How do successfully pick stocks?

This question is right up there with “What is love?”, and “Why does toast always fall butter side down?” in the pantheon of the great unanswerable of life.

However, that doesn’t stop people –and me – from trying to answer.

There are lots and lots of possible ways to address this. For our purposes here, I’m going to suggest that for the biggest gains, exploit the holy trinity of growth investing: (1) find a growing sector, (2) identify the leading company in this sector and (3) buy the leading company when it’s cheap.

When it comes to stocks, buying the best – at the right price – is worth it.

There are a lot of ways to make (and lose) money as an investor. Some strategies are very complex. Others are common sense and simple to understand – but not always easy to implement.

As a rule of thumb, if you invest in the best company in a dying industry, you’ll probably lose money. You’re fighting the tide and will probably wind up out at sea. And if you invest in an average company in a growing sector, things could go either way. (Of course valuations matter here as well.)

You can make use of the following mediums which can be of help to you while selecting stocks.

Social Media

The Social Media industry has also been an attractive target for day trading, recently. The massive influx of online media companies, such as LinkedIn and Facebook, has been followed by a high trading volume for their stocks.Moreover, debate rages over the capability of these companies to transform their extensive user bases to a sustainable revenue stream. (bulls, bears and pigs of the stock market)

Financial Services

Financial services corporations provide excellent day-trading stocks. 

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High Liquidity and Volatility

Liquidity, in financial markets, refers to the relative ease with which a security is obtained, as well as the degree by which the price of the security is affected by its trading. Stocks that are more liquid are more easily day traded; moreover, liquid stocks tend to be more highly discounted than other stocks and are, therefore, cheaper

Trading Volume and Trade Volume Index (TVI)

The volume of the stock traded is a measure of how many times it is bought and sold in a given time period. This time period is most commonly within a day of trading. More volume indicates interest in a stock, whether that interest is of a positive or negative nature.

Money Mysteries: Know Yourself Before You Invest.

When I look at the kind of investment questions that people ask–on the Internet generally, and on Value Research Online, there’s an interesting pattern that can be observed. There are savers who think that investing is about investments and there are those who think investments are about themselves.

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Let me give you two contrasting examples to demonstrate this.

Here is one real question:

“Is it advisable to invest in mid-cap and small-cap mutual funds in the current situation?”

“How long will the conditions remain favourable for such funds?”

Sounds like a perfectly reasonable question. However, contrast it with this question: “I am 40 years old but haven’t started saving for retirement, apart from the EPF deduction. When I retire, I will need Rs 75,000 a month….”, and then there are personal details that I will omit here.

While these are just questions that the two savers asked in emails to Value Research, I think it reflects their attitudes about #investment in general. The first questioner thinks investing decisions are to be based on what’s happening in the outside world while the second one sees it as a way of finding solutions to the problems in one’s own life.

Unless you are a rich dilettante who is just playing around, the second approach is the right one. This may sounds like some new age wisdom, but the first thing that an investor must do is to `Know Thyself ‘. The reason for this is there is no investment that can be judged to be the right one without knowing who it is for and what the investor needs it for. There are great mutual funds and stocks which could be completely unsuitable for certain investors.

An investment can’t be judged to be the right one without knowing more about the saver’s life. However, it can certainly be judged to be the wrong one–there are a lot of investments that are always unsuitable for everyone, but we will talk about those later.

Conventionally, the first step to knowing yourself from a saving point of view is to decide your financial goals, the time frame in which those goals have to be met, and the flexibility of those time frames, and overlay a certain amount of tax-awareness on top of these goals. Then, for each type of financial goal, work out which type of investment is needed, and decide on the specific investments.

See the sequence here?

The first step is to analyses your own life. Then comes the goals, and then follows the type of investment. There are other aspects apart from the goals.

How stable is your income, and your spouse’s?

How’s your health?

Do you have any older dependents?

And so on. Believe me, knowing whether small-cap stocks are going to be `hot or not’ over the next six months is utterly unrelated to the things that are the real inputs to your life’s savings and investment decisions.

