How to start investing for a useful purpose?

Investing had become the need of every person in today’s fast moving life and ever-rising costs. The matter raises how to start investing for a useful purpose.

How to start investing for a useful purpose

One should have a clear purpose and reasons for investing. It is a very important if one wants to invest successfully. Investing just because everyone other person is investing, then you will be unsuccessful.

Bodybuilders go to the gym, as they have a purpose to have a muscular body or want to develop six pack abs. If one has no purpose, then investing can be difficult, tedious and even dangerous.

Investing for a useful purpose

If you have a goal then one can track his own progress. If one is going out of course then it can be corrected. Or if moving slow, then it can speed up. Here are two purpose.

  1. Retirement investment

It is not possible to predict, what will be the cost of living few years or decades from now. How much amount, one will need to maintain the present lifestyle in future. It is this uncertainty and future rate of inflation that makes us plan for the retirement.

In these uncertain times, the investment made today will come handy after retirement. Present investments will help one to make a solid path once one’s working years come to an end.

Must Read: What Is The Purpose Of Investment In Share Market?

If you have a number of years in your hand, your investments will have more years to grow. Remember you have to fight inflation too. You have not only to defeat inflation by just a few percentage points. But have to get a good lead over it, as your money will not be worth as it is of today.

Risk-taking capacity decreases as one gets older. That is in future you will be making investments in only those instruments which carry less risk. Instruments which carry less risk, returns are likewise less. Another side of the coin is if you start young you can take greater risk for greater gains.

Must Read: Why should you diversify your share portfolio?

Younger you start investments, earlier you learn about in’s and out’s of investments. Financial consultants are difficult to choose and are costly. So it is best that you manage investments yourself whenever possible.

If you are investing for retirement then it is a long-term investment. You will have to see for quality investment, which you buy and hold for long term. This will be your capital.

Your investment portfolio will be a mix of stocks, mutual funds, precious metals. And also FD, bonds, debentures, PPF and saving in a bank account. The proportions of mix change over time as you grow older. Moving from high-risk investments towards low-risk investments.

  1. Setting up small financial goals

Financial goals can be of short-term too, like buying a computer or high-end TV. The medium-term like going for a holiday abroad. Or buying a new car, alteration /modification at home, changing complete furniture, etc.

Investments can be also made to enhance your employment income. And help you buy those things that you want. Since investment changes with investor’s desired goal. It is not like retirement investments. It is a mix of the long and short-term.

Must Read: How to take first step to make money in share market?

Like, if your aim is to buy high-end TV you will need short-term investment. But if you plan to buy a home than long-term investments will be needed.

Investment strategy should be in the line of your goal. That is if you wish to buy a high-end TV, in a year’s time than your investment strategy will be different. And if you wish to buy a new car or go for a trip abroad then your investment strategy will be different.

The most important thing is to set your goals first. Plan how much budget you will need. Once your goal and time frame is set. Other purposes like celebrating birthdays in a posh manner. Or other expenses which seem more important at that instant time can be cut down or decreased.

Must Read: How to earn regular second income from stock market?

It is exciting and challenging to achieve financial goals. You will be more motivated to learn about investments which give you better returns.

For Free Investment Tips Visit: https://goo.gl/2nhRwT

How to recognize a dividend paying company?

When the company makes a profit, it distributes a part of its earning among shareholders. Amount (percentage) and date of distribution is decided by the board of directors and paid to a class of its shareholders. The dividend is usually paid by cash (cheque or ECS), usually once in a financial year.

How to recognize a dividend paying company

The most important factor in determining a dividend is company’s net profit. The company will earn a good profit if it is a dominant player in its sector or industry. And also if it has a durable competitive advantage, and is ahead of its peers.

Let us see which all companies will pay dividends and how to identify those companies. You can also make money in share market without investment.

There are certain characteristics that one should look for identifying dividend paying company. Let’s see them one by one.

