Looking For A Long Term Investment? Select Some Good Dividend Stocks

Dividend is the return that a company gives to its shareholders. When a company earns profit, it can either retain that profit for investment or can distribute the profit amongst its shareholders. In fact, most of the companies retains some part of the profit for further investment and distribute the rest of the amount as dividend to its share holders. Stocks that give time to time dividends to the investors are generally called dividend stocks. In reality public companies that earn profit on a steady manner regularly pay dividends to its share holders on a fixed schedule.

Dividend can be given in many forms like cash, property and stocks. In most cases cash dividends are paid to the shareholders through check or the dividend is directly deposited to the trading account of the share holder. The next most used form of paying dividends is the stock. Companies issue number of stocks to the share holders equivalent to the amount of declared dividend. Property is the least used form of paying dividend and this form of dividend is only paid to subsidiaries of the company or to one company to the other within a corporation.

Dividend stocks are preferred by most of the individual stock market investors, who invest in the stock market for long term. The dividend paid by the company from time to time acts like a regular source of income for them while they are holding the stocks. In fact while selecting the stocks for long term investment, dividend is an important criterion that is weighed by the investors.

But while buying the dividend stocks one must remember that paying the dividend is not the liability or compulsion of the company. The management of the company can always decide to reinvest the entire profit without paying any dividends to the share holders. So, it can never be guaranteed that a company that has paid dividends earlier will pay dividend in future as well. Actually dividends are paid by the companies to retain the long term investors and it completely depends on the management and the board of directors whether they will declare the dividends or not. Another drawback about dividend is that in case of dividend there is double taxation. The company pays income tax for earning the profit and the share holder also pays tax for getting the dividend.

Forecasting The Stock Market

If you think that you can forecast what is going to happen in the stock market, then you are wrong. It is impossible inforecasting the stock market because nobody can predict what is going to happen in the market tomorrow. You should be guided in order to invest your hard earned money in the Indian stock market. You should also keep in mind certain things before you wish to go for investing in the stock market. You can also trade online and make your investments. Let us see how you can go for online stock market.

About Online Trading

With the advent of the Internet it has become possible to invest in the market online. You get several choices when you invest your money online. What’s more, there are online traders who could help you in choosing the right stock for you. There are certain things you need to be aware of when you invest online. In today’s world there are many websites which have come that enables the trader to invest or trade online. There are websites that asks for your bank details and also your credit card details. And at the end of the day you are left bankrupt. So, always be sure that you have visited a secured and safe website in order to protect your cash.

How To Forecast?

Is it possible to forecast the stock market? Well there are a few ways where you can at least predict the future of the stock market directions. There are stock analysts who try to forecast the stock market. It is better you seek their recommendations when it comes to forecasting the market. They help you to give you some of the ideas where they can forecast the market. They use fundamental analysis where they try to evaluate the company past performance and also try to look at the ratio like PE ratio , PEG ratio ,earning per share… etc. They then try to compare with the market sector to see whether the company is undervalued or something like that. 

The next thing they do is to make use of the technical analysis because they think that the fundamental analysis does not give the accurate results. So they use charts and chart patterns like head and shoulder or say like cup and handle in order to see where the stock is heading towards. It is when you combine the two together; it seeks to give you a slight edge over other traders. So they sometimes use thetechnical analysis of the market.

Then, comes the use of simple proven strategies for stock trading. With the help of this technique, experts help you do it yourself by using different methods like delta trading, market matrix and so on. This process involves simple calculations or percentages…etc. You need to use your basic common sense and combine them together to get the accurate results. Thus you can get help from the experts in doing a research of the stock market in order to predict what is going to happen in the stock market in the future. But you should always know it is very difficult to predict what is going to happen in the stock market without having any knowledge of the functions of the stock market. So you need to be aware of the things which are important when you wish to invest your hard earned money in the stock market.

Go For Day Trading For Short Term Investment

If you wish to go for short term investment, then day trading suits you the best. There are many investors in the market who do not wish to go for day trading as they think that this type of trading has got several risk factors and they would end up losing all their money in the stock market. But in reality it is not so. But is you are looking forward to this type of trading, then you should always go for the best stock market consultancy. You should never regret that you have lost all your money in the stock market because of small mistakes like not consulting an experienced person in the stock market and the like. However, you need to have a proper knowledge about the functioning of the stock market. You should understand concepts like NSE,BSE, NASDAQ…etc. It is very important that you know every concept of the stock market because there are so many things that you need to know before you go for investing in the stock market.

