Investing is easy. Just watch “The Wolf of Wall Street.” All you do is get some buddies together, pool your money, buy low, sell high and then find a place big enough for your private jet and sports cars.
Investing doesn’t work like that in real life — and you probably won’t get super-rich in a short time. But by learning the basics of how to invest your money through a long-term approach, you can safely and securely grow your money over time.
1. Do I need a lot to start investing?
It is natural to think that investing is for people with throwaway money, but over time, pennies turn into Rupee. “Being a financial adviser for over 27 years, it amazes me how some people are able to accumulate so much money even if they don’t have huge incomes.”
“It is a systematic approach, and over time, by investing small amounts on a regular basis, people are able to accumulate large nest eggs.”
“It is a systematic approach, and over time, by investing small amounts on a regular basis, people are able to accumulate large nest eggs.”
Why you care: Start now with whatever you have. Time is a greater asset than money.
2. What about risk?
The first rule of investing is that the potential for gain comes with the potential for loss. The higher the potential payout, the bigger the risk of losing money. Conservative investments like bonds are far less dangerous than highly risky investments such as penny stocks, but they don’t have nearly the potential for a big windfall. There is no such thing as a safe bet.
Why you care: If someone pitches an investment as “guaranteed,” “risk-free” or “can’t lose,” walk away. All investments come with risk — without exception.
3. What’s the value in diversification?
The old adage “don’t put all your eggs in one basket” was never more true than it is for investing. By spreading your money around different investments, you hedge your bets and protect yourself against a singular, catastrophic loss.
If you put all of your money in Abc Co, and Abc co goes under, you go under with it. If abc co is just part of a larger blend of investments, you can absorb the loss and move on.
Why you care: It is important to create a portfolio with a wide variety of investments. Diversification is your greatest protection against risk.
4. Are a few stocks enough for diversification?
“Avoid individual stocks and invest in a low-cost, diversified Equity fund's over time.”
“Warren Buffet would tell you the same thing. If you’re a us, this is just glorified gambling and likely to cost you a lot more than it will make you.”
“Warren Buffet would tell you the same thing. If you’re a us, this is just glorified gambling and likely to cost you a lot more than it will make you.”
Why you care: Beginner investors are often intimidated by the market and simply choose to buy stock in a company they like or that someone tipped them off about. Don’t pick individual stocks — that’s the opposite of diversification.
5. What is the stock market?
5. What is the stock market?
The stock market is a marketplace in which shares of publicly traded companies are issued and traded. This enables companies to raise vital capital, and it gives investors like you the chance to make money by buying into these companies — and to benefit from their financial achievement.
Why you care: The stock market is crucial to the national and global economy, and it is one of the best ways to invest money.
6. What are stock exchanges?
The stock market consists of individual stock exchanges, which exist to ensure fair and accurate trading. Stock exchanges exist all over the world. They are the physical marketplaces that make up the concept of the “stock market.” Among the most famous exchanges in the world are the New York Stock Exchange and Nasdaq.
Why you care: These marketplaces are where some of your most important investments will be bought and sold.
7. What are indexes?
Indexes are a crucial component of measuring the health of the stock market. Indexes are imaginary portfolios of securities, each of which uses its own method of calculation.The S&P BSE Sensex is a “index of 30 well-established and financially sound companies listed on Bombay Stock Exchange" OR NSE's flagship index, the CNX Nifty,the 50 stock index, is used extensively by investors in India and around the world as a barometer of the Indian capital markets and is commonly used as a benchmark for the entire stock market.
Why you care: Indexes reflect the health of the overall market.
8. What are securities?
Security refer to financial instruments with some kind of financial value. Securities can be stocks, bonds or the rights to ownership, which are called options. Securities are generally either debt securities, which represent money owed, and equities, like stocks.
Why you care: If you decide to invest, you will almost certainly purchase securities
9. What are stocks?
Stocks, also called “equities,” are securities that represent partial ownership in a company. Companies sell stock to raise money or to pay off debt. People purchase them for capital appreciation, which means that when the value of a company grows, so does your stock price. Some stocks pay dividends
Why you care: Many funds available to you contain stocks purchased on the stock market.
