R.K. Mohapatra's Blog
May 31, 2016
FOCUS & THINK ABOUT YOUR FINANCIAL GOALS
You need money for every significant decision, such as buying a house and a vehicle, planning for children’s higher education, and retirement. You create a clear goal of what your life would look like and set your milestone based on your resources and find out the real path where you want to go in your life.
Once your goals set, you may start saving a small amount each month regularly. Your long-term goals may face uncertainty due to the volatility of the market (ups and downs), but don't stop until you reach your destination. For example, if someone makes SIP per month only for Rs.5000 in an equity mutual fund and after 240 months, he/she will get Rs.65.81 lakhs assuming a rate of return 14% per annum. Every decision has some objectives and goals. You can make a meaningful plan to fulfill your financial goals such as a child’s higher education, purchase of house and planning for retirement, etc. The above amount can quickly help to achieve one of the objectives say your child’s higher education goal after 20 years.
If you are looking for a short-term investment, then you can park your money in post offices, government bonds, liquid mutual funds, FMP and fixed deposit (FD) and if you are concentrating on long-term investment, then public provident funds (PPF ), National Pension Scheme (NPS), five-year recurring deposits(RD), PMIS, 10/ 15 years Infrastructure bonds, Equity mutual fund, and ELSS are the best options for you.
Why you invest in mutual funds (MFs)?
Mutual fund is the best option on the date to invest for long-term goals as it has several advantages, which include lower cost of financing, very liquid, higher safety in comparison to other products, and also tax-efficient. Mutual fund is also diversifying investor’s money into different asset class. It is less risky than equity, as fund units managed professionally. It is highly operational transparent, and user-friendly. On the other hand, mutual funds generate consistency return over the long-run.
Is consistency an essential parameter for the selection of a fund?
A mutual fund has outperformed its benchmark index over one year; it may not do well in the coming year. You can take funds five-year return and its benchmark returns on every month for five years. On average, if the fund return was over and above the benchmark return, we may call consistency in fund performance. The higher the outperformance, the better is the consistency. Birla Sun Life frontline equity return for five years as of 26th November 2016 is the best example of consistency performance.
What are the criteria for selecting MFs?
Two criteria will generally guide the selection of investing in a mutual fund of portfolios by the investor:
• The investor would prefer to invest in the lowest risk fund with the same expected return in a specific time frame in two funds.
• The investor would prefer the higher expected return in portfolios of two funds with the same risk.
An investor should make an investment strategy based on risk-tolerance capacity. Risk tolerance capacities differ from person to person and also their age. It is prudent for an investor to invest in large-cap, multi-cap & diversify equity mutual fund scheme, rather than aggressively invest in mid-cap as well as small-cap funds.
Invest directly in MFs:
The expense ratio is the amount an investor pays a fund every year as a percentage of investment as payment for managing one’s money. In the long term, a high expense ratio can reduce returns massively. However, a lower expense ratio does not necessarily imply a well-managed fund. Instead, a good fund is one that delivers a consistent performance with minimal expenses. You must, therefore, consider the fund management charges while investing in a mutual fund. For an investment of Rs 10 lakhs in a mutual fund scheme that offers a rate of return of 12 percent per annum, a 1 percent extra fund management charge will result in a loss of Rs 70.67 lakhs over 30 years. By investing directly with mutual fund houses instead of through distributors/ agents, you can save on distribution fees, and there is evidence that, over the long term, direct equity mutual fund outperform regular funds by over 1%.
Think before you invest:
Investing blindly in shares and other market-related products may risk the loss of investor’s capital as speculator plays a vital role in inflating the stock prices nowadays.
Security prices are affected by so many factors. It causes interest rate risks and purchasing power risks. Similar to the capital markets, more broadly, mutual funds governed by factors such as socioeconomic conditions, inflation and interest rates, global events, political stability, exchange rate fluctuations, as well as company performance and governance. Returns from shares and mutual funds also depend upon the earnings growth of companies. Hence, the concentration ratio of each fund should play an important role while selecting between different Mutual funds.
Create a balanced portfolio by Investing in mutual funds:
It is prudent to invest in different fund houses and various categories of mutual fund products, which not only protect your hard-earned money from the market volatility but also create wealth in the long-run. Mutual funds are the most suitable investment for the common man as it offers an opportunity to invest in diversified securities and different asset classes, which are professionally managed by fund housed at a comparatively low cost. Mutual funds help an investor to create a right portfolio mix due to its various categories of funds, such as: large-cap funds, multi-cap funds, mid-cap funds, hybrid funds, debt funds, and gold funds. Equity funds have a higher risk of capital loss in comparison to hybrid/ diversified funds.
“Diversification keeps you financially fit and also protects you from the volatility of the market, as it reduces the risk exposure in your portfolio.”
Review the portfolio periodically:
You can evaluate the performance of a mutual fund based on parameters such as NAV, portfolio turnover, risk and return yearly or half-yearly returns. It is also advisable to book the profit periodically or to transfer equity fund holding to liquid/debt fund when fund earns more than the bank fixed deposit rate plus the current inflation. Investment of shares during your lifetimes may give you five times positive returns and 50 times negative return. It is not a process of a win-win system. If you have known the actual market trend, you can win in this volatile market, otherwise not. Speculative effect, demographic factors, micro factors, macro factors, fluctuation of currency & also political stability play an important role in the capital market.