So it is better if you do not go forforecasting the stock market. Always get a good stock counselor who could help you in investing the right stocks that would give good returns. Do not forget to read books on stock market and always take the help of the Internet whenever you get time.

Basics of investment – What the first time investors need to know

Are you amongst those who are making investment for the first time? If yes, you need to know about investment basics properly. If you’re investing in bonds, stocks, mutual funds or any other investment plan, then you are taking an important step in planning your future growth. Make sure you choose the right investment for yourself so that you may get good return with it.

Some tips you should follow as a first time investor

Read on to know some tips you should follow when you are investing for the first-time.

• Health insurance and savings for emergency – Before you begin investing, you should be sure that you have sufficient health insurance and emergency savings for you and your family. This is because investment is meant for increasing your leftover in the long run. Once you make investment, you cannot take back the money before the maturity period. Thus, it is always better to have adequate emergency savings and a health insurance before you begin your investment.

• Set your objectives and assess your finances – You must assess your finances from time to time. This way, you’ll be able to get a clear idea about the money you’ll require achieving your goals and the amount you can invest with time. Be clear about your present financial condition and plan your objectives such as education fees, vacations, down payment for home loan, home repair, car purchase, saving money, retirement savings, etc. These will help you plan your investment.

• Work out your time-frame – You will have to fix a time-frame that is practical and sensible depending upon your investment goals. So, if you’re making a short-term investment, it should be of 1-2 years, for medium-term, it should be 4-5 years and for long-term, it should be of 7-10 years. So, if you fix a time horizon for each objective, it will help you find the amount of money you require to invest every month.

• Select your investment option – You will have to choose your investment option that will suit your investment planning. It must be based on the time horizon to attain your objectives. See some examples in terms of goals. If you are investing for holiday vacation, then it is a short-term goal of 1-2 years. If you’re investing for down payment or child’s education, then they are medium-term goals. In case of retirement planning, you may invest for a period of 10 years or more than that.

• Diversify investments very carefully –While thinking to invest your hard-earned money, you should always consider diversifying the investment risks. This means reducing the risk by making investment in various assets. Thus, if one of your investments does not perform well, the other investment plan can secure your principal amount with good returns. Mutual funds are considered to be the best option for increased diversification. Being a first-time investor, it is better to invest in a mutual fund that is handled efficiently.

Thus, the above-mentioned tips will help you accumulate reasonable amount of money so that you can satisfy your future requirements.

A sneakpeak on the stock market investment for the beginners

When you’re planning to invest in stock market for the first time, it can evoke a combined emotion of exhilaration and intimidation. After the recent economic meltdown, most of the young people are planning  investment to secure their financial future. If you’re planning to invest in stock market, then you need to follow the steps given below.

Here are some of the important tips before you plan to invest in stock market:

1. Research before investment : Make sure you extensively research the market in order to avoid complications in future. Stock trading can be a difficult job; therefore it is advisable to research extensively before investment. If you invest in wrong shares or bonds, then there is a risk of losing your hard earned money. So, the beginners are required to acquire more information before they start investing. If you’re looking for assistance, then you can check different online forums. The financial experts can guide and help you choose the right investment plan for you.

2. Look for an online broker: Make sure you look for a low cost online discount broker if you don’t have yet. In order to invest in stock market, you need a broker. You need to sign up for a traditional brokerage account and it can be cheap to trade online. A proficient broker can help to assist you through the process, especially while buying and selling securities.

3. Keep aside a portion of your savings: When you’re planning for your investment, make sure you set aside a portion of your income for investment purpose. Make sure you start your investment by depositing small amount of money when you’re a beginner. Remember, the money you use for investment is hard earned and you leverage to make more money. Make sure you avoid thinking of investment when you find it difficult to manage your monthly expenses.

4. Determine about different types of securities: Make sure you find about different types of securities you’re planning to trade. There are various types of stock market investment other than the stocks. You can opt for Mutual funds, ETFs and stock options when you’re looking for investment options. You need to search for different types of investment styles you’re interested in before investing.