There’s another, even deeper aspect that requires you to know yourself. Different people seem programmed to suffer different amounts of stress and anxiety when they are invested in asset types that are volatile. This is partly a function of experience–of having been invested through a volatile period and then seen recovery.

Investment advisers are fond of asking their clients about their `risk tolerance’, but the answers are useless unless someone has had a real life experience of facing losses

Benefits Of investing in Mutual Fund ?

If someone told you that there is an investment option that is managed by an expert, has an expert looking into it, and lets you get started with even a small amount, would you be interested? Mutual funds can offer you such advantages, and much more.

The popularity of mutual funds is on the rise. More and more people are keen to invest in them and for good reason. Even though mutual funds carry with them a factor of risk, the fact remains that the risk is actually mitigated as a result of the age old saying, “don't put all your eggs in the same basket.” An investment in mutual funds can be a turn into a very good investments since the returns that it provides can be very good while mitigating losses. Investors also don't need to be experts on the markets since these investments are made with the help of an army of experts who take the best call possible on where to invest. But these are just a few of the advantages of mutual funds. Great as they may be, one thing must always be remembered with mutual funds, and that is that they always carry the element of risk because they are investments that are linked to the markets

Mentioned below are a few advantages associated with mutual funds

Smart investment

The first thing to do would be to talk about risks. If you were to invest all your money in one industry and that industry failed, you'd lose a lot of money, but with mutual funds, such risks are mitigated by spreading the investments over various avenues, like stocks and bonds, to ensure that even if one generates losses the rest can control the amount you lose.

Choice of risk

Stay with talking about risk, mutual funds also offer a choice of low, medium and high risk funds. These are meant to satiate your appetite for risks. A high risk fund offers the highest returns but the losses will also be high where as a medium risk fun tends to balance risk with return a little better where as low risk funds carry the least risk of losses and, consequently, the least returns of the three too.

Investing in a variety of instruments

Imagine ordering a thaali at your favourite restaurant where you can eat a variety of different foods in one affordable package! Mutual funds also work in a similar way.

Mutual Funds invest in a wide range of securities. This diversification reduces the risk by limiting the effect of a possible decline in the value of any one security. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

Convenience

You can invest directly with the fund house or through your financial advisor. You get regular information on the value of your investments and portfolios of the schemes.

Professional Management
Mutual fund investments are managed by experienced and skilled professionals, who with the help of an investment research team, analyzes the performance & prospects of companies and selects suitable investments to achieve the objective of the scheme.

Easy access to your money

In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. With close-ended schemes, you can sell your units on a stock exchange at the prevailing market price or avail of the facility of repurchase through Mutual Funds at NAV related prices which some close-ended and interval schemes offer you on maturity of scheme or periodically, as the case maybe.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

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Is investing in insurance plans really helpful?

Congrats 

If you thought about this questions, most of the time people dont stop & think about it.

There is a generic perception among people to consider insurance as an investment vehicle. People expect something in return for the premium that is paid to the insurance company. Be it life, health or accident insurance, we always tend to equate and measure this with other investment products.If you are rich - let’s say if you die tomorrow and your family doesn’t need to worry about money - don’t bothering thinking about insurance. 

Primarily insurance is not for you, it’s for your FAMILY, so its basically to take care of them in case you are not there to support them monetarily - income replacement. So let us if you are sole earning member of family and if you die, how do family sustain, hence insurance. So insurance is not investment, get that right now and for rest of your life, it can never be. 

Insurance that come with investment plans give return in range of 2%-6% - that’s pathetic saving bank return, FDs give you more but it doesn’t beat inflation all the time. 

Once a Person took advice from Moneymindz on insurance_policy where he had paid Rs 15000 for last 7 years (and continue for another 22yrs). if he dies any time (between 0–30yrs) his family would get Rs10,00,000/- . Now his monthly expenses are anywhere in region of 22,000/- meaning, if he dies tomorrow his saving would help his family survive easily for another 50months/4yrs, but what after that? Nothing..? Remember his monthly expense of Rs 22, 000 we have kept constant not changed, not taken into account inflation (regular increase in price). Add to that he has 2 kid of which 1 will go to school 2 years hence, so his expense would only increase from here on. Think about college expenses, you can’t do anything. Hence instead go for term policy of Rs1cr @ premium of 10,000. At least now he doesn’t need to worry too much. 