10. What are bonds?
Bonds are debt securities, like IOUs (IOU' An informal document that acknowledges a debt owed. IOU is an abbreviation, in phonetic terms, of "I owe you." The debt owed does not necessarily involve a monetary value but can also involve other product) . Governments and corporations issue bonds to raise money. Unlike stocks, in which the investor is buying into the company, a bond represent a loan that is to be repaid with interest. Bonds are safe and predictable and — if allowed to mature — preserve the initial capital. Bonds are often included in funds to mitigate riskier investments.
Why you care: Bonds are among the most common investments and will likely be a part of any fund you buy.
11. What is the difference between corporate and government bonds?
Bonds are issued by both private and public sector entities. Earnings on GOVT. PSU bonds aren’t taxed, but the rates of return are lower. Corporate bonds pay higher returns, but the investor must pay taxes on earned interest.
Why you care: Your income tax rate will decide which kind of bond is right for you.
12. What are mutual funds?
Mutual funds pool money from many investors to be housed in one large portfolio. Mutual funds are diversified and may contain stocks, bonds or other securities. Investors like them because they are managed by professionals who do research and execute trades. Those managers take a fee, making mutual funds more costly than passively managed funds like index funds.
Why you care: Mutual funds are a common choice for beginning investors.
13. What are index funds?
Unlike mutual funds, which are actively managed, index funds are passively managed portfolios designed to mirror the performance of a specific index, like the Dow Jones or the S&P 500. Index funds are popular because they provide instant diversification.
Why you care: Unlike mutual funds, index funds are not actively managed because they simply mirror an index. Therefore, they have very low fees
14. What are exchange-traded funds?
Exchange-traded funds (ETFs) are like mutual funds in allowing investors to pool their money in a large fund. But they are bought and sold in shares during regular trading hours on stock exchanges, hence the name. ETFs are not mutual funds. They can only be bought and sold in market transactions and cannot be sold retail directly to investors. Many different kinds of funds, including index funds, can be bought as ETFs.
Why you care: ETFs are very popular because they allow average investors to purchase shares of funds in small amounts.
15. What are hedge funds?
Hedge funds are yet another way to for groups of people to pool their money to purchase a large portfolio. Hedge funds, however, are not regulated nearly as heavily as mutual funds, and they generally are open only to accredited investors. Accredited investors are generally wealthier with high incomes and significant capital and assets. If you are a beginning investor, you will probably not be investing in a hedge fund.
Why you care: Anyone asking a beginning investor with modest resources to invest in a hedge fund could be running a scam.
16. What are penny stocks?
Penny stocks are low-priced stocks, sometimes trading for just a few pennies a share, and never for more than Rs.5. The lure of penny stocks is that many giant, global companies started out as penny stocks, and investors who bought thousands of shares in the beginning when the stock traded for just few Rupee made enormous returns. The downside is that most penny stock companies will never amount to anything.
Why you care: Penny stocks are incredibly risky. Many penny stock traders target our investors. Avoid them until you are competent and confident that you can decipher the often-foggy reporting that comes with penny stock investing.
17. How do I buy securities?
Although some companies allow direct purchasing, the overwhelming majority of stocks have to be purchased through a licensed broker. You tell your stockbroker how much of a given stock you want to buy, and he or she executes the trade.
Why you care: You need a broker to invest in the stock market.
18. What is the difference between a discount broker and a full-service broker?
Full-service stockbrokers give advice and tips to their clients, but they take a hefty fee. Discount brokers operate online and only execute trades, for just a few Rupee a trade.
Why you care: Some investors have long-term relationships with their brokers. Other people will never meet or even speak to the people who execute their trades. This depends on whether you employ a discount broker or a full-service broker.
19. If I’m just starting out, don’t I need advice from a full-service broker?
It may seem counter intuitive, but full-service brokers often handle more experienced clients with more complicated investment needs. Our investors often invest in simpler vehicles, like mutual funds. In these scenarios, investors often choose to save money on trades by picking a fund.