5. Extensively search for various securities: Make sure you extensively search for different securities when you’re planning to invest in stock market. Once you have completed your first investment purchase, ensure that you look for different securities. Well, the stock market may fluctuate on the basis of the market conditions and over all financial scenario of the company. Make sure you keep a check on the sound investment purchase to monitor the security to review the growth of your investment.

Therefore, you need to keep the above mentioned points in mind when you plan to invest in stock market for the first time.

Polls or not, invest in equities for long term

Post actual results of polls on May 16, depending on the outcome, there will be volatility. But soon after, the markets will again focus on macroeconomic fundamentals, which we believe are improving and that is the basis of the rally over the next three-five years.

The markets have rallied significantly and the common feeling among retail investors is of being left out. Many large investors and institutional investors are experiencing a similar syndrome. The reason is very clear because no investor has ever been able to buy at the bottom and sell at the top. In this market, initial moves are sharp and swift and not with much delivery volumes. In todays age of ubiquitous information and analysis, more or less everybody reaches the same conclusion at the same time. If one analyses performance of any successful stock investor, it is more through prudent asset allocation and discipline of time and less by timing the market of stock picking. The stock markets witness cyclical gyrations and no bull market gets over in a few weeks.

Let us look at market fundamentally and technically. Fundamentally, India is a great long-term investment story that can deliver 18-20% per annum returns to a prudent equity investor. The returns will mimic the earnings growth of largely industrial and services sector in nominal terms. A sustained GDP growth of 7-8% per annum with inflation of 5-6% can let many corporates sustain 18-20% yearly earnings growth. Technically, markets were sluggish for six years and seem set for a cyclical uptrend. The broader markets underperformed in the last six years with slowdown in economic and investment activities. The investment slowdown was not caused by lack of demand or non-availability of capital but due to policy logjam and confusion in the wake of a few scams. These things can be set right easily and we can witness a beginning of a new bull market for next five years.

No doubt, euphoric run-up will witness sharp corrections. Therefore, while I advise increased allocation to equities, I do not recommend leverage or trading in futures and options. Invest in stock markets with a long-term view and restrict exposure to an amount which need not dip into at least for three years. Also, do not make the mistake of selling too early to book small profits. When one tries to make up for the lost rally by investing more than what they can hold for longer term, one invariably gets trapped in down cycle and lose all their positions at a loss.

For instance, if you have bought good quality stocks, you should not fear even if NDA falls much short of the expected majority. India is on a gust of a major breakthrough on all parameters. With or without the positive elections results, the macroeconomic conditions are improving. We are seeing the rupee stabilizing and appreciating and the current account deficit coming under control. Although it is too early to see whether there are actual green shoots of recovery in the economy, clearly the worst is behind us.

Our advice to the retail investor is not to get carried away by the sensex gyrations in the short term. Post actual results of polls on May 16, depending on the outcome, there will be volatility. But soon after, the markets will again focus on macroeconomic fundamentals, which we believe are improving and that is the basis of the rally over the next three-five years. A new stable, pro-reforms government can further boost the growth rates. For those investors who cannot invest in research, large cap diversified equity mutual funds are the best bet. For those, who can spend time and energy researching stocks, build a diversified portfolio of quality names. Do not panic the party has not ended but has just begun.

Need to Enhance Liquidity and Funnel Savings into Equity

Many a time, our policy makers confuse speculation with manipulation. They put too many restrictions that curb even healthy speculation. I have heard even comments like we should encourage genuine investors but not speculators.

In FII-led euphoria, we should not forget the importance of domestic money for equities through individuals, mutual funds, insurance companies etc.

According to RBI data, flow of domestic savings into equity dwindled from 7.4% of GDP in 2007-08 to as low as 0.5% in 2013-14. Let us look at some more data points in the five years from March 2009 to March 2014. Shareholding of FIIs in Indian-listed companies has increased from 13.8% to 22.4% whereas domestic equity mutual fund has witnessed a net outflow of $6 billion. FII investment in Indian equity has averaged less than $20 billion per annum. Compare this with domestic savings averaging $373 billion, including financials savings of $144 billion. Its obvious that domestic pool of savings is large enough to easily counterbalance the FII volatility.