If anybody sells your insurance because of superb returns, we suggest you immediately make 180 degree turns and run at fastest pace. It’s never possible to have good return in traditional insurance plan. Also if people try to sell you for tax purpose, term policy also provide tax benefit. 

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When is the right time to take a term insurance plan?

There is a misconception in India That We’ll need life insurance (LI) beyond 68 years of age. LI is meant for replacing your income stream. Why? So that people dependent on your income don't lose your financial support when even if they lose you. Nor would your liabilities fall on them. 

Typically most people don't really need any LI before they start earning or beyond 60-65 years of age. By this age:

You would have already provided sufficient assets for your loved ones(usually spouse) to inherit. These would enable them to continue at the same standard of living.

Other than your spouse, you would not have any dependents. You'll be lucky if your parents are still alive, unlucky if your children are still dependent on you..

You would have paid off all your liabilities.

You really don’t have to do anything or be prepared for the happy surprises in your life. But, what about the unhappy ones? Such as a permanent disability or death? It is of the utmost importance that your family continues to meet its financial requirements even after you are not around. To secure your family’s future, you need to have term insurance.

There are many terms plan, Do you want to know about the terms plan? Just leave a missed call on Moneymindz.com India’s Best Financial Advisor 022-62116588 or Download Financial Freedom application and post to expert your Queries. Moneymindz.com offers Free, Unbiased and on-call financial advice on Investment Assistance for insurance, Loan Assistance Retirement, Planning, Money Management Investment, Advisor RetirementPlanning, Best Health Insurance. 

Which you may want to consider buying. But the question is at what age? 27 years? 35 years? 42 years? While the investors and insurance experts have their own viewpoints regarding the right age, what really matters is the right life stage of the life when you would want to buy a term insurance plan.

( How can one reduce cost of an Insurance policy?)

We will discuss some factors that should help you to decide when is the right time to take a term insurance plan.

Now!!!

The earlier you take a term insurance plan, better it is. The first reason being that younger the policy holder, lower the premium. This means that for a cover of say one crore, a person who starts early would pay lesser than a person who starts later and so on. Insurance companies see better prospects in a young policy holder paying all premium instalments since he has most productive years ahead in terms of earning capacity.

Secondly, you have lesser financial liabilities when you are younger, in terms of loans and other debts.

You just got married 

At this point, you would need to focus on saving for future needs and begin a savings plan for your family. A life cover would be a good idea to protect your spouse. All in all, more financial responsibilities. Take a Term Life Insurance at 30 and it would have to be one with more coverage.

You are married with young children 

Your children’s education and future expenses take centre-stage now. You may want to protect your family from the burdens of loan repayments if you aren’t around, and begin thinking of planning for your retirement. This means a higher degree of financial protection.

Your children are starting college

Children in college? Time flies, right?Now would be a good time to start thinking of putting your feet up and plan for your golden years. Term Plans? We’ve got a better idea. Think pension plans.

So, more your delay buying term insurance, more premium you have to pay and higher cover you have to look for.

Note: The premium you pay also depdends on the age till which you are covered. So when you opt for a policy that lasts till a later age, you end up paying higher premiums from the first year itself

Some useful tips for money investment and saving tricks?

Sometimes the hardest thing about saving money is just getting started. It can be difficult to figure out simple ways to save money and how to use your savings to pursue your financial goals.

Money is just a tool and depending on what your goal is, you might need a whole lot less (or more) than you think. Our goal is to be freedom.

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Saving money is supposed to get you to a point where you spend less than you earn. Once you’re in that territory, you can of course try to maximize it, but being in this position in the first place already puts you on the right track.

“Money, like emotions, is something you must control to keep your life on the right track.”

This step-by-step guide to money-saving habits can help you develop a realistic savings plan

• Always carry a water bottle with you while eating out. Subway costs you Rs 30 for a water bottle that you get outside for Rs 10. Soft drinks are usually 1.5X-2X the actual price in Dominos.