  1. Free cash flow of the company

Total cash generated by the company, during a financial year is cash flow. After deducting all the expenses etc, the company is left with some cash. This cash is called free cash flow. The free cash flow by the company can be used to either expand its operation or pay dividends. After covering their future expenses. If some cash still remains then this cash is paid to shareholders as a dividend.

What should the dividend investor look for? He should look for cash flow history of 5 to 10 years. He should also see for its dividend per share for the same time duration. If both are rising at an almost same rate, then the investor should go for it.

Must Read: How to take the first step to make money in share market?

  1. Dividend history of the company

Company paying an irregular dividend should not be trusted. Because one cannot be sure that it will pay a dividend in future or not. The company should have a long history of stable and regular dividend payment.

See the history of the company for last decade or so. Analyze the trend of dividend yield. It should be part of your portfolio if it has given stable or rising dividend yield. Dividend history can be seen at the website of all the stock exchange in India where you can invest your money.

  1. Debt of the company

The company borrows money from market or bank for its expansion or other business needs. Many companies have huge borrowing on their books. This borrowed payment sometimes is very high and takes away a huge part of profits. If profits are decreased then it is not possible for the company to pay a dividend. It is in the interest of investors to avoid these companies.

A slight increase in interest rates will decrease/wipe out company’s profit. Even if the board of directors of the company wishes to give a dividend. They cannot give, because of the shortage of funds.

Not only in share market but also commodities trading companies can be considered on same lines. Commodity trading tips for beginners can be had from agents/brokers of commodity exchanges.

Conclusion

See to it that your portfolio is diversified across sectors. This reduces the risk, as some sector performs best and some perform worst, at a given period of time.

Must Read: How to earn regular second income from the stock market?

One should never over-exposure the investment in only one company and one sector only. Some sectors perform contradictory to each other. Like when share market is on high ROI path, gold is at low ROI path, and vice versa.

Plan for dividend income should be made during working years as it needs time to grow. Patience, research, and regular investment help you achieve your targets.

Dividend income is one of the best passive sources of income. It provides the investor with regular and steady cash flow when other sources of income are dried up. It can be a source of regular income during retired life. One can see forward to rich, wealthy and worry-free life.

Beginner’s guide for investment in Indian share market

There are things that beginners should do, and should not do in general while dealing in the share market

Beginners guide for investment in Indian share market

As with any financial instrument, share market also carries associated risk. This risk can be reduced if we take certain precautions.

Below given are certain general dos and don’ts while dealing with share market.

 

Must Read: How Do You Invest in Stocks for the First Time?

 

Things you should do

1.  Check if market intermediaries, like DP, broker, sub-broker, agents are registered with the exchanges. In India, all data can be found at SEBI official website. They are given the specific registration number.

2. Always give clear, to the point and straightforward instructions. To the intermediaries like your broker or sub-broker or depository participant or agent, as the case may be.

3. Always insist on your depository participant/ broker/sub-broker/agent to give you contract notes. Whatever type of transaction it may be. In case of any doubt, it is better to verify the genuineness on the exchange website.

4. Settle all the dues completely through normal banking channels with the market intermediaries. They should not be kept pending for unnecessary reasons. Who so ever end it may be.

5. Before placing a buy order with depository participant/broker/sub-broker/agent. Do check about the standing and credentials of the company in the marketplace. Credentials like management, fundamentals, and various recent announcements. And also disclosures made under various regulations, to SEBI from time to time. One can get most of the information on SEBI website, company’s website, business magazines, and financial newspapers.

6. Always adopt trading or investment strategies which are in the line of your risk tolerance capacity. You may be aware that all investments carry risk. A degree of risk does vary for different type investment instruments. It depends upon the strategy one adopts.

7. Always check, verify and confirm before registering with the intermediaries. With any depository participant/broker/sub-broker. Risk disclosure document is available with market intermediaries. Its content should be understood and read carefully. It forms a part of investor registration need.