Yet, our market is over-dependent on FII money. If FIIs flee for reasons purely external such as global liquidity squeeze, unviability of carry trades, crisis in their home countries, the impact will be disastrous on Indian markets. For a typical global fund, India is a small investment and can be dumped in crisis. It would cause havoc here by way of sudden losses immediately, but worse, loss of investor confidence for several years, thereby making it difficult for entrepreneurs to tap equity markets, slowing investment, employment and so on.

Nobody would disagree that we need growth and for growth, we need investment. And also that for investment, the foundation has to be of equity capital which can be leveraged by loans from banks and other sources. In contrast to FIIs penchant for large caps, domestic investors tend to invest more in small and mid-cap stocks. For inclusive growth, small and medium enterprises need impetus. To attract domestic investors, tax sops have little utility.

What they need is a liquid vibrant market, where an investor can enter and exit easily. Unlike investment in real estate or other assets classes such as gold, ownership and management are separated in equities. Therefore, liquidity is the most fundamental requirement for equity markets.

Many a time, our policy makers confuse speculation with manipulation.

They put too many restrictions that curb even healthy speculation. I have heard even comments like we should encourage genuine investors but not speculators. Genuine investors i.e. two sets of people who simultaneously get fundamentally bearish and bullish from a long-term perspective will be few and far between. Even in a stock like Reliance, they will meet once in a few months.

They will also not transact if the markets are not liquid. Without speculative trading, genuine investors will also not come to equities. Also, many a time, speculators moderate the event risk by building up positions in anticipation of events. For instance, this set of speculators starts expecting very good or very bad results, and the real impact of announcement of results will not be a spike or a crash but relatively moderate.

Our government and regulators can do the following to improve liquidity and encourage domestic investors to go for equities:

a) Remove STT and CTT completely: For any liquid market at any given point in time, spread between buy and sell price should be as narrow as possible. The incidence of STT and CTT increases this spread artificially, impacting liquidity, and therefore, attractiveness for genuine investors as well. STT contributes a minuscule amount to exchequer of less than $1 billion. The market will not mind even some increase in capital gains tax in lieu of removal of STT and CTT.

b) Encourage financing of equity investment: Sebi should simplify margin funding norms. The current reporting norms are too cumbersome to make the scheme popular. RBI should enhance banks limits for funding retail equity investors. There can be safeguards in terms of eligibility of scrips for funding and margin ratio.

c) Enhance EPFO and retirement funds limits for equity investment from the current 15% to 30%: Over long term, its well established that growth markets like India will offer equity investors much higher returns than fixed-income investors.

But there is risk in stock selection as well as timing of investment. Our regulators and market participants have done a great job of enhancing investor education and the effort continues.

Now, they should address the key issue hindering flow of domestic money into equities market. This will help domestic investors participate in wealth creation that equities typically allow when economic growth accelerates.

How black money finds its way out of India, and how it comes back as white

In February 2008, R Prasad, the then chairman of the Central Board of Direct Taxes (CBDT), led a team of tax sleuths to Port Louis, the capital city of Mauritius. Backed by a team from the ministry of external affairs, Prasad made an attempt to convince Mauritius officials to re-negotiate the double tax avoidance agreement (DTAA), which was resulting in massive tax losses to India.

Prasad's attempt was unsuccessful, but what he discovered in the process was startling: a handful of persons acted as directors for about 30,000 companies located in that island nation. Also, companies there exist only on paper, as addresses of many of those begin with a mere post box number.

And the challenge before the investigators is to establish the criminality of those involved in such activities," says Prasad, who retired as CBDT chairman six years ago. Now, the Supreme Court-appointed Special Investigation Team ( SIT) on black money wants such tax treaties to be re-drafted, a move that will put the government in a spot.

Only this week, a reluctant government had to hand over to the apex court a complete list of 627 Indians who have accounts in HSBC Bank, Geneva.

"The debate so far has been what comes first: investment or tax? Is India ready to sacrifice investments worth billions of dollars for the sake of some tax gain? So far as Mauritius is concerned, any retreat from India's side will allow China to woo the island nation," says a finance ministry official who did not want to be named, explaining why New Delhi hasn't been assertive with Mauritius, a nation where Indian defence forces harbour strategic interests.