Besides, it is vital to consider indicators such as standard deviation, the beta, and the alpha, and the sharp, Treynor, Sortino, and concentration ratios while reviewing an equity mutual fund.
Why focus on the long-term….?
The S&P BSE Sensex yielded returns at a CAGR of 8.83 percent over the last ten years. As the tenure of investment increases, the probability of negative performance decreases. Historically, there has never been an instance of negative performance for ten years and above.
Affirming this fact, as of 1st September 2016, actively – managed large-cap and diversified funds generated a CAGR return of 15.86 percent and 17.31 percent respectively over the period of 10 years. In comparison, the benchmark index for large-cap fund S&P BSE 200 yielded a lower, 9.38% during the same period. Then, equities deliver strong returns with lower downside risk in the long term, compare to debt instruments such as bonds, debentures, and Govt. Securities. Hence, equity and equity-related investments should always be for the long-term, ideally more than five years, and one can assume returns of 12-15 percent a tear over a longer horizon.
Maintain a disciplined approach:
An investor must be well-disciplined; otherwise, he/she will lose money due to wrong decisions such as selling stocks and shares & mutual funds haphazardly due to the volatility of the market. The decision to not invest in the bear market also reflects that the investor is not well disciplined as he/she is not investing regularly as per the defined/targeted goals.
Those who invest irrespective of market trends will achieve their goal in due time. Start investing in diversify equity mutual fund at the age of 25, a very small amount say Rs.3000/- per month for your retirement after 35 years you will accumulate Rs.1.95 cores with an annual return of 12 %, which is sufficient to generate Rs.1.26 lakhs Per month (7.75% interest in bank FDR), to meet your post-retirement living expenses comfortably. The above corpus can be achieved only by disciplined approaches irrespective of market volatility. Hence, it is the ultimate path towards the success of your specific goal.
R K Mohapatra is GM - Finance, IRCON, and an eminent author
You can get the book at amazon.
http://www.amazon.in/Retirement-Plann...
Once your goals set, you may start saving a small amount each month regularly. Your long-term goals may face uncertainty due to the volatility of the market (ups and downs), but don't stop until you reach your destination. For example, if someone makes SIP per month only for Rs.5000 in an equity mutual fund and after 240 months, he/she will get Rs.65.81 lakhs assuming a rate of return 14% per annum. Every decision has some objectives and goals. You can make a meaningful plan to fulfill your financial goals such as a child’s higher education, purchase of house and planning for retirement, etc. The above amount can quickly help to achieve one of the objectives say your child’s higher education goal after 20 years.
If you are looking for a short-term investment, then you can park your money in post offices, government bonds, liquid mutual funds, FMP and fixed deposit (FD) and if you are concentrating on long-term investment, then public provident funds (PPF ), National Pension Scheme (NPS), five-year recurring deposits(RD), PMIS, 10/ 15 years Infrastructure bonds, Equity mutual fund, and ELSS are the best options for you.
Why you invest in mutual funds (MFs)?
Mutual fund is the best option on the date to invest for long-term goals as it has several advantages, which include lower cost of financing, very liquid, higher safety in comparison to other products, and also tax-efficient. Mutual fund is also diversifying investor’s money into different asset class. It is less risky than equity, as fund units managed professionally. It is highly operational transparent, and user-friendly. On the other hand, mutual funds generate consistency return over the long-run.
Is consistency an essential parameter for the selection of a fund?
A mutual fund has outperformed its benchmark index over one year; it may not do well in the coming year. You can take funds five-year return and its benchmark returns on every month for five years. On average, if the fund return was over and above the benchmark return, we may call consistency in fund performance. The higher the outperformance, the better is the consistency. Birla Sun Life frontline equity return for five years as of 26th November 2016 is the best example of consistency performance.
What are the criteria for selecting MFs?
Two criteria will generally guide the selection of investing in a mutual fund of portfolios by the investor:
• The investor would prefer to invest in the lowest risk fund with the same expected return in a specific time frame in two funds.
• The investor would prefer the higher expected return in portfolios of two funds with the same risk.
An investor should make an investment strategy based on risk-tolerance capacity. Risk tolerance capacities differ from person to person and also their age. It is prudent for an investor to invest in large-cap, multi-cap & diversify equity mutual fund scheme, rather than aggressively invest in mid-cap as well as small-cap funds.
Invest directly in MFs:
The expense ratio is the amount an investor pays a fund every year as a percentage of investment as payment for managing one’s money. In the long term, a high expense ratio can reduce returns massively. However, a lower expense ratio does not necessarily imply a well-managed fund. Instead, a good fund is one that delivers a consistent performance with minimal expenses. You must, therefore, consider the fund management charges while investing in a mutual fund. For an investment of Rs 10 lakhs in a mutual fund scheme that offers a rate of return of 12 percent per annum, a 1 percent extra fund management charge will result in a loss of Rs 70.67 lakhs over 30 years. By investing directly with mutual fund houses instead of through distributors/ agents, you can save on distribution fees, and there is evidence that, over the long term, direct equity mutual fund outperform regular funds by over 1%.
Think before you invest:
Investing blindly in shares and other market-related products may risk the loss of investor’s capital as speculator plays a vital role in inflating the stock prices nowadays.
