Where should I make investments?

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raksrules said:
Bumping the thread again,

I am planning to remove the money invested from MF and cash out on whatever the NAV is at the moment. What is this Inflation Indexed Bond some people are talking about ? Also what is the rate of return and how safe is the principal and tax implications ?
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Corrected the name.
When a bond is indexed to something it basically means it will follow the movement that particular thing. In this case, it will be inflation. Normally, when you invest in a bond it will have a fixed coupon payment. So year on year basis, your investment loses some shine because of inflation. Say you invested 10000 for 1 year at 8% interest. the payment comes out to be:
10000+(10000*0.08) = 10800
If the inflation within the period has increased by say 2%, actual money in hand is:
(10000 - 2%) +((10000-2%) *0.08) = 10584
(this is just a numerical calculation to show loss in purchasing power and not actual money)
So you lost on principal as well as interest payout due to the inflation adjustment. These bonds will protect from this loss and adjust the principal and interest based on the change:
(10000 + 2%) +((10000+2%) *0.08) = 11016
(this will be actual payout and is theoretical is equal to the expected 10800 payout)
This is the specialty of these bonds.

Things to note:
The year on year change will be calculated from a fixed year (don't remember the year rbi is going to use) . So that years inflation will be set to 100 (easier to calculate) and every year change will be calculated compared to that100. This exposes you to a Theoretical risk in case the inflation later is lower than that year's inflation then payout will be lower.
Secondly. the inflation is fixed to WPI (wholesale price index) which is not the correct reflection of the inflation, CPI is. RBI says CPI ones will be issued later.
Note: the bonds will be issued only to institutional now and retail investors in Sep/Oct.
Edit:corrected some points which might create confusion.
 
So basically I cannot invest in the inflation indexed bonds even of I wanted to as of now ? Only by year end I guess.
 
raksrules said:
So basically I cannot invest in the inflation indexed bonds even of I wanted to as of now ? Only by year end I guess.
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Yes more or less. I recently read about mfs being launched which will be heavily invested in these bonds (companies owning the bonds via the non-retail route). So investing in these bonds directly will not be the only option.
But i won't be surprised if the mfs and the bonds (in secondary market) being charged at a premium. I only wish if there was a way to bag them in the auction it self :p (haven't checked that route but that surely will require a deep pocket).
 
raksrules said:
Bumping the thread again,

I am planning to remove the money invested from MF and cash out on whatever the NAV is at the moment. What is this Inflation Index Bond some people are talking about ? Also what is the rate of return and how safe is the principal and tax implications ?
Click to expand...

The interest is linked with WPI(wholesale price index).

So the maturity amount is adjusted according to it.

http://articles.economictimes.india...056_1_inflation-indexed-bonds-coupon-rate-iib

Anyways i would suggest to stay invest in quality stocks and for mutual fund make direct investments and with sound fundamental fund which doesnt get merge with some bigger fund of same house.
 
As of now max money is put in FD since I feel it is less risky and a certain percentage of guaranteed return. Not high but reduces the unpredictability.
Also i am not a daily trader in stocks, kind of invest and forget but now with so much volatility that is out of question for me. No more putting money in risky propositions.
 
raksrules said:
As of now max money is put in FD since I feel it is less risky and a certain percentage of guaranteed return. Not high but reduces the unpredictability.
Also i am not a daily trader in stocks, kind of invest and forget but now with so much volatility that is out of question for me. No more putting money in risky propositions.
Click to expand...
I have put major money in FD.
I am wanting to dabble some in good stocks.
Hey which demat account are you using?
Is it ICICI?
 
raksrules said:
As of now max money is put in FD since I feel it is less risky and a certain percentage of guaranteed return. Not high but reduces the unpredictability.
Also i am not a daily trader in stocks, kind of invest and forget but now with so much volatility that is out of question for me. No more putting money in risky propositions.
Click to expand...
Well Traders are those who every other day sit on PC and start looking for a percent of return and next day comes back for same either via buy or shorting.And one fine day put all money one stroke and start from zero.

I feel such markets are good for buying stocks which go much below their price.