In Black and White

While tax havens like Mauritius will help black money come back into the country as white, Indians continue to send illicit money abroad.

This is done through various methods, hawala transactions — where money is transferred abroad without any real movement of funds — being one of them although, according to a finance ministry white paper on black money released two years ago, hawala transactions have actually dwindled over the past decade.
"In recent years, after the 9/11 incident in the US, due to intense scrutiny of banking transactions, enhanced security checks at airports and ports and relaxation of exchange controls, transfer of money through hawala has reduced significantly," says the report. "...increasing pressure on financial operators and banks to report cash transactions has also helped in curbing hawala transactions."

 However, there are other methods to siphon black money out of the country, two of which are manipulation of export invoices and setting up of trusts abroad.

Two income-tax officials told ET Magazine that a large number of the accounts of the 627 names based on data stolen by an employee of HSBC, Geneva, would be of such trusts. The modus operandi adopted here is as follows: black money moves abroad through routes like hawala.

Then a trust is formed in, let's assume, the Netherlands. The trustees in this case will be Dutch nationals, but the beneficiaries will be relatives of an Indian back home who put in the initial corpus.
"But we can initiate a probe only when money gets reflected in the accounts of the beneficiaries," explains one of the tax officials.

As the incometax department and the Enforcement Directorate (ED) will now work under SIT, one can expect more urgency in the mission to bring back unaccounted money. Yet, genuine hurdles may come in the way of that endeavour.

The classic example of such a hurdle is seen in the case of Pune-based stud farm-owner Hasan Ali Khan, who was raided by the I-T department seven years ago. Documents and data in his laptop established that he had a Swiss bank account with a whopping $8 billion (roughly Rs 48,000 crore) in deposits. Ali was sent to jail, but the ED that probes money laundering cases found out from the Swiss authorities that Ali's accounts had been emptied.
The multi-billion dollar question then: how many of the 627 whose names exist in a sealed cover would have done the same?

The Sensex & The Nifty

What are the Sensex & the Nifty?

• The Sensex is an "index". It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down.
• The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE.
• If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down.
• Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE. Just in case you are confused, the BSE is the Bombay Stock Exchange and the NSE is the National Stock Exchange. 
  
• The BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock exchanges in the country. There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the country is done though the BSE & the NSE. Besides Sensex and the Nifty there are many other indexes. 
• There is an index that gives you an idea about whether the mid-cap stocks go up and down. This is called the “BSE Mid-cap Index”. There are many other types of indexes. There is an index for the metal stocks. There is an index for the automobile stocks etc.

NOTE:-

• The stocks selected are based upon a number of parameters that the creators of the index decide. Equally, the valuation is also done using complex mathematical principles.
• Periodically, the list of shares used for computing the index also undergoes a change. 
• These changes are decided by the index creators based on the parameters they have set for the stocks for inclusion.
• An index shows whether the stock market, on the whole, is appreciating in value or declining in value.
• The movement of the index itself is no indicator for individual shares. 
• You may find that a particular share may be increasing in its price even when the index is down and vice versa. 
• The index is only an indicator of the general trend. 
• The common indexes in Indian stock markets are the SENSEX, the index for stocks listed on the Bombay Stock Exchange and Nifty, the index for stocks listed on the National Stock Exchange.

Reserve Capacity of MONEY!!!

HOW MUCH RESERVE?

That depends from person to person.

There are a number of factors that influences your decision on the quantum of emergency fund that needs to be created. Factors such as age, occupation, health condition, monthly EMIs, number of members in the family, other sources of income needs to be considered on a one to one basis. 

1. AGE: 

Depending upon how old you are, the emergency fund required keeps changing. As you grow older, the possibility of medical emergencies is also high. Hence, if your age is on the higher side (let’s say you’re 45 years old) you also need an emergency fund that’s higher than some one who is just turning 30. 

2. OCCUPATION:

The style of occupation/business you do is another factor that influences emergency fund decisions. If you are doing a seasonal business or if your job has an uncertain future, you need a higher emergency fund. People living on commission based income would also require a high emergency fund. 

3. HEALTH CONDITION: 

More reserve funds may be required for a person whose health condition is questionable. The amount of insurance cover he has should also be considered while assessing his future requirement. Higher the insurance, lesser the need for reserve funds on these grounds. Again, if you have your parents or grand parents living with you, you might need to plan accordingly. 