Security prices are affected by so many factors. It causes interest rate risks and purchasing power risks. Similar to the capital markets, more broadly, mutual funds governed by factors such as socioeconomic conditions, inflation and interest rates, global events, political stability, exchange rate fluctuations, as well as company performance and governance. Returns from shares and mutual funds also depend upon the earnings growth of companies. Hence, the concentration ratio of each fund should play an important role while selecting between different Mutual funds.
Create a balanced portfolio by Investing in mutual funds:
It is prudent to invest in different fund houses and various categories of mutual fund products, which not only protect your hard-earned money from the market volatility but also create wealth in the long-run. Mutual funds are the most suitable investment for the common man as it offers an opportunity to invest in diversified securities and different asset classes, which are professionally managed by fund housed at a comparatively low cost. Mutual funds help an investor to create a right portfolio mix due to its various categories of funds, such as: large-cap funds, multi-cap funds, mid-cap funds, hybrid funds, debt funds, and gold funds. Equity funds have a higher risk of capital loss in comparison to hybrid/ diversified funds.
“Diversification keeps you financially fit and also protects you from the volatility of the market, as it reduces the risk exposure in your portfolio.”
Review the portfolio periodically:
You can evaluate the performance of a mutual fund based on parameters such as NAV, portfolio turnover, risk and return yearly or half-yearly returns. It is also advisable to book the profit periodically or to transfer equity fund holding to liquid/debt fund when fund earns more than the bank fixed deposit rate plus the current inflation. Investment of shares during your lifetimes may give you five times positive returns and 50 times negative return. It is not a process of a win-win system. If you have known the actual market trend, you can win in this volatile market, otherwise not. Speculative effect, demographic factors, micro factors, macro factors, fluctuation of currency & also political stability play an important role in the capital market.
Besides, it is vital to consider indicators such as standard deviation, the beta, and the alpha, and the sharp, Treynor, Sortino, and concentration ratios while reviewing an equity mutual fund.
Why focus on the long-term….?
The S&P BSE Sensex yielded returns at a CAGR of 8.83 percent over the last ten years. As the tenure of investment increases, the probability of negative performance decreases. Historically, there has never been an instance of negative performance for ten years and above.
Affirming this fact, as of 1st September 2016, actively – managed large-cap and diversified funds generated a CAGR return of 15.86 percent and 17.31 percent respectively over the period of 10 years. In comparison, the benchmark index for large-cap fund S&P BSE 200 yielded a lower, 9.38% during the same period. Then, equities deliver strong returns with lower downside risk in the long term, compare to debt instruments such as bonds, debentures, and Govt. Securities. Hence, equity and equity-related investments should always be for the long-term, ideally more than five years, and one can assume returns of 12-15 percent a tear over a longer horizon.
Maintain a disciplined approach:
An investor must be well-disciplined; otherwise, he/she will lose money due to wrong decisions such as selling stocks and shares & mutual funds haphazardly due to the volatility of the market. The decision to not invest in the bear market also reflects that the investor is not well disciplined as he/she is not investing regularly as per the defined/targeted goals.
Those who invest irrespective of market trends will achieve their goal in due time. Start investing in diversify equity mutual fund at the age of 25, a very small amount say Rs.3000/- per month for your retirement after 35 years you will accumulate Rs.1.95 cores with an annual return of 12 %, which is sufficient to generate Rs.1.26 lakhs Per month (7.75% interest in bank FDR), to meet your post-retirement living expenses comfortably. The above corpus can be achieved only by disciplined approaches irrespective of market volatility. Hence, it is the ultimate path towards the success of your specific goal.
R K Mohapatra is GM - Finance, IRCON, and an eminent author
You can get the book at amazon.
http://www.amazon.in/Retirement-Plann...
April 8, 2014
SPECULATION IN CAPITAL MARKET
The speculation is the real crime in the country. The government must find out the ways how to control these speculations, not only in the share market but also in the commodity market. Inside trading and speculator effect plays an important role for share prices. In present scenario, it proved that they are very active and destroy every body’s peace in the country.
Generally price movements go up and down based on demand and supply of stock. The artificial demand created by the leading market players (broker houses) in the market almost all day in the trading of stock, which have a tendency to decrease and increase of stock prices.
However, market, regulatory system does not control it. Market regulator SEBI always done the post-mortem after the inside trading. You could observe the case of Ranbaxy, which was climbed near about 33% within six days on the BSE from 27.03.14 to 04.04.14, prior to the deal of the Sun Pharma-Ranbaxy.
Market Regulator SEBI in this case is helpless, because increase and decrease of share prices is outside its control. SEBI should announce new guidelines for trading to curb speculator effect in the market.
SEBI should come out forthwith with a strong regulatory trading policy by protecting small as well as large investor by infusing greater transparency in the share market. It also learned that from our past experience how speculator plays an important role for ups and downs of the capital market.
The government should come out forthwith with regulatory measures and suitable credit policy to overcome the future darkness of the Indian economy. Devaluation of Indian rupee and increase of inflation is also one factor of FII investment in capital market. FII investment is not generating much employment what we need today. The rupee appreciated during last two years in terms of a US dollar due to purely strong FII inflows.
Generally price movements go up and down based on demand and supply of stock. The artificial demand created by the leading market players (broker houses) in the market almost all day in the trading of stock, which have a tendency to decrease and increase of stock prices.
However, market, regulatory system does not control it. Market regulator SEBI always done the post-mortem after the inside trading. You could observe the case of Ranbaxy, which was climbed near about 33% within six days on the BSE from 27.03.14 to 04.04.14, prior to the deal of the Sun Pharma-Ranbaxy.