Why you care: You need to decide if the advice from a full-service broker is worth paying for.
20. What is Rupee-cost averaging?
Rupee-cost averaging is a strategy where investors contribute the same amount of money consistently over time. If you invest, say Rs.5000 a month, in an Diversified fund without regard to the fluctuating price of the stock, you’ll wind up buying more of it when it is cheaper and less of it when it is more expensive.
Why you care: Emotions are important for long-term investing. “If the market rises after your initial investment, you can feel good about how your portfolio has performed and how smart you were for not delaying investing".
“If, on the other hand, the market has fallen, you can feel good about the opportunity to now buy at lower prices and how smart you were for not putting all of your money in at one time. Either way, you win from a psychological perspective.”
“If, on the other hand, the market has fallen, you can feel good about the opportunity to now buy at lower prices and how smart you were for not putting all of your money in at one time. Either way, you win from a psychological perspective.”
21. Will I be paid dividends?
Dividends are a portion of company earnings paid back to investors, through a Rupee amount or a percentage of market price, called “dividend yields.”
Why you care: Not all companies pay dividends.
22. Who regulates Indian's investment world?
The Securities and Exchange Board of India .
Why you care: This branch of the government exists to protect investors and maintain fair, orderly markets.
23. What do I do if I think I’ve been scammed?
Contact the http://scores.gov.in/ right away if you think a person or company misrepresented a security or any other investment.
Why you care: Anytime money changes hands, unscrupulous people will try to take advantage for profit — especially when it comes to us.
24. Should I consider day trading?
Day traders seek fast, short-term gains by buying and selling in high volume throughout the trading day.
Why you care: Often glamorized as a fast path to big money, day trading is actually quite risky. The Sebi warns against the practice.
25. Is short selling right for beginners?
Short selling, which involves betting against a stock, involves the selling of a security the investor doesn’t own. A broker loans the investor shares of stock out of his or her own inventory. Eventually, you have to “close” the short by buying those shares back to return to the broker. If the stock loses value after you borrowed it, you can buy it back cheaper and keep the profits.
Why you care: Short selling is a popular form of investing you may want to try once you master the basics.
26. What is foreign exchange?
Foreign exchange involves investing in, buying, selling or trading different kinds of international currency.
Why you care: The global foreign exchange market is by far the largest market in the world.
27. What are commodities?
Commodities are physical goods that are basically the same no matter who produces them, such as oil or gold.
Why you care: Commodities markets are among the most lucrative and heavily traded in the world.
28. What is futures trading?
Futures are contracts that obligate an investor to purchase goods like commodities at a later date. This strategy is often used to hedge or speculate.
Why you care: Futures trading allows you to bid on a range of goods for both long and short investments.
29. What’s the difference between options and futures?
They are very similar, but options are contracts that give investors the opportunity to buy instead of obligating them.
Why you care: Managers often use options to hedge or to speculate, which could lower or increase the risk associated with your fund.
Allaudin Bldg Shop No 1,Manchubhai Road,Malad East,Mumbai - 400097.
Shop No.9,Param Ratan Bldg,Jakaria Road,Malad West,Mumbai - 400064.
Tel:28891775/28816101/28828756/28823279. CELL:9930444099 www.tejasconsultancy.co.in | E-mail Us: ritesh@tejasconsultancy.co.in
Ritesh.Sheth CWM®
CHARTERED WEALTH MANAGER
Helping you invest better...
Shop No.9,Param Ratan Bldg,Jakaria Road,Malad West,Mumbai - 400064.
Tel:28891775/28816101/28828756/28823279. CELL:9930444099 www.tejasconsultancy.co.in | E-mail Us: ritesh@tejasconsultancy.co.in
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This emailer is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only and is not spam. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this emailer.The views are personal. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing.
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This emailer is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only and is not spam. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this emailer.The views are personal. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing.
To unsubscribe from future mailer Please e-mail: info@tejasconsultancy..co.in
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