4. MONTHLY EMIs. 

The volume of debt you have needs to be analysed to get an idea about how much EMIs you’ll have to pay a month. Typically, while creating reserve funds, an amount equal to 6 months EMIs should be kept aside so that in case of emergency, you don’t default in your loan payments. A clear track record of loan re-payments is absolutely necessary for your future financial needs. 

5. NUMBER OF MEMBERS IN FAMILY. 

If the numbers of members you need to support are more (say 7 members) naturally you need a higher reserve than what would be required if you have only say, 3 members in your family. 

6. OTHER SOURCES OF INCOME

You can count on your other sources of income, if any, while creating a reserve fund. One time or casual income or credit card limits should not be considered in this group. However, you can count on the income of your spouse or other family members staying with you in case of emergency. 

7. OTHER POSSIBLE EXPENSES. 

You may also want to consider other expenses like possible higher education fees for your child who is about to enter college or a possible repair for your house. It all depends from person to person. 

HOW TO KEEP RESERVE FUNDS? 

Hundred percent of your reserve funds need not be kept in liquid cash. A portion of it can be kept in short term fixed deposits or debt funds and a certain portion in gold or easily marketable securities.

Any cash lying idle over and above your emergency fund results in a lost investment opportunity. You are not making your money work efficiently for you.

THUMB RULE

The thumb rule is – You should have enough reserves to meet all the expenses for 4 or 5 months plus some extra to meet unforeseen expenditure like medical expenses. 

Find Out Where The Money!!!!! Is

 

Where the MONEY!!! is?

• 
  

That’s interesting! This is one topic everyone will read very carefully because it all about finding money! Imagine that you found Rs 1000 between the pages of an old book on the shelf. You kept it some months back and forgot about it. How does it feel? Even if that money was never found, you would have still lived with what’s left in your wallet without even bothering where it disappeared. isn’t it? This is the principle behind accumulating savings from your income. Set aside your target savings and forget about it as if it were not there and live with the rest. It’s not easy as you think,but definitely not impossible. And , it’s never too late to apply this principle !

 
To most of us Savings = Income (or salary)- Expenses . However, this formula doesn’t work since when money is in your pocket, you get trapped by advertising tricks like discount offers on Clothes or new gadgets which tempts you to spend more. It’s difficult to control expenses. As a result, your savings never hits the target. If what we said holds true for you and you seriously want to save a fixed 10% or 20% of your take home salary each month, you need a different approach to savings.\

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INCOME – SAVINGS(INVESTING FUND) = EXPENSES

Smart ! isnt’ it ? This formula forces you to “pay yourself first,” before the other expenses. That way you know your savings will not get lost in the daily grind of living expenses. The other side of this formula is a forced discipline. You hold your expenses to no more than 90% of your take home pay. You can even automate the process by having 10% (or any amount you want) deducted from your Salary account and transfer it into a separate account or fixed deposit, recurring deposit or other savings instrument .

But, that’s not all. You can also find money from many other sources. For example, Instead of going for parties and shopping, you can set aside extra payments like bonuses, commissions and so forth into your savings Fund. So try to make it a habit to set aside 10% ( or what ever percentage you would like to set aside) and live with rest. If you do that, you have a great chance to succeed.

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MORE TIPS TO CONTROL YOUR EXPENSES: 

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SPEND LESS

This is one simple method to save more. Sit back and analyse your spending habits and look where you spend more unnecessarily. Once you have identified certain areas of high spending, try to find ways to cut back. Take a decision that you’ll not spend more than a fixed budget. 

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MAKE A BUDGET

A budget is a very important tool to control expenses. Be it individuals or corporates. A budget is nothing but a chart or a statement that shows how much you earn and hence, how much you can spend.

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PAY OFF YOUR LOANS

Loans carry high rates of interest. If you have a lot of EMI’s to pay, it naturally reduces your capacity to save more. It also shows that you’re living on high levels of debt which is not a right thing to do. If you have loans, first look for ways to pre-pay it as soon as possible. Another common area where you could lose a lot of money is credit cards. Credit cards companies slap huge interest for delayed payments. 