Market Regulator SEBI in this case is helpless, because increase and decrease of share prices is outside its control. SEBI should announce new guidelines for trading to curb speculator effect in the market.
SEBI should come out forthwith with a strong regulatory trading policy by protecting small as well as large investor by infusing greater transparency in the share market. It also learned that from our past experience how speculator plays an important role for ups and downs of the capital market.
The government should come out forthwith with regulatory measures and suitable credit policy to overcome the future darkness of the Indian economy. Devaluation of Indian rupee and increase of inflation is also one factor of FII investment in capital market. FII investment is not generating much employment what we need today. The rupee appreciated during last two years in terms of a US dollar due to purely strong FII inflows.
April 5, 2014
POSITIVE THOUGHT AND OUR LIFE
It is the tendency of human being to work more and to earn more and sometimes we think of earning more with less work . This process is called accumulation of money. We usually get up and rush to work after finishing the morning work. We think there is no limit for work, which can help us earn more and achieve our desired goals. Whenever, one goal fulfils, another goal forms in our subconscious mind and we run after it to achieve it. It is a never ending process.
We forget to worship God who made us and gives a marvellous life. We are enjoying this cosmic world simply by the grace of GOD. We are also forgetting to enjoy our life in this beautiful world due to accumulation process as explained above. It creates fear, stress, tension, anxiety in our mind and as a result, sorrow and sufferings of many diseases come into our life and we forget to enjoy the things available in this beautiful world. Negative thoughts develop in our mind due to fear, stress, pressure, tension, anxiety and nervousness etc. Conversely, it imbalances our metabolic system and leads to so many diseases.
How to overcome these factors which affected our mind, body and soul? Let us start with one factor.
FEAR
Fear is our body’s natural reaction; which causes havoc in our life. It creates confusion and disorder in your metabolism system. Your thoughts and feelings tend to move towards a negative thinking due to biological reactions in your body against risk or danger, which effectively aggravate your nerve system, with possibility of creation of depression in your mind.
Type of Fear:
Fear can be arises in different levels of life. It will vary from person to person. It can broadly divided in to three categories:
a) Things that occurred during the life time of an individual.
• Change in atmosphere and work place
• Ageing
• Disability
• Kids leaving
• Retirement
• Loss of loved ones
• Death
b) External factors create fear in the human mind.
• Change of political system in your country
• War & violence
• Economics Crisis
• Disease
• Accident
• Robbery
• Rape and murder
c) Other Factors
• Fear of failure
• Fear of rejection
• Fear of success
• Fear of impotence
• Fear of disapproval
• Fear of loss of image
Let us learn to Overcome Fear:
Identify what exactly you are afraid of. You observe independently your thoughts and analyse them without involving yourself. You may find out the real cause of fear, then you will think of a process which will overcome it. You may observe the situations and keep it in your mind. What is happening is change in atmosphere and find out what are you really scared of? Which thought generates your fear in your mind and how do you react to it? Try to observe very minutely what is going on in that situation and its impact in your mind.
This is the time to reset your life and open the doors for new ventures for the betterment of your life and future.
LET US START A DAY WITH POSITIVE STATEMENT SUCH AS:
When you wake up, thank the God for your first breath than you feel active and energetic. Inhale and exhale at least 10 minutes by chanting “OM” for the sake of God. You may repeat “OM” with certain process. At that time you will notice that you will inhale more deeply and then you exhale, “OM” loudly (first pronounce the vowel OOOOOO.... and then in the end MMMMM...); this will help to exhalate slowly and more continuously, as the thorax box and abdominal zone relax. Oxygenation is not only necessary to remain alive but also to provide superb connection with the inner self. Process of breathing facilities mental vibrations at all levels of our body which generate positive energy, which we can feel.
“Deep breathing is fundamental to physical health and spiritual development”
YOU MAY FOLLOW THESE SIMPLE STEPS TO CREATE POSITIVE THOUGHT:
• Sitting or lying in comfortable position.
• Place hand on the stomach just above the naval.
• Look for main points of tension and stress and imagine how to settle it.
• Relax your mind with easy notes, which consciously solve your problems.
• Start process of relaxing your body. Relax yours jaws but do not open the mouth. Let your shoulders fall. Open your hands and relax your fingers.
• Close your eyes and be conscious of your body’s parts: first the head, then the arms, the trunk and then the legs.
• Breathing normally, listen to your breath, for at least 10 to 12 breaths.
• Start breathing DEEP, filling the belly first and then the lungs, in one inhalation. Make sure that the hand on the stomach rises before thorax.
• Retain the air and count up to five. Exhale.
• Repeat ten times.
• Let your breathing normalize naturally.
• Tense muscles softly
• Open your eyes while you relax your muscles again.
Your main aim is to acquire a happy life. It is essential to eliminate negative thought and create positive thought in your soul, mind and body. It is also essential to be able to love and be loved. Be grateful for your family, friends, near and dear, colleagues, teachers and Gurus. This will help you center and focus on your family as well as others with whom you share your affections. It will change your mood and creates energy and you will be happy for ever. Write your pending work and goals you want to do on this day and achieve in future. Goals should be precise and accurate. Start sending mail, letters and visits people to whom you want to meet for finish of work. This process will ready you in emotionally and physically to face the challenges in your life. Tell yourself that I will solve all my problems and face all challenges in my day-to-day life. Convince yourself that you can actually make all you imagine happen.