I remember during 2008 meltdown Hero motor corp shares went upto 180 levels.A person bought stock worth rupee a lakh of same.550 shares.

Now that person every year receive almost 30k to 40k as divident plus his stock is worth 8.5 lakhs now.

Anyways one needs to be master in value investing in finding such gems.

But the biggest mistake one investor does in slowdown/meltdown or uncertain period is they stop their SIP's or run away from market.

As Warren Buffet said "Be Fearful When Others Are Greedy and Greedy When Others Are Fearful".

Hence i will say not to loose opportunity of such market condition.Though the worst is yet to bee seen.As it all started with Dollar Bubble but it was the Euro nation which exploded but sooner or later Dollar trouble will be back.Also one of the guess to fine meltdown so far in past 200 years have been when the Germans and Japanese start investing a big fall is around.The Japanese already started investing here.
 
pradeep200417 said:
I have put major money in FD.
I am wanting to dabble some in good stocks.
Hey which demat account are you using?
Is it ICICI?
Click to expand...

If you hardly trade than brokerage charges are no such big deals.Its the traders who have issues which such high brokerage as their margins are always a percent.

Also i find banks to be a better and reliable entity to buy and trade for demat .As with other big entities i have heard the broker using the demat account of client.

You can go ahead with Icici though i heard Kotak have much better facilities and trading softwares.Also both ICICI and KOtak allows buying in OFS online which is missing in my broker.

Note::I use HDFCsec.
 
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MAGNeT said:
If you hardly trade than brokerage charges are no such big deals.Its the traders who have issues which such high brokerage as their margins are always a percent.

Also i find banks to be a better and reliable entity to buy and trade for demat .As with other big entities i have heard the broker using the demat account of client.

You can go ahead with Icici though i heard Kotak have much better facilities and trading softwares.Also both ICICI and KOtak allows buying in OFS online which is missing in my broker.

Note::I use HDFCsec.
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Since i already have an account with them, do i need to open one more account for this?
Can i open a demat account linked to my current account?
 
pradeep200417 said:
Since i already have an account with them, do i need to open one more account for this?
Can i open a demat account linked to my current account?
Click to expand...

Yes you need to open two account demat and trading.Just demat account is for holding the shares in your account say you had old physical form and now you dematerialise it than it goes to demat account.For trading its just that you need to sign more forms and power of attorneys.

Anyways most probably your bank will tell to open 4 in one account i.e savings,demat,trading and and mutual fund.

But if you want to stick to shares tell them straight you only want that much for personal use.No need for new 4 in one.
 
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MAGNeT said:
Yes you need to open two account demat and trading.Just demat account is for holding the shares in your account say you had old physical form and now you dematerialise it than it goes to demat account.For trading its just that you need to sign more forms and power of attorneys.

Anyways most probably your bank will tell to open 4 in one account i.e savings,demat,trading and and mutual fund.

But if you want to stick to shares tell them straight you only want that much for personal use.No need for new 4 in one.
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:(...I already have 3 icici saving account, 1 FD account, now add 2 or 1 more to this. :(
 
^ If your accounts are linked to a single login then managing them online would not be a problem. You can close your unused accounts anytime.

The demat account is needed to store your shares in demat (dematerialised- means paperless) format. You can use the demat account with other brokerages as well if they allow it. Also the trading account will be an ICICIDirect account which will hold all your transaction details and your trading + bank account will be linked to this too. So all you need to remember is the login details for both ICICIBank and ICICIDirect to manage all the accounts which you hold.
 