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SHOP SMART

Most of the big brands will be available at throw away prices once there’s an off season sale or sales promotion drive. For example if you want to buy an expensive watch, wait for the company to announce some discount offers. All the big brands announce discount offers at least twice a year. 

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SAVING ENOUGH IS HALF THE JOB DONE

If you have saved enough,good. but saving is only half the job done.You have to give your savings the right opportunity to grow. Putting all your funds in fixed deposits or fixed income bonds is not a good idea. Your investments should have the right mix of equities, bonds, gold and fixed deposits.Deciding the ‘right mix’ of investments is something an investment expert can do. It depends on an individual’s age and risk profile. 

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KNOW IT

• Finding money is a matter of making it a priority.
• Pay yourself first and learn to live off with what is left. You will always have money with you. It may be difficult at first. But gradually, you will see your fund growing and that would encourage you to stick to it until you reach your goal of finding enough money.
• Bonuses and extra pays you get are opportunities to buy the latest iphone or Blackberry but a prudent option would be to create a savings out of it
• You can save a lot of money if you control your expenses.
• As time goes by, your small saving will also give you additional money in the form of interest. Finally, you’ll find that you’ve done a great job,creating more money than expected.

Who Can Invest In India?

  

India started permitting outside investments only in the 1990s. Foreign investments are classified into two categories: foreign direct investment (FDI) and foreign portfolio investment (FPI). All investments in which an investor takes part in the day-to-day management and operations of the company, are treated as FDI, whereas investments in shares without any control over management and operations, are treated as FPI.

For making portfolio investment in India, one should be registered either as a foreign institutional investor (FII) or as one of the sub-accounts of one of the registered FIIs. Both registrations are granted by the market regulator, SEBI. Foreign institutional investors mainly consist of mutual funds, pension funds, endowments, sovereign wealth funds, insurance companies, banks, asset management companies etc. At present, India does not allow foreign individuals to invest directly into its stock market. However, high-net-worth individuals (those with a net worth of at least $US50 million) can be registered as sub-accounts of an FII. 

 
Foreign institutional investors and their sub accounts can invest directly into any of the stocks listed on any of the stock exchanges. Most portfolio investments consist of investment in securities in the primary and secondary markets, including shares, debentures and warrants of companies listed or to be listed on a recognized stock exchange in India. FIIs can also invest in unlisted securities outside stock exchanges, subject to approval of the price by the Reserve Bank of India. Finally, they can invest in units of mutual funds and derivatives traded on any stock exchange. 



An FII registered as a debt-only FII can invest 100% of its investment into debt instruments. Other FIIs must invest a minimum of 70% of their investments in equity. The balance of 30% can be invested in debt. FIIs must use special non-resident rupee bank accounts, in order to move money in and out of India. The balances held in such an account can be fully repatriated. (For related reading, see Re-evaluating Emerging Markets. )

Restrictions/Investment Ceilings

The government of India prescribes the FDI limit and different ceilings have been prescribed for different sectors. Over a period of time, the government has been progressively increasing the ceilings. FDI ceilings mostly fall in the range of 26-100%. By default, the maximum limit for portfolio investment in a particular listed firm, is decided by the FDI limit prescribed for the sector to which the firm belongs. However, there are two additional restrictions on portfolio investment. First, the aggregate limit of investment by all FIIs, inclusive of their sub-accounts in any particular firm, has been fixed at 24% of the paid-up capital.


However, the same can be raised up to the sector cap, with the approval of the company's boards and shareholders. Secondly, investment by any single FII in any particular firm should not exceed 10% of the paid-up capital of the company. Regulations permit a separate 10% ceiling on investment for each of the sub-accounts of an FII, in any particular firm. However, in case of foreign corporations or individuals investing as a sub-account, the same ceiling is only 5%. Regulations also impose limits for investment in equity-based derivatives trading on stock exchanges. (For restrictions and investment ceilings go to http://www.fiilist.rbi.org.in/) 

Investment Opportunities for Retail Foreign Investors

Foreign entities and individuals can gain exposure to Indian stocks through institutional investors. Many India-focused mutual funds are becoming popular among retail investors. Investments could also be made through some of the offshore instruments, like participatory notes (PNs) and depositary receipts, such as American depositary receipts (ADRs), global depositary receipts (GDRs), and exchange traded funds (ETFs) and exchange-traded notes (ETNs). (To learn about these investments, see 20 Investments You Should Know.)