• Get a health insurance and vehicle insurance.Before investing get a Unbiased advice from India’s Best Financial Advisor.

• Do NOT use debit or credit cards while shopping as much as possible.

• Decide your monthly budget. Cut your costs accordingly. If you save some money, put it aside in a saving box. Use it for personal purpose like travelling. Such goals keep you motivated.

• Install apps for coupons. You get a lot of coupons for salons, restaurants, electrical appliances.

• For travelling, use trip planning apps. Also, before visiting a place, get tips from someone who has been there or read blogs related to the place.

• Use public transports instead of cab.

• Buy a basic surge protector for all electrical appliances to protect it during electricity fluctuations.

• Learn about the service tax, service charges and VAT in your area. 

• Pay your bills with Financial Freedom Application. (“The hardest thing in the world is to understand Tax” – Learn more about Indirect Tax with MoneyMindz)

Is it better to invest in ELSS than PPF, considering a long term horizon?

Earlier, we looked at the pros and cons of . tax-saving fixed deposits Another popular tax-saving alternative under Section 80C is mutual_funds. These tax-saving mutual funds are known as Equity Linked Savings Schemes (ELSS). ELSS funds are widely-used to save taxes but a lot of people make rushed investments in them in the last financial quarter of the month. To get the best out of tax-saving mutual funds, an investor needs to understand their pros and cons

ELSS and PPF are two completely different products. The reason one tends to compare is because the two are part of the same tax saving section of the income tax act.

PPF is similar to debt instruments. Returns from this investment is fixed and more importantly similar to the underlying inflation in the economy.

(Never fall prey for insatiability)

Its far better to invest in ELSS than in PPF or any other tax saving funds.

Here are the pros of ELSS -

Investments are in equity -

It gives you higher returns and way to participate in the growth story of India. Unless you have a lot of time to research and pick stocks, this is the best way to invest.

Shortest lock-in of 3 years - 

If the market shot up in these three years, you can withdraw the money and invest elsewhere - buying a house etc. If the markets have not performed so well during these three years, you can wait and hold longer. Unlike FD, the investments are not liquidated by itself

The returns are tax free - 

similar to PPF, the returns earned on the ELSS investments are subject to nil taxation.

It’s easy to invest, track and redeem -

with just click of buttons or touch of screens, you can invest and manage your investments. The returns are updated on a daily basis and after three years, you can withdraw whatever amount you need, keep the rest of the investments invested.

While ELSS are logically best options, here are a few factors why someone might shy away from investing in them for saving taxes -

No fixed returns - certain people want certainty, guarantee. ELSS can’t offer that as the investments are linked to market. But PPF guarantees you a 8% returns.

If I can, then I will redeem -

Since ELSS has a lock-in for just 3 years, you might use the funds just after that. Therefore, your impulse shopping or urge to spend can hurt your net worth. While in case of PPF its locked for 15 years.

Want to save money through ELSS? 

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How to learn all about Indian stock market before investing?

Lately, People have started giving attention to the Stock market because of the false or rather superficial rate of returns which are marketed throughout media sources. This is done only to attract a huge crowd of earning people and lure them into this money business. Majority of the people invest blindly and then get devastated on realising what has happened to all their money.

Investing is a plan, not a product.

Let's say you plan to invest in Stock market When you finalise on one piece of property, you also finalise factors like

How much are you willing to pay?

Would you buy the stock right now?

What is the exit strategy (holding long term or sell in 6 months?)

Does the investment fit in with your overall plan/goal?

Get it now? You plan the investment. (An overview on capital 

market)

It took me a while to get this, but it is really empowering to understand this principle. It is wise to divide investing in 3 plans.

Plan to be secure

Plan to be comfortable

Plan to be rich

For someone looking on how to invest money in share market, this may help.

• Start with reading News channels, Editorials and do read the Moneymindz blog.

• Apps such as, Financial Freedom give you a good piece ADVICE BY EXPERTS off the market scenario

• Never follow the script suggestion of unheard companies which are provided on TV, they are mostly paid news

• When you think you have gained sufficient knowledge, try to experiment with a certain amount of money which you are not afraid to loose

• Take a note, I said to experiment and not to invest, Once you gain any profits out of your experiment then think of investing with a small amount every month.

