Investors guide to trade in Nifty

To deal with stock market an individual must know about Nifty and nifty future. Nifty is basically a termed defined as an index of performance of top companies listed in NSE – National Stock Exchange. The NSE India enlists thousands of companies but only 50 companies are responsible for variations in Nifty. Nifty future is basically a financial instrument through which transactions are done on the basis of index of NSE. This can also be said as agreement between two parties in order to buy or sell at the particular price at particular time. The Nifty future is an essential so as to perform transaction of physical commodities and financial instrument in stock exchange market.

Nifty Futures is a volatile market of Indian stock market. It varies on continuous basis. It always involves certain risk as it is a fluctuating market. There are many firms that provide you free Nifty tips in order to carry out transactions appropriately. This is essential especially at times when individual do not have sufficient time to see the fluctuations in market before investing into it. Thus it sticks to Nifty tips provided by these financial firms. Some of those Nifty tips may include the following:

Patience: Patience is really important while investing in Nifty futures as the investment can turn to profit in long term basis one need to be patient along with complete knowledge of the changes of the market.

Judgments and inferences: The judgment is of the current and past trends of the existing Nifty market is essential so as to go on with the trends of market. It is also necessary to fine inferences of the current market from the judgment one makes before actually investing.

Choosing the correct contract: it is also essential to select the appropriate contract before investing a huge capital in Nifty market because these decision can either lead to undue profit or even a loss.

Loss must be minimized: one cannot decide the amount of profit it would get but the losses from the investment in Nifty future can be minimized with correct decisions kept in mind while carrying the transactions.

Knowledge: Knowledge of the stock market is essential for investment in this market. The individual investing in Nifty must have required knowledge necessary. One can lead to loss if it does not knows the current and past trends of this market as not knowing the past and current one cannot judge for the future of the amount invested.

Advice: the Nifty is a fluctuating market even sometimes the experiences individuals of these markets fail in transactions and leads to loss thus it is essential to go with the expert advice and knowledge one gathered through times.

Everyone knows that the Nifty future market keeps on varying with time and the fact remains that even sometimes the great experienced also lead to big losses thus it is very important to make a proper decision before investing in Nifty futures. This can be done by taking proper advice from certain existing advisory firms so that you lead to profit and profit only.

All about SIP (Systematic Investment Plan)

This is the market revolutionary change happened, achieved fame and many of us heard of it without knowing much about it.

Unfortunately, many new investors seem to be under a misconception that it is a type of mutual fund. A Systematic Investment Plan is not a type of mutual fund; it is a method of investing in a mutual fund.

Here's to coming to terms associated with mutual funds. There are two ways in which we can invest in a mutual fund.

•   A one-time outright payment

If we invest directly in the fund, we just hand over the cheque and we get our fund units depending on the value of the units on that particular day.

Let's say we want to invest Rs 10,000. All we have to do is approach the fund and buy units worth Rs 10,000. There will be two factors determining how many units we get.

a)      Entry load

This is the fee we pay on the amount we invest. Let's say the entry load is 2%. Two percent on Rs 10,000 would Rs 200. Now, we have just Rs 9,800 to invest.

b)      NAV

The Net Asset Value is the price of a unit of a fund. Let's say that the NAV on the day we invest is Rs 30.

So we will get 326.67 units (Rs 9800 / 30).

• Periodic investments or SIP (Our present area of concentration)

This is referred to as a SIP.

That means that, every month, we commit to investing, say, Rs 1,000 in our fund. At the end of a year, we would have invested Rs 12,000 in our fund.

Let's say the NAV on the day we invest in the first month is Rs 20; we will get 50 units.

The next month, the NAV is Rs 25. We will get 40 units.

The following month, the NAV is Rs 18. We will get 55.56 units.

So, after three months, we would have 145.56 units. On an average, we would have paid around Rs 21 per unit. This is because, when the NAV is high, we get fewer units per Rs 1,000. When the NAV falls, we get more units per Rs 1,000.

Other important points relating to SIP-

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Exit load -

 An exit load is a fee we pay at the time of selling the units, just like the entry load is a fee we pay when we buy the units.

Initially, funds never charged an entry load on SIPs. Now, however, a number of them do. We will also have the check if there is an exit load. Generally, though, there is none. Also, if there is an entry load, an exit load will not be charged. An exit load may be charged if we stop the SIP mid-way. Let's say we have a one-year SIP but discontinue after five months, then an exit load will be levied. These conditions will wary between mutual funds.  

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Periodic Investments -

 If we do a onetime investment, the minimum amount that we have to invest is Rs 5,000.