8. Penny stocks sometimes display abrupt spurt in price. Or sometimes shows high activity suddenly, for no particular reason. Investors are cautioned about these types of stocks. They are high risk, and if positive, give high returns too.

9. Stock market goes up and down. Usually, in the Indian market, it is called bull or bear run. Though no one can guarantee returns. But taking a calculated risk, one can increase more probability of gain than loss.

 

Must Read: How To Perform Fundamental Analysis of Indian Shares?

 

Things you should NOT do

1. Do not deal with unregistered brokers/sub-brokers/agents. Most of the time, they only flee the customer. Often they wrap up their business all of a sudden, leaving no traces.

2. Do not buy/sell on basis of rumors in the market. Sometimes companies just create rumors to increase their share price or net worth. It is a frequent phenomenon, just to create rumors, and be in limelight.

3. Do not go with unregistered intermediaries. They promise huge and guaranteed returns, which are practically impossible.

4. Many companies show government approvals/registration which may be for some other purpose. It may not be for securities that you are buying. That is, purpose and use may both be different.

5. Never give custody of your signed blank demat transaction slip book in hands of any intermediary.

6. Do not be carried away by the financial figures shown in the advertisement. They may be deceiving. Try reading between lines to understand the true worth of the company.

7. Do not blindly follow the investment gurus. Or those who have profited in past. Because earnings may not depend on past performance. Though, in some cases, they may repeat their past performance or even excel it.

 

Must Read: How to earn regular second income from stock market?

 

Free Trading Tips For Beginners Visit: https://goo.gl/2nhRwT

How to take first step to make money in share market?

People are attracted to share market because they think they can make good and fast money. But in reality, there are only a few people who did. It is not easy that any Tom, Dick or Harry can make huge money. The people who make money are one who is disciplined and have a lot of patience and a lot of research. Deep understanding of the market is also necessary. Knowing an overview of Indian stock market is appreciable.

How to take first step to make money in share market

In the last few years, it has seen that share market is being quite volatile. Investors and traders are unable to decide their future strategy. Should they sell, buy or hold? It is hard to predict market movement. One should take precaution to get a fair share of profit making stocks, compare to loss-making stocks.

There are certain rules and observation which can help to make a profit in this volatile share market. In other words, it is necessary to know the money making tricks from share market.

How to make money in Indian share market?

  1. Trade with surplus funds only

Many people take a loan and they invest in share market. When they lose, they are unable to even pay interest on the loaned amount. This is especially more true for new traders. The best way is to start with a small amount. Small amount means an amount which, if lost will not create a great disturbance in your financial condition. Turbulence in your smooth going life.

Once you start earning, in the initial phase you can reinvest profit earned. You should not take a loan for investing in share market whatever the market condition is.

Must Read: How Do You Invest in Stocks for the First Time?

2. Do not go with the crowd

If possible avoid herd mentality. The decision to buy, sell or hold depends upon what you hear in the market. In some cases, family or friends may influence your decision. If your friends or colleagues are buying/selling certain stocks, you do not go with the same. You should use your own research before buying or selling any stock. Going with the crowd strategy does not work for a long time.

Warren Buffet once said, “One needs to be fearful when others are greedy and greedy when others are fearful”. That is, move opposite of the market trends. When everyone is selling then buy. When everyone is buying then sell.

  1. Identifying the kind of trader you are

Broadly speaking there are two types of traders. One kind of trader is who go with fundamental investing. They are usually called investors. They give less importance to day to day price fluctuation. They also give little importance to the price. They are usually long-term players. They are more concerned with the fundamental strength of the company.

Other types of traders are speculative one. They are day traders. They give high importance to day to day price fluctuation. They are short-term players. Their gain/loss depends on the violent fluctuation of the market.

You should decide which one is the best fit for you.

Must Read: How to make a winning trading plan in just 11 steps?

 

  1. Never let greed influence you

When during the bull run people keep holding or buy new script in expectation of making more and more money. When market collapses suddenly, then they lose not only what they were to gain. But also a part of capital they have invested.

