in Groth Stocks, Equity Diversified Mutual Funds, Gold, Bonds, PPF and National Savings Schemes right? Or some may have invested their first Rs.10,000 to start their own Business right?

well, Than my answer is that, Invest in the same things in which you used to invest when you had just Rs.10,000 in your pocket. Today the only difference is that you have few more zeros behind that 10,000. But that doesn't mean that you start searching something new. This is the commonest and most dangerous psychology I have seen in my life.

I mean if you have become a Crorepati by inveting in equity mutual funds over a period of 10-15 years than please continue the same way and you will have crores of rupees in the future also. Don't change your Investment Strategy.

It is the commonest psychology of the Investors. Means when they have 1 Crore on their hand they started thiking that they become smarter than before and that's why they started searching for the new investment vehicles. But remember that your Financial IQ remains the same irrespective of your Net Worth.

Never Forget this lesson. If you ever have Rs.1 Crore of Corpus in your life than continue the same investment strategies that you used to apply when you had only 10,000 bugs in your pocket...!!!

Portfolio Management Services in India

Portfolio Management Services (PMS) in India – Are They Really Worth?

Recently I came across the Article by Dhirendra Kumar, CEO of Valueresearchonline.com. The Article was The PMS – Non-Service. I am totally agree with the opinion of Mr.Dhirendra Kumar. Recently one of my friends asked me that the top level manager of some well known private sector bank of India was insisting him to invest in his PMS also known as Wealth management Services.

He was offering 8-9% return per month. And not only this but he was also saying that, he himself was making tons of money from this scheme. Well, let me tell you that PMS/Wealth Management Services are nothing but the Opaque Mutual Funds. They will share a profit from your Investments. In other words, you have to take risk as well as suffer a loss if any and if profit happens, they will share it with you.

Wealth Management Services play with your psychology. They will tell you that their scheme will give you unexceptionally high returns. But Beware of such kind of promises and assurances. Just remember the words of Warren Buffet - “If It’s Too Good To Be True, It Certainly is.”

If Businesses grow at the rate of 5-15% per year than how can any other asset can give you 150% per annum return and that is also with the sure shot guarantee? Rather than that Mutual Funds are 100% Transparent. They will offer you the good returns with the 100% transparency.

What I advise you is that, if you have lots of money to invest and you are searching for some financial product for the rich people than just wait for a minute and deduct few zeros from your Investment Capital. And ask yourself that where did you invest this money several years back? The Probable answer will be Stocks, Bonds, Gold, Equity Diversified Mutual Funds, Starting your own Business…etc.. right?

Now, today you have the Investment Capital with several zeros on it. and you are searching for something different kind of Investment Strategy? Just Invest in the same things when you had little money in your pocket. No Matter how Big amount of money you have Today…..!!!!

Understand my Point?…!!!

Cashflow From Assets – How Important is it?

Cashflow From Assets – How Important is it?

Let us today discuss about the Cashflow from Assets and its importance. There are basically 2 types of assets in the world. One which does not provide any cashflow at all. These assets provide only capital gains which is “On paper” and remains most of the time of the life of its owner “On Paper” only.

Another type of asset is the Cashflow Asset. Read my articles Best Cashflow Assets. These type of assets provide a steady passive income as well as capital gains. The main reason behind owning a Cashflow Asset is that, you will have a growing flow of passive income as long as you own that asset. And that’s why you can enjoy this passive income from your asset.

Take the Example of this Blog. This blog is my Cashflow Asset. It means that this blog provides me a steady flow of passive income every month. Now, the main advantage of this kind of Income is that, even if I stop working today, this Income will still keep flowing into my bank accounts for the rest of my life and even after that.

While the only disadvantage of owning a job or the asset without having a cashflow is that, you will have to hold it for the rest of your life hoping that its price will go up.

Most of the people in this world invest for Capital Gains such as Stocks, Mutual Funds, Bonds, Gold, Real Estate which does not provide a Cashflow…etc… While rich people invest for the Cashflow such as Businesses, Dividend Stocks, Rental Properties, Blogs, Websites, Web Properties, Intellectual Properties…etc..

Best Cashflow Investments

Best Cashflow Investments

Let us today discuss about the Best Cashflow Investments. Read my Post Best Cashflow Assets and you will get a fair idea about what I want to say in this article.

According to the above article, following are the Best Cashflow Investments.

- Businesses
- Dividend Stocks
- Real Estate (Rental Properties)
- Web Properties (Blogs, Forums, Websites, Articles Directories, Facebook applications…etc..)

The reason I like the above Investments is that, they provide a cashflow. Most of the people Invest for the Capital gains and that’s why they don’t get succeed. What I hate about the Capital Gain Investment strategy is, you have to feel happy by seeing the “On Paper” Valuations going up for the most of the part of your life.

Say for Example investing in Stocks for Capital Gains, Real Estate which does not provide any income, Mutual Funds..etc.. Most of the people around this world invest in these investment. Now, my question is that what if I want to enjoy this money right now?

I know several people who are asset rich but cash poor. They have assets worth of literally millions of dollars but unfortunately they don’t provide any cashflow. And that’s why the owner of such assets can’t enjoy their life.

Well, I am not saying that you should not invest for capital gains. After all the Income in the form of capital gains is totally tax free and this is the reason many people grow very rich over the time. If you love to live a frugal life style than the Capital Gains is the best strategy for you.

However, I love to Invest for Cashflow. Take the Example of this Blog. This Blog is my Invest of Time & Money for Cashflow. And today I am making good cashflow from this blog. I Personally love to invest for the Cashflow.