• Initially for few months focus only on Equities, consider a sector and start finding out the future prospects of that respective sector, Classify the companies within that sector according to the brand value and its customer reach and then segregate accordingly.

• Always remember “Good quality stocks will always give you a good return, even if they look pricey”

PRO-TIP: Once you enter the world of stock market you will get suggestions from many people to invest in Penny Stocks rather than established Companies, People will claim that these Penny Stocks will become Multi-Baggers within few years and will give you say 10x returns or even more. But remember a fact “An Egg can either get hatched or get fried, But a Baby Elephant will always grow up to be an Elephant”

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How to invest like warren Buffet?

Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is considered by some to be one of the most successful investors in the world, and as of March 2017 is the second Wealthiest person in the united states with a total net of $78.7 billion.

Warren Buffett’s investing principles have earned him the moniker of the “world’s greatest investor.” It is a nickname that Buffett himself chuckles at, but when you are worth $36 billion, it is hard to dispute. However, it’s not the truth.

Warren Buffett did not become a billionaire as an investor, and he does not “invest” in the manner usually depicted in popular media. That may be a bold statement to make, but once you understand his actual techniques of accumulating wealth, then you will be able to begin running your own investments in a similar way.

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Does Buffett “Buy and Hold?”

Buffett is used as an example by the media and financial advisors of why you should buy and hold. But the portrayal isn’t really accurate. When you buy and hold a stock, you buy it and hold it no matter what. It does not matter if there is good news or bad news, a Democrat or Republican president, a recession or an economic boom. You hold the stock through good times and bad.

Buffett, on the other hand, buys for specific reasons, and when those reasons are no longer present, he sells. Known as a value investor – one who buys stocks that have a low price-to-earnings ratio – Buffett looks for good prices, sound management, and a competitive advantage

Buying a stock and holding it forever is not what the Sage of Omaha does. Of the first 20 companies in which Buffett invested, the only one he still holds is Berkshire Hathaway, and that is probably only for its name. Each of the other 19 he no longer owns. Yet, we have

writers, financial advisors, business news heads, and self-proclaimed investment educators who tell you to do just that. But if the world’s richest “investor” does not do that, why should you?

How to Invest Like Warren Buffett

Though you probably won’t have an ownership interest in the companies in which you invest, you can follow Buffett’s approach to generate more profits and reduce losses. The steps are simple to understand, though they may not be easy to implement:

DETERMINE HOW MUCH YOU WANT TO PUT IN THE STOCK MARKET

Unless you come from money, you will probably be starting from scratch and that is ok. Many of us have to start small – myself, included. Begin by determining how much you want to invest. If you are going, the route of investing in mutual funds many will have some initial minimums you need in order to buy in. Numerous ones available have initial investments of as low as $250 or none at all, such as through E*TRADE. If you had rather invest in individual stocks, you need to choose an online broker. Many of these will also have minimums to get started, though some of them do not. If you do not have $1,000 to invest right now, set a goal for yourself to save up the money as you can start investing with $500 or less at a number of online brokers. When you reach your goal, your investment account will mean even more to you because you had to work harder for it.

• Make a List of Criteria to Buy a Stock. For example, you could look for stocks within a certain industry and with a specific price to earnings ratio or 6 month moving average. Just remember that stock price should not be a sole criteria. Often, a good company will dip in price due to the market or sector – which could present a good buying opportunity as long as the criteria you establish are being met (How To Complete Tax-Related Issues Before March 31, 2017)

• Invest in Industries and Companies Familiar to You. Understanding something about the industries or companies you invest in will make it easier to stay current on industry trends and company news. An investing strategy based on hype or following other people’s stock tips is a recipe for long-term failure. If you are interested in a company you do not know, but hear a lot about, research it first.
• Stay in Cash if Necessary. If no companies on your list fit your investment criteria, stay in cash. Cash is a position.
• Do your research and follow the Companies. Rather than buying on a tips , Do the research, Buffet reportedly Read 5 newspaper a day and Once you invest, follow the companies on a monthly basis. Do not look at them on a daily basis.
• Sell at the Right Time. When a company no longer matches your reasons for buying, sell the stock. If you determined it needs to be above its two-year average stock price, and it falls beneath it, then you sell. This is what most Buffett followers miss. He has rules and he diligently follows them. When a company no longer fits his criteria, he sells. Resist the urge to make excuses to stay in the investment. Sell it. Period