  1. Timing the share market

To gain good profit, the thumb rule is to buy when very low, to sell when very high. It is practically not possible to predict the high and low of the script. This is called timing the market in local parlance. Never ever try to time the market. Do not employ this strategy to earn. Because chances are you may lose more than gain. On consolidating your accounts you will see yourself at a loss.

  1. Disciplined approach

Even during the best bull run period, share market has given shivering moments to traders. Traders have panicked and sold/bought shares. That is even in bullish trend numbers of investors sell their stocks on hearing rumors and do not make much profit. Even they have made the loss.

One should have long-term gain in mind. For this, they should follow a disciplined and systematic approach. They should have a definite plan. Plan regarding the price of purchase. Plan regarding the price of a sale. The profit they expect. Disciplined approach generates outstanding returns.

For Free Trading Tips Visit: https://goo.gl/2nhRwT

Proven tips for commodity trading discipline you should follow

Trading in Commodity derivative was first started with setting up of Bombay Cotton Trade Association Limited in 1875. They first started future trading in cotton. Later on groundnut, cotton seeds and castor seeds were added.

On the same lines, Calcutta Hessian Exchange Limited was set up in 1919, for future trading of Jute in Calcutta (now Kolkata)

Things started evolving and trading in wheat, bullion, potato, too came in the picture. At present, future trading is carried out in vegetable oil seeds, oils, pulses, cereals, metals, energy, fibers, etc.

Proven tips for commodity trading discipline you should follow

The main aspect of commodity derivative trading consists of two aspects. They are money management and research. One has to have a very solid plan taking into consideration both the aspects.

Certain traders give high importance to money management whereas others give more importance to research. To get best results it is seen that both are to be balanced in right proportion. Both are inter-dependent.

We will talk about both aspects. Money management and research. Both should follow in a disciplined manner.

 

Must Read: How to use derivative market for your advantage?

 

  • Money Management

Money management is one of the important aspects of the commodity derivatives trading business.

A) Time interval of trade

The time interval varies from intraday trading (daily) to short-term (two to three days) to medium term (few days) to long-term (few days to a few months).

This is the first step the trader should decide. And plan how long will he be holding the position. He should stick to the plan accordingly.

B) Funds at risk

Amount of risk he is ready to take on each trade depending on his investments. It can be two to three percent or five percent of his investments. Because longer the time duration of trade higher would be the risk and vice versa.

C) Risk to rewards ratio

Everyone knows higher the risk higher will be the rewards and vice versa. But taking calculated risk rewards can be further extended. That is if three trades are successful and one failed one than it is OK. But since commodity market occasional have trend pattern, in that case, the ratio should be 1:1.5

D) Identifying commodities

One should identify in which one wishes to trade in. Commodities which have a daily trading range of two to four percent should consider.

If the daily trading range of commodity is more than four percent than it will be the high-risk commodity. On the other hand, if trading is less than two percent than it is a very idle commodity. Traders usually avoid slow-moving counters.

  •  Research

After money management research is the second most important factor. The output of good research will provide –

A) Entry and exit points

One of the outputs of good research is that it provides a clearly defined entry point. When a trader should enter in the trade and also for how long should hold and when to exit. Both end of the spectrum that is stop loss and target gain should be considered.

B) To trade or not to trade

An experienced trader will not trade all the times. They usually avoid high volatile days. And also low movements days. This is where most of the money is lost, and risk is high.

Discipline on both the aspects that is money management and research, helps the experienced trader make trading a profitable business. Having a trading plan prepared and sticking to it no matter what may come, is the essential key to successful trading business. Though, in the initial stage of trading business, one may not earn sufficient returns. But in long run, he is sure to earn a good profit and that too steadily. As times go by one enriches his experience and chances of earning regular profit increases.

For Free Commodity Tips Visit: https://goo.gl/2nhRwT