Fill your mind with new images of your glorious and you will actually start enjoying it. Continue...........
At the end of the day, you will feel satisfied. Start every day with fresh note and a clean slate. Create positive energy and delete negative feeling of the past. I think you will feel energetic and begin your day with new notes which makes you good and successful in your life.
We forget to worship God who made us and gives a marvellous life. We are enjoying this cosmic world simply by the grace of GOD. We are also forgetting to enjoy our life in this beautiful world due to accumulation process as explained above. It creates fear, stress, tension, anxiety in our mind and as a result, sorrow and sufferings of many diseases come into our life and we forget to enjoy the things available in this beautiful world. Negative thoughts develop in our mind due to fear, stress, pressure, tension, anxiety and nervousness etc. Conversely, it imbalances our metabolic system and leads to so many diseases.
How to overcome these factors which affected our mind, body and soul? Let us start with one factor.
FEAR
Fear is our body’s natural reaction; which causes havoc in our life. It creates confusion and disorder in your metabolism system. Your thoughts and feelings tend to move towards a negative thinking due to biological reactions in your body against risk or danger, which effectively aggravate your nerve system, with possibility of creation of depression in your mind.
Type of Fear:
Fear can be arises in different levels of life. It will vary from person to person. It can broadly divided in to three categories:
a) Things that occurred during the life time of an individual.
• Change in atmosphere and work place
• Ageing
• Disability
• Kids leaving
• Retirement
• Loss of loved ones
• Death
b) External factors create fear in the human mind.
• Change of political system in your country
• War & violence
• Economics Crisis
• Disease
• Accident
• Robbery
• Rape and murder
c) Other Factors
• Fear of failure
• Fear of rejection
• Fear of success
• Fear of impotence
• Fear of disapproval
• Fear of loss of image
Let us learn to Overcome Fear:
Identify what exactly you are afraid of. You observe independently your thoughts and analyse them without involving yourself. You may find out the real cause of fear, then you will think of a process which will overcome it. You may observe the situations and keep it in your mind. What is happening is change in atmosphere and find out what are you really scared of? Which thought generates your fear in your mind and how do you react to it? Try to observe very minutely what is going on in that situation and its impact in your mind.
This is the time to reset your life and open the doors for new ventures for the betterment of your life and future.
LET US START A DAY WITH POSITIVE STATEMENT SUCH AS:
When you wake up, thank the God for your first breath than you feel active and energetic. Inhale and exhale at least 10 minutes by chanting “OM” for the sake of God. You may repeat “OM” with certain process. At that time you will notice that you will inhale more deeply and then you exhale, “OM” loudly (first pronounce the vowel OOOOOO.... and then in the end MMMMM...); this will help to exhalate slowly and more continuously, as the thorax box and abdominal zone relax. Oxygenation is not only necessary to remain alive but also to provide superb connection with the inner self. Process of breathing facilities mental vibrations at all levels of our body which generate positive energy, which we can feel.
“Deep breathing is fundamental to physical health and spiritual development”
YOU MAY FOLLOW THESE SIMPLE STEPS TO CREATE POSITIVE THOUGHT:
• Sitting or lying in comfortable position.
• Place hand on the stomach just above the naval.
• Look for main points of tension and stress and imagine how to settle it.
• Relax your mind with easy notes, which consciously solve your problems.
• Start process of relaxing your body. Relax yours jaws but do not open the mouth. Let your shoulders fall. Open your hands and relax your fingers.
• Close your eyes and be conscious of your body’s parts: first the head, then the arms, the trunk and then the legs.
• Breathing normally, listen to your breath, for at least 10 to 12 breaths.
• Start breathing DEEP, filling the belly first and then the lungs, in one inhalation. Make sure that the hand on the stomach rises before thorax.
• Retain the air and count up to five. Exhale.
• Repeat ten times.
• Let your breathing normalize naturally.
• Tense muscles softly
• Open your eyes while you relax your muscles again.
Your main aim is to acquire a happy life. It is essential to eliminate negative thought and create positive thought in your soul, mind and body. It is also essential to be able to love and be loved. Be grateful for your family, friends, near and dear, colleagues, teachers and Gurus. This will help you center and focus on your family as well as others with whom you share your affections. It will change your mood and creates energy and you will be happy for ever. Write your pending work and goals you want to do on this day and achieve in future. Goals should be precise and accurate. Start sending mail, letters and visits people to whom you want to meet for finish of work. This process will ready you in emotionally and physically to face the challenges in your life. Tell yourself that I will solve all my problems and face all challenges in my day-to-day life. Convince yourself that you can actually make all you imagine happen.
Fill your mind with new images of your glorious and you will actually start enjoying it. Continue...........
At the end of the day, you will feel satisfied. Start every day with fresh note and a clean slate. Create positive energy and delete negative feeling of the past. I think you will feel energetic and begin your day with new notes which makes you good and successful in your life.
February 22, 2014
Impact of global slowdown in Indian Economy
We all are aware that the economy of our country is slowly collapsing due to trade deficits, adverse growth of export, devaluation of wealth especially land and buildings, the credit crunch, close down of manufacturing units, lay off and retrenchment of workers, slashes of raw material prices, lack of demand of commodities and growth of unemployment.