If we invest via an SIP, the amount drops. Each fund has their own minimum amount. Some may keep it at least Rs 500 per month; others may keep it as Rs 1,000.

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Frequency of investment - It

 would depend on the fund. Some insist the SIP must be done every month. Others give us the option of investing once in three months or once in six months. They also give fixed dates. So we will get the option of various dates and we will have to choose one. Let's say we are presented with these dates: 1, 10, 20 or 30. We can pick any one date. If we pick the 10th of the month, then on that day, the amount we have decided to invest in the fund has to be credited to our mutual fund.

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Nature of payment - 

We can opt for the Electronic Clearance Service from our bank; this means the mutual fund will, as per our instructions, debit a certain amount from our account every month. Let’s say we have a SIP of Rs 1,000 every month and we have chosen to invest in it on the 10th of every month. Under this option, we can instruct our mutual fund to directly debit our bank account of Rs 1,000 on the due date. If we don't have the required money in our account, then for that month, no units will be allocated to us. But, if this continues periodically, the mutual fund will discontinue the SIP. We need to check with each mutual fund what their parameters are.

Alternately, we can give cheques to our mutual fund. In this case, they may ask for five Post Dated Cheques upfront with our first investment. Since these cheques are dated ahead of time, they cannot be processed till the date indicated.

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Duration of investment –

 one have to state whether we want it for a year or two years, etc. If, during the course of this period, we realize we cannot continue with the SIP, all we have to do is inform the fund 15 days prior to the payout. The SIP will be discontinued. We can continue to keep our money with the fund and withdraw it when we want. 

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Type of funds that offer SIP -

 All types of equity funds (funds that invest in the shares of companies), debt funds (funds that invest in fixed-return investments) and balanced funds (funds that invest in both) offer a SIP.

Liquid funds, cash funds and floating rate debt funds do not offer an SIP. These are funds that invest in very short-term fixed-return investments. Floating rate debt funds invest in fixed return investments where the interest rate moves in tandem with interest rates in the economy (just like a floating rate home loan).

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Tax implications - 

Let's say we have invested in the SIP option of a diversified equity fund. If we sell the units after a year of buying, there is no need to pay capital gains tax. If we sell if before a year, we are required to pay capital gains tax of 15%.

Let's say we have invested through a SIP for 12 months: January to December 2015. Now, in February 2016, we want to sell some units. The system of first-in, first-out applies here. So, the amount we invest in January 2015 and the units we bought with that money will be regarded as the units we sell in February 2016.

For tax purposes, the units that we sell first will be considered as the first units bought.

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How can be SIP is different and help full when compared to regular method of investing in mutual fund-

When we buy the units of a fund, we may do so when the NAV is really high. For instance, let's say we bought the units of a fund when the bull Run was at its peak, leading to a high NAV.

If the market dips after that, the value of our investments falls and we may have to wait for a long while to make a return on our investment. But, if we invest via a SIP, we do not commit the error of buying units when the market is at its peak. Since we are buying small amounts continuously, our investment will average out over a period of time. We will end up buying some units at a high cost and some units a lower price. Over time, our chances of making a profit are much higher when compared to an one-time investment.

Understanding VISA Business model

Ever wondered how VISA and Master Card generates billions of money...?? Through my this article, i would like to explain you how it works. 

VISA business model is very different from a traditional business model. It is not very intuitive enough. Though most of us use VISA credit cards for our payments, very few of us would know how VISA works. In fact, many of us would not even know that VISA is a public-traded company and is listed in the New York stock exchange.

VISA is a Technology company providing global payment solutions to the banks. Its payment product platforms are used by the banks to develop credit and debit card programs for their customers. VISA does not issue credit cards or extends credit to the consumers. Instead, it operates an “Open-loop payments Network” to manage the exchange of information between different financial institutions.

To understand how VISA works, which customer segments it serves, what it offers to its customer segments, and how does it makes money from them, we need to get familiar with few terms. VISA classifies the banks as either Issuers or Acquirers. Issuers issue cards to the cardholders, whereas the Acquirers manage the relationship with the merchants. The diagram below explains what happens behind-the-scenes when a cardholder presents a card for payment to a merchant.

When a cardholder presents a card for payment to a merchant, the payment request is forwarded to the acquirer. The acquirer contacts the issuer through the VISA network. The issuer shares the information on whether sufficient balance is available to carry out the transaction. The information is then routed to the merchant. In case sufficient balance is available, the payment is accepted. Else, it is rejected. The issuer bills the cardholder on a monthly basis. The cardholder pays those bills then.