As per Indian regulations, participatory notes representing underlying Indian stocks can be issued offshore by FIIs, only to regulated entities. However, even small investors can invest in American depositary receipts representing the underlying stocks of some of the well-known Indian firms, listed on the New York Stock Exchange and Nasdaq. ADRs are denominated in dollars and subject to the regulations of the U.S. Securities and Exchange Commission (SEC). Likewise, global depositary receipts are listed on European stock exchanges. However, many promising Indian firms are not yet using ADRs or GDRs to access offshore investors

Retail investors also have the option of investing in ETFs and ETNs, based on Indian stocks. India ETFs mostly make investments in indexes made up of Indian stocks. Most of the stocks included in the index are the ones already listed on NYSE and Nasdaq. As of 2009, the two most prominent ETFs based on Indian stocks are the Wisdom-Tree India Earnings Fund (NYSE: EPI) and the PowerShares India Portfolio Fund (NYSE:PIN). The most prominent ETN is the MSCI India Index Exchange Traded Note (NYSE:INP). Both ETFs and ETNs provide good investment opportunity for outside investors.

 

 

Indian Economy!!!

 

Studies/Surveys/Reports

In India, various agencies and organisations conduct studies and surveys as well as publish reports on a regular basis covering diverse aspects of the economy. Each research and publication focuses on a particular section of the country and analyses its performance and happenings. 

Reserve Bank of India (RBI) is the most important organisation which publishes information and data on all sectors of the economy in its annual, quarterly, monthly, weekly and occasional publications. They include:- 

• Annual report is a statutory document relating to the financial year of the Reserve Bank (July to June), released every year in late August. It is the statement of the Board of Directors on the state of the economy and on the balance sheet of the Reserve Bank. It also presents an assessment and prospects of the Indian economy.
• Report on Trend and Progress of Banking in India is also a statutory publication produced annually to review the policies and performance of the financial sector for the preceding year. The publication, covering period from April to March, is generally released around November/December.
• Report on Currency and Finance is an annual document which dwells around a particular theme and presents a detailed economic analysis of the issues related to the theme. Since the publication is released around December, it also serves the purpose of presenting a mid-year review of the economy.
• Handbook of Statistics on Indian Economy is a major initiative by the Reserve Bank aimed at improving data dissemination by providing a useful storehouse of statistical information at one place. The publication provides time-series data (annual/quarterly/monthly/fortnightly/daily) pertaining to a broad spectrum of economic variables, including data on national income, output, prices, money, banking, financial markets, public finance, trade and balance of payments.
• State Finances : A Study of Budgets is a publication which provides a comprehensive analytical assessment of the finances of the State Governments.
  
• Macroeconomic and Monetary Developments provides an analytical overview of macroeconomic and monetary developments during the year under review. The publication serves as a backdrop and rationale of the monetary policy for the year.
• Statistical Tables relating to Banks in India is an annual publication containing comprehensive data relating to the commercial banking sector. It covers balance sheet information as well as performance indicators of each commercial bank in India including those registered abroad.
• Basic Statistical Returns is another data-oriented publication which presents comprehensive data on number of offices, employees, deposits and credit as per occupation of scheduled commercial banks.
• RBI Bulletin is a monthly publication released in the first week of every month. It publishes analytical articles based on data collected by the Reserve Bank and carries speeches of the Governor, Deputy Governors and Executive Directors. Other useful inclusions in the Bulletin are important press releases and circulars issued by different departments of the Reserve Bank and data relating to economy, finance and banking.
• Weekly Statistical Supplement to the RBI Bulletin presents the weekly balance sheet of the Reserve Bank and other developments relating to financial, commodity and bullion markets. This is published on every Friday. 

'Economic Division' of the Ministry of Finance examines trends in the economy and undertakes techno-economic studies all of which helps to keep a close watch on economic developments, both internally and externally. It also issues selected economic indicators on monthly basis and prepares Economic Survey on an annual basis. The economic survey reviews the major developments and trends in the economy for a given year and brings out the guidelines and considerations relevant for formulation of budgetary and economic policies for the coming year.