The global economic slowdown is bound to have adverse impact on the industry whether large, small and medium enterprises. The global crisis has a huge impact on our exports, financial markets, production and also on job market to a certain extent. The impact of slowdown in India not only adversely affect the GDP but also generate unemployment , lay off, negative growth of industry and cut down the production of manufacturing sectors due to lower demand of finished product in domestic as well as international market. As a result import of inputs is decreasing day by day due to lower demand in the wake of economic slowdown. The demand for dollars in Indian markets has eased as importers are observed demand for inputs decreased day by day due to global economic slowdown.
The rupee had depreciated near about 65.00 against one US dollar which is nearly 20% in comparison to last year data. While depreciation of currency is usually welcome by exporters, the volatile in the rupee has made them wary as many had hedge their risks at higher levels. Exporters have been selling dollars today as they fear high volatility in the foreign exchange market. But on the other hand, the currency factor also contributed to FII investment in the Indian market.
Effect of recession / slowdown already create labour turnout, unemployment, lay off, lock out, slashes of commodity/ raw material prices such as iron ore, cotton trade, PVC resins , poly propylene etc in India. Millions of people lose their jobs and 40% of units closed due to slow down. Every body’s wealth/assets will decrease over night due to crash of share market. The sentiment of people is going in bearish trend day by day and they lose their confidence in the present economic scenario and uncertainty market. Small investors wipe out due to nonproductive growth of capital market since 2010. It creates negative attitude in society which leads to adverse impact such as not to invest in new venture and share market.
WHAT REQUIRED TODAY FROM GOVT?
It is never too late, but it would require radical changes to be made and only if the government implements suitable policies and rules to control the main reasons/factors of slowdown. In this point what is required today is to take suitable supportive measures by the government like enhancement of credit and fiscal support, and specific incentives for exports that could help micro, small and medium enterprises to building their competitiveness and thereby minimizing the adverse impact.i
The main reasons of slowdown of economy are stock market crash, speculation and government policies and people bearish sentiment.
LAYMAN IDEA TO OVERCOME SLOWDOWN:
Generally investors are looking for the companies with strong balance sheets, healthy cash flows and quality management. The entire fundamental is not operating in these days because of global economic slowdown . Speculation plays an important role in these days globally. It is necessary to curb it forthwith without any further delay instead of wait & watch.
Speculation is the real crime in the country. The government must find out the ways how to control these speculations, not only in the share market but also in commodity market. Spreading the bearish sentiment among the people also create speculation in human mind. It is crime against the nation. Few speculators cannot run our economy. At present scenario it proved that they are very active and destroy every body’s peace in the country. People are financially weak day by day as inflation hits their backbone and affect economy very adversely. They forgo their expenditure on daily life and even if they desire, they are not observing the festival like before.
SAVE NATION AND SAVE PEOPLE:
The government should come out forthwith with regulatory measures and suitable credit policy to overcome the future darkness of the Indian economy. SEBI should announce new guide lines for trading to curb speculator effect in the market. SEBI should come out forthwith with a strong regulatory trading policy by protecting small as well as large investor by infusing greater transparency in the share market. It also learned that from our past experience how FII plays an important role to wipe out our growth and economy. Devaluation of Indian rupee and increase of inflation is also one factor of FII investment in capital market. FII investment is not generate employment. It is now-a-days one instrument to reduce CAD, which may create a very serious problem for Indian economy in future.
Govt. must discourage them at this point and try to boost export and curb unnecessary import.
Loss and gain in Wall Street and other Asian market will not create panic in Indian stock market if we follow guided predetermined policy strongly in trading floor. Restriction on trading if imposed in terms of price range keeping in view the present market conditions may improve bullish sentiment and protect investors. Keeping in view the companies growth, EPS, dividend pay out and profitability position, the Government/ SEBI may evaluate and fix each and every stock price on date. Government / SEBI can fix the share/ unit price either of the one option as enumerated below:
1. Let’s think today trading price is the minimum price of a unit/share. Nobody can trade in the market below the minimum price unless and until it is re-valuated again in fortnightly /monthly. Every additional increase in price of a stock not only benefits the investor but also improve the value of the company. It grows the profit as well as marginal revenue of the stock price. Like minimum price of a stock SEBI may also fix maximum price of a stock keeping in view last trading trend and past performance in terms of profit, growth and EPS. It will protect unrealistic price rise and speculator effect in the market. A speculator is now restricted with the minimum and maximum price range of a stock( say scratch level to 40% price level) in certain period say 15 days or 30 days or 90 days.
2. On the other hand, let’s think today’s trading price is the base price of the unit/ share. SEBI may fix price range for trading say (+/-) of 25% of the base price keeping in view the company growth, EPS, dividend pay out and profitability position. If we adopt this option, a speculator is now also restricted with in the above price range. It will protect unrealistic price rise and speculator effect in the market. SEBI may revaluate the price range of the share/unit after certain period say 15 day or 30 days or 90 days.
Now question arises in our mind what benefit will it create / produce by adopting the either of the above policy? It is very easy and simple as every transaction creates marginal benefit to the investor because of scratch level / base level of share price is restricted. Small investor and individual will enter gradually in share market with selected shares by observing as they are protected in the market. Corporate Institution, Banking sector will grow by investing surplus fund in current market as they know that every transaction will create short term gain. On the other hand, one can quantify its loss in the certain period say 15 days or 30 days or 90 days within the minimum and maximum price range/ trading range as mentioned in option -II.