raksrules said:
As of now max money is put in FD since I feel it is less risky and a certain percentage of guaranteed return. Not high but reduces the unpredictability.
Also i am not a daily trader in stocks, kind of invest and forget but now with so much volatility that is out of question for me. No more putting money in risky propositions.
Click to expand...
there are many ways to invest and forget types too. We as people are hard wired to look at FD for the low risk returns and look at stocks as suspicion of being too volatile. There are stocks with superior risk adjusted returns but finding them is a real task (reading about the industry/demand for a product, then reading about companies, finding about the corporate structure, future plans etc). Or you can have FoF (Fund of funds - build your own or use company standard), set up a DRIP (divident re-investment program - harder to pull of as many divident paying sell for premium their price but once instituted can work great), Or the best build your own portfolio with passive hedging - 60-40 - stock:bonds being the standard, take a fundamental view of trading (day traders by nature are technical oriented).
Sounds omnious but easier to pull off with some reading and help. And last but not the least don't fall into the trap of value trading - specially "bought in 2008" stories. If nothing is trading at value now, how will the investors make money tomorrow? And if still not convinced, wait for 1-1.5yrs worse than 2008 is coming near you (don't quote me on that :P)
 
sharktale1212 said:
there are many ways to invest and forget types too. We as people are hard wired to look at FD for the low risk returns and look at stocks as suspicion of being too volatile. There are stocks with superior risk adjusted returns but finding them is a real task (reading about the industry/demand for a product, then reading about companies, finding about the corporate structure, future plans etc). Or you can have FoF (Fund of funds - build your own or use company standard), set up a DRIP (divident re-investment program - harder to pull of as many divident paying sell for premium their price but once instituted can work great), Or the best build your own portfolio with passive hedging - 60-40 - stock:bonds being the standard, take a fundamental view of trading (day traders by nature are technical oriented).
Sounds omnious but easier to pull off with some reading and help. And last but not the least don't fall into the trap of value trading - specially "bought in 2008" stories. If nothing is trading at value now, how will the investors make money tomorrow? And if still not convinced, wait for 1-1.5yrs worse than 2008 is coming near you (don't quote me on that :p)
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I somehow feel investing in Stocks is better than mutual funds and FDs, but lack the know how of investing into stocks.
Do you have recommend any books or pointers for starting to invest in the stock markets?
 
pradeep200417 said:
I somehow feel investing in Stocks is better than mutual funds and FDs, but lack the know how of investing into stocks.
Do you have recommend any books or pointers for starting to invest in the stock markets?
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Books - Reminiscene of a Stock Operator by Jesse Livingston. Its a handbook for most Wall Street traders. Though it is geared towards actual "traders" it gives you understanding on how the market works. IMO one of the reasons people fail. And frankly, what you learn from it depends on you.
Other than that, you can read up on international magazines. Time and again, they highlight some desi companies/sectors for their stellar performance. Then you can look up the company, industry (is there are demand at all or are they BSing?), Public offering, corporate structure (how the companies under these guys perform earlier), future plans. *The major point to look out for is dependencies. Is there a risk of that dependency going away soon? (Like say infrastructure growth in cities like Hyderabad are due to IT. If there is a foreseeable risk of companies shunning Hyderabad due to Telangana issue, is it worth investing? A knowledge of local politics might help - in which way investing is a whole lot deeper connection game than it looks).
Or if you are lazy :P
Google up Nomura, GS, JPM Emerging market updates. They print it for customer but is available on googling (then you can decide if what they say makes sense locally - dont follow it blindly ;) )
 
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Where should I make the investment now in today's time so that I can easily get quarterly 10% every year by default of whatever amount I invest?
 
In FD, say the interest in 9%, is it quarterly or yearly, in the sense, do they calculate the interest per quarter at the rate of 9%/annum(actually 390 days?) and then compound it,
sort of compound interest at the end of FD term ?

Assume i invest 10,000 Rs in FD at 9% per annum (390 days ?) so no counting the tax and all, would i get 10,900 Rs at the end of term ? Or more because of compound interest ?
 
raksrules said:
In FD, say the interest in 9%, is it quarterly or yearly, in the sense, do they calculate the interest per quarter at the rate of 9%/annum(actually 390 days?) and then compound it,
sort of compound interest at the end of FD term ?

Assume i invest 10,000 Rs in FD at 9% per annum (390 days ?) so no counting the tax and all, would i get 10,900 Rs at the end of term ? Or more because of compound interest ?
Click to expand...
It would be more than 900, compounded on a quarterly basis it is around 931. If you want to a calculation check this:
http://www.allbankingsolutions.com/fdcal.htm
 
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