This is a very simplified explanation of what happens behind-the-scenes. The actual process involves separate loops for Authorization and Clearing & Settlement. VISA also offers several value-added services such as risk management, debit issuer processing, loyalty services, dispute management and value-added information services.

What the above diagram does not tell is how VISA and banks make money in the process. They make money from the transaction fees charged to merchants. To understand how it works, imagine a Rs. 100 payment from a cardholder to merchant. In case the merchant fee is 2.4%, the merchant would get Rs. 97.60 from the transaction. Rs. 2.40 would get unevenly split between issuer and acquirer, depending upon the interchange fee. In case of an interchange rate of 1.8%, the issuer will keep Rs.1.80 and acquirer will keep Rs.0.60. Issuer gets to keep more of the merchant fee because of a higher risk of payment default from the cardholder. VISA makes money on payment volumes, transaction processing, and value-added services.

VISA creates value for all its stakeholders during the process. Cardholders’ benefit because of convenience, security, and rewards associated with card payments. Merchants benefit from improved sales by offering payment method options to the customers. Banks get new revenue streams through card fees, late payment interests, and transaction fee cuts.

VISA captures value through the following revenue streams: Service revenues from banks for their participation in card programs; Data processing revenues for authorization, clearing, settlement, and transaction processing services; International revenues from transactions where the cardholder issuer country is different from the merchant’s country.

In order to create the value, VISA has built a global processing infrastructure consisting of multiple synchronized processing centers. These centers are inter-linked and are engineered for redundancy. Managing these payment networks is a core part of VISA operations to ensure a safe, efficient, and consistent service to the banks, cardholders, and merchants.

VISA is a great example of a “Multi-sided Platform” business model pattern. The platform induces “cross-side” network effects. More the cardholders use VISA, more the merchants will accept it and vice-versa. Since merchants are on the ‘money side’ of the platform, VISA focuses its marketing efforts on the cardholders who are the ‘subsidy side’ of the platform. VISA sponsored FIFA world cup in 2010 and will be Olympic sponsor through 2020. This marketing focus helps VISA in building a strong brand and attracting more consumers

I hope you enjoyed reading it!!

Investing for beginners : Getting started...!!

Hi Friends,

Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream of retiring early (or of being able to retire at all)? Do you know that you should invest, but don't know where to start?

If you answered "yes" to any of the above questions, you've come to the right place. I am starting a series wherein i will try to explain the concepts of investing in a most simple and lucid manner so that even the beginners can understand it and can benefit. In this series i will try to cover the practice of investing from the ground up.

The world of finance can be extremely intimidating, but i firmly believe that the stock market and greater financial world won't seem so complicated once you learn some of the lingo and major concepts.

I will emphasize, however, that investing isn't a get-rich-quick scheme. Taking control of your personal finances will take work, and, yes, there will be a learning curve. But the rewards will far outweigh the required effort. Contrary to popular belief, you don't have to let banks, bosses or investment professionals push your money in directions that you don't understand. After all, no one is in a better position than you are to know what is best for you and your money.

Regardless of your personality type, lifestyle or interests, this series will help you to understand what investing is, what it means and how time earns money through compounding. But it doesn't stop there. This series will also teach you about the building blocks of the investing world and the markets, give you some insight into techniques and strategies and help you think about which investing strategies suit you best. So do yourself a lifelong favor and keep reading.

One last thing: remember: there are no "stupid" questions. If after reading this tutorial you still have unanswered questions, feel free to contact me at 'birmohit.bathla@gmail.com'. Would love to hear from you.

Cheers!!

A touching story!!

This amazing story was originally posted on Facebook. It is a touching lesson on being patient - you HAVE to read it, it'll change how you think.

A NYC Taxi driver wrote:

I arrived at the address and honked the horn. After waiting a few minutes I honked again. Since this was going to be my last ride of my shift I thought about just driving away, but instead I put the car in park and walked up to the door and knocked.. 'Just a minute', answered a frail, elderly voice. I could hear something being dragged across the floor.

After a long pause, the door opened. A small woman in her 90's stood before me. She was wearing a print dress and a pillbox hat with a veil pinned on it, like somebody out of a 1940's movie.

By her side was a small nylon suitcase. The apartment looked as if no one had lived in it for years. All the furniture was covered with sheets.

There were no clocks on the walls, no knickknacks or utensils on the counters. In the corner was a cardboard

box filled with photos and glassware.

'Would you carry my bag out to the car?' she said. I took the suitcase to the cab, then returned to assist the woman.

She took my arm and we walked slowly toward the curb.

She kept thanking me for my kindness. 'It's nothing', I told her.. 'I just try to treat my passengers the way I would want my mother to be treated.'