Share price will definite grow gradually in company having strong fundamentals. Investor will earn short term profit and again we will be going towards the boom market.On the other-hand,Finance and service sector creates employment and Govt. earned taxes through generation of profit by financial sector. In the mean time, again we evaluate the price of share after a certain period and thereafter minimum and maximum price range to be change according to the trend and growth of the company.
But on the other hand, keeping in view the positive side, announcement of revised fiscal package by the government and further measures taken by the RBI in terms of interest rate cuts are likely the boost the market sentiment.
Readers are requested to make comments and suggestions about this topic which may help to government to frame a clear cut policy and regulate it through SEBI.
The global economic slowdown is bound to have adverse impact on the industry whether large, small and medium enterprises. The global crisis has a huge impact on our exports, financial markets, production and also on job market to a certain extent. The impact of slowdown in India not only adversely affect the GDP but also generate unemployment , lay off, negative growth of industry and cut down the production of manufacturing sectors due to lower demand of finished product in domestic as well as international market. As a result import of inputs is decreasing day by day due to lower demand in the wake of economic slowdown. The demand for dollars in Indian markets has eased as importers are observed demand for inputs decreased day by day due to global economic slowdown.
The rupee had depreciated near about 65.00 against one US dollar which is nearly 20% in comparison to last year data. While depreciation of currency is usually welcome by exporters, the volatile in the rupee has made them wary as many had hedge their risks at higher levels. Exporters have been selling dollars today as they fear high volatility in the foreign exchange market. But on the other hand, the currency factor also contributed to FII investment in the Indian market.
Effect of recession / slowdown already create labour turnout, unemployment, lay off, lock out, slashes of commodity/ raw material prices such as iron ore, cotton trade, PVC resins , poly propylene etc in India. Millions of people lose their jobs and 40% of units closed due to slow down. Every body’s wealth/assets will decrease over night due to crash of share market. The sentiment of people is going in bearish trend day by day and they lose their confidence in the present economic scenario and uncertainty market. Small investors wipe out due to nonproductive growth of capital market since 2010. It creates negative attitude in society which leads to adverse impact such as not to invest in new venture and share market.
WHAT REQUIRED TODAY FROM GOVT?
It is never too late, but it would require radical changes to be made and only if the government implements suitable policies and rules to control the main reasons/factors of slowdown. In this point what is required today is to take suitable supportive measures by the government like enhancement of credit and fiscal support, and specific incentives for exports that could help micro, small and medium enterprises to building their competitiveness and thereby minimizing the adverse impact.i
The main reasons of slowdown of economy are stock market crash, speculation and government policies and people bearish sentiment.
LAYMAN IDEA TO OVERCOME SLOWDOWN:
Generally investors are looking for the companies with strong balance sheets, healthy cash flows and quality management. The entire fundamental is not operating in these days because of global economic slowdown . Speculation plays an important role in these days globally. It is necessary to curb it forthwith without any further delay instead of wait & watch.
Speculation is the real crime in the country. The government must find out the ways how to control these speculations, not only in the share market but also in commodity market. Spreading the bearish sentiment among the people also create speculation in human mind. It is crime against the nation. Few speculators cannot run our economy. At present scenario it proved that they are very active and destroy every body’s peace in the country. People are financially weak day by day as inflation hits their backbone and affect economy very adversely. They forgo their expenditure on daily life and even if they desire, they are not observing the festival like before.
SAVE NATION AND SAVE PEOPLE:
The government should come out forthwith with regulatory measures and suitable credit policy to overcome the future darkness of the Indian economy. SEBI should announce new guide lines for trading to curb speculator effect in the market. SEBI should come out forthwith with a strong regulatory trading policy by protecting small as well as large investor by infusing greater transparency in the share market. It also learned that from our past experience how FII plays an important role to wipe out our growth and economy. Devaluation of Indian rupee and increase of inflation is also one factor of FII investment in capital market. FII investment is not generate employment. It is now-a-days one instrument to reduce CAD, which may create a very serious problem for Indian economy in future.
Govt. must discourage them at this point and try to boost export and curb unnecessary import.
Loss and gain in Wall Street and other Asian market will not create panic in Indian stock market if we follow guided predetermined policy strongly in trading floor. Restriction on trading if imposed in terms of price range keeping in view the present market conditions may improve bullish sentiment and protect investors. Keeping in view the companies growth, EPS, dividend pay out and profitability position, the Government/ SEBI may evaluate and fix each and every stock price on date. Government / SEBI can fix the share/ unit price either of the one option as enumerated below:
1. Let’s think today trading price is the minimum price of a unit/share. Nobody can trade in the market below the minimum price unless and until it is re-valuated again in fortnightly /monthly. Every additional increase in price of a stock not only benefits the investor but also improve the value of the company. It grows the profit as well as marginal revenue of the stock price. Like minimum price of a stock SEBI may also fix maximum price of a stock keeping in view last trading trend and past performance in terms of profit, growth and EPS. It will protect unrealistic price rise and speculator effect in the market. A speculator is now restricted with the minimum and maximum price range of a stock( say scratch level to 40% price level) in certain period say 15 days or 30 days or 90 days.
2. On the other hand, let’s think today’s trading price is the base price of the unit/ share. SEBI may fix price range for trading say (+/-) of 25% of the base price keeping in view the company growth, EPS, dividend pay out and profitability position. If we adopt this option, a speculator is now also restricted with in the above price range. It will protect unrealistic price rise and speculator effect in the market. SEBI may revaluate the price range of the share/unit after certain period say 15 day or 30 days or 90 days.