5 THINGS TO KNOW BEFORE SUBMITTING YOUR INVESTMENT PROOF

It is that time of the year where you, as a salaried tax payer, have to submit Income Tax Investment Proof in order to avoid excess tax deduction.

There are things that you must be aware of pertaining to investment proofs which an individual needs to provide to their employer at the time of tax-saving season. In case you are not aware of them, read on to get complete details on the same. It will not only help you to save tax but also ensure that you are understand why and how it helps. It can be divided in 5 basic ideas, to help you remember these things.

Educating yourself a bit about taxes and tracking your expenses can go a long way in saving the taxes and avoiding the hassle of claiming the refund for excess taxes paid. ? Just leave a missed call on Moneymindz.com India’s Best Financial Advisor 022-62116588 or Download Financial Freedom application and post to expert your Queries. Moneymindz.com offers Free, Unbiased and on-call financial advice on Investment Assistance for insurance, Loan Assistance Retirement, Planning, Money Management Investment, Advisor, Retirement Planning, Best Health Insurance.

Ensure that you submit the bills for your reimbursement claims

There are certain perquisites which are exempt under the Income Tax Act only if you submit the proof of actual expenses to your employer, like telephone reimbursement, reimbursement on books and periodicals, research allowance, etc. “Unless you submit the proof of the related expenses to your employer within the given time, these will be considered to be taxable allowances in your hand and you may not be able to claim exemptions while filing the tax return. Hence ensure that you submit the proof of these tax deductible expenses to your employer,” says Chetan Chandak, Head of Tax Research, H&R Block India.

Know the regulations as well as pros and cons of making investment declaration

Declaring your investment helps the employer deducting correct and appropriate tax amount from the salary of the employees. As certain investments are subject to tax exemption by declaring them the employee can reduce the tax load on their income. Knowing which investments can help you saving tax and and to what extent is important. Besides medical reimbursement and few other expenses like house rent and traveling allowance are also subject of tax exemption. Employers begin collecting the documents as proofs of investment from the month of December and January to validate the declaration made by the employees earlier. This take 2 to 3 months and the process becomes complete by March every year.

(Misconceptions can make offenders of law-abiding taxpayers)

You need to furnish proofs of investments in the month of February and March against your earlier mentioned investments

It is understandable that for premiums and investment installments that are due in March cannot always be validated with receipt or any document months ago. In case you do not have the premium receipts with you or your SIP or ELSS statement does not reflect the installments paid, you have the option of making a declaration and employers will provide you a form for this purpose. When the year-end tax filing would be done you will be given the exemptions based on the declaration made by you.

Finally, you can always get your excess taxes returned to you by furnishing the documents for investment made by you. While it is always better to declare and furnish things in time, you can always furnish investment information and supporting documents later to claim your rightful deductions

Declaration of Additional Income to the employer to avoid penal interest.

You might not be aware, but declaring your other income to your employer can work to your advantage. Other income can be in the kind of rentals from your property, interest on your fixed deposits, etc. If you declare these incomes to your employer, they can then deduct and pay the taxes on your behalf. “The important point to note here is that you may be liable to pay advance tax in respect of such additional income in four quarterly installments. Further, if you have not done this you may be liable to pay interest at 1% p.m. on the quarterly shortfalls. But the benefits of declaring this ‘other income’ to your employer is that they will calculate the due taxes on such income and pay it in the form of TDS. This will save you from the interest for default in payment of advance taxes,” says Chandak.

Do remember to submit the Proof of TDS on Additional Income.

The next important point to note is that if you have declared your other income to your employer, you should also ensure that you submit the details of tax deduction on such income to your employer. Else your employer will deduct the taxes due at full rate and this will result in you paying excess taxes.