Now question arises in our mind what benefit will it create / produce by adopting the either of the above policy? It is very easy and simple as every transaction creates marginal benefit to the investor because of scratch level / base level of share price is restricted. Small investor and individual will enter gradually in share market with selected shares by observing as they are protected in the market. Corporate Institution, Banking sector will grow by investing surplus fund in current market as they know that every transaction will create short term gain. On the other hand, one can quantify its loss in the certain period say 15 days or 30 days or 90 days within the minimum and maximum price range/ trading range as mentioned in option -II.
Share price will definite grow gradually in company having strong fundamentals. Investor will earn short term profit and again we will be going towards the boom market.On the other-hand,Finance and service sector creates employment and Govt. earned taxes through generation of profit by financial sector. In the mean time, again we evaluate the price of share after a certain period and thereafter minimum and maximum price range to be change according to the trend and growth of the company.
But on the other hand, keeping in view the positive side, announcement of revised fiscal package by the government and further measures taken by the RBI in terms of interest rate cuts are likely the boost the market sentiment.
Readers are requested to make comments and suggestions about this topic which may help to government to frame a clear cut policy and regulate it through SEBI.
Investment in Equities
Investment in Equities/Mutual Fund:
Security prices are affected by economic, political, and sociological factors. It causes interest rate risks and purchasing power risks. These are called systematic risks. In addition to the above security and mutual fund prices that are also affected due to fundamental characteristics of the company. This is also called business risk.
Stocks and shares
Investors make direct investments in equities to earn some positive return in the future in the form of capital gains and dividends. If the investment is properly undertaken, the return will be commensurate with the risk the investor assumes. Dividends are received only if the company grows and is declared on year after year. Capital gains arise when a market is enjoying upward trends and the price of the stock rises against its purchase price, which is generally associated with growth in per share earnings. On the other hand, if the stock price is lesser than the purchase price the investor incurs capital loss. Based on the holding period capital gain/loss is determined. The percentage of equity in a portfolio is calculated based on the investor’s age and risk appetite.
The prices of equities vary from company to company and sector to sector. It can be measured through fundamental and technical analysis. An investor must see the financial statement of the company and compare that company with its peers within the industry. Generally fundamental analysis watches the company share price trend through Earnings per Share (EPS). P/E ratio, profit margin, debt to equity, divided yield and price to book value ratio and P/E to growth ratio. On the other hand, technical analysis measures share price trading of shares in the past as well as day trading through graph and volume. Technical analysis predicted the movement of the share price on the basis of the historical price of a share by plotting a two dimensional chart.
An investor can get bonus shares if the company issues them. Bonus issues may vary from company to company or may not be declared by the company. For income tax purposes, the cost of such shares is nil. If such shares are held for more than 12 months and sold on a recognized stock exchange, the capital gains are exempt from tax. In contrast, if it is sold within 12 months of the bonus issue capital gain is taxable as per prevailing tax rate of Income tax Act. One can plan accordingly while investing in shares and debentures. Former is exempted from tax and latter is taxable as per individual tax slab.
Tips for stock investment:
• Select the right stock after studying a number of companies fundamental
• Closely follow up the price trend of shares as well as industry
• Get the desired return predicting the trend in the right time
• Avoid the stock run by the speculator in the market
Security prices are affected by economic, political, and sociological factors. It causes interest rate risks and purchasing power risks. These are called systematic risks. In addition to the above security and mutual fund prices that are also affected due to fundamental characteristics of the company. This is also called business risk.
Stocks and shares
Investors make direct investments in equities to earn some positive return in the future in the form of capital gains and dividends. If the investment is properly undertaken, the return will be commensurate with the risk the investor assumes. Dividends are received only if the company grows and is declared on year after year. Capital gains arise when a market is enjoying upward trends and the price of the stock rises against its purchase price, which is generally associated with growth in per share earnings. On the other hand, if the stock price is lesser than the purchase price the investor incurs capital loss. Based on the holding period capital gain/loss is determined. The percentage of equity in a portfolio is calculated based on the investor’s age and risk appetite.
The prices of equities vary from company to company and sector to sector. It can be measured through fundamental and technical analysis. An investor must see the financial statement of the company and compare that company with its peers within the industry. Generally fundamental analysis watches the company share price trend through Earnings per Share (EPS). P/E ratio, profit margin, debt to equity, divided yield and price to book value ratio and P/E to growth ratio. On the other hand, technical analysis measures share price trading of shares in the past as well as day trading through graph and volume. Technical analysis predicted the movement of the share price on the basis of the historical price of a share by plotting a two dimensional chart.
An investor can get bonus shares if the company issues them. Bonus issues may vary from company to company or may not be declared by the company. For income tax purposes, the cost of such shares is nil. If such shares are held for more than 12 months and sold on a recognized stock exchange, the capital gains are exempt from tax. In contrast, if it is sold within 12 months of the bonus issue capital gain is taxable as per prevailing tax rate of Income tax Act. One can plan accordingly while investing in shares and debentures. Former is exempted from tax and latter is taxable as per individual tax slab.
Tips for stock investment:
• Select the right stock after studying a number of companies fundamental
• Closely follow up the price trend of shares as well as industry
• Get the desired return predicting the trend in the right time
• Avoid the stock run by the speculator in the market
