Tag: Long-term Investment

Share Market Myths Vs Reality

When someone enters the share market as an investor or trader, they will come in after listening to several myths about the share market. Here, we bust a few myths about trading and investing.

Myth 1: Buying stocks is the same as gambling.
People often think that trading is like betting, where you either win or lose.

Myth Shot Down

Investing is more like a science than an art because it requires thorough research into the technical and fundamental aspects of the assets, as well as the market’s current trends and the company’s growth potential.

Myth 2: Past results show what will happen in the future
When making an investment decision, investors look at how the stock has done in the past or how it has been rated.

Myth Shot Down

Investing decisions are made based on the company’s future, not just on what has happened in the past. Some of the most important macroeconomic factors that affect the performance of stocks are the interest rate, GDP, exchange rate, etc. Investors must also look at the company’s quarterly results, how much competition there is, how much it costs to make a product, if a new product is coming out, if there are changes in the top management, etc.

Myth 3: Stocks that go down will go back up, or vice versa.
Most people think that a stock that is going down will go up again at some point. In a similar way, they don’t buy stocks that are at all-time highs because they think the price will drop quickly.

Myth Shot Down

Investors should look into why a stock is going down. Is the collapse just because of the mood of the market, which could change, or is it because of something big that could hurt the company’s finances? Also, a stock’s recent rapid rise does not always mean that it can’t go up more.

Myth 4: To be successful, you have to spend a lot of money.

Myth Shot Down

In reality, all the investors need to do is be disciplined and do thorough research. The power of compounding can be unlocked by making small investments over a long period of time. This can turn regular investors into millionaires.

Myth 5: You have to trade a lot in order to be successful.
A second thing that keeps people from investing is the idea that they will have to trade a lot to make good money.

Myth Shot Down

In reality, quality trades do better than lots of trades. If you don’t do your research, you might make a lot of trades but not get the results you want. On the other hand, you may make good money if you invest wisely and make good trades.

Myth 6: Trading stocks with low P/E (Price-to-Earnings) ratios is smart and safe.
The price-to-earnings ratio (P/E) can be used to tell if a stock is overvalued or undervalued. Most people think that the better the deal, the lower the price is compared to the earnings (P/E ratio).

Myth Shot Down

There may be a good reason why the stock is so cheap. Considerations must be made for the company’s growth prospects, operating revenue, product launch (if any), debt structure, peer comparison, management, etc.

December 19, 2022
The Beginner’s Guide To Equity Delivery

Equity delivery, which is also called “delivery-based trading,” is one way to trade on the stock market. In an equity delivery, you buy some shares and store them for a while in your demat account. In delivery trading, you can keep the shares for as long as you want once they have been sent to you. You own all of the stocks you buy, so you can keep them until the right time to sell them and make a good profit. Intraday trading, which is the second most common way to trade stocks and involves buying and selling shares during the same trading day, is the opposite of this. When you do intraday trading, you don’t have to pay the full price of the stocks. But if you want to buy shares in delivery, you must have enough money in your account because there are no margins.

Let’s look at some ways to invest that will give you better returns:

Don’t put all your eggs in one basket. This saying is also true for shares. Mix and match things. Try to buy a wide range of stocks when you buy shares. After doing your research, pick a few businesses in different fields. Choose companies that do business in the areas you think have the most potential. Diversifying your investments will help you because you will make money if good things happen in any of them.

Be patient. The stock market is so unpredictable that it will often test your patience. There is always a chance that the value of the shares you buy will go down. The price of each share changes from time to time. Don’t get scared and sell your shares just because the price is going down. Delivery-based trading is much better than intraday trading because you don’t have to sell your shares in a certain amount of time. If you stay calm, your chances of making money will go up. Most traders wait to sell their shares until they reach their cost price.

What does it mean to deliver equity?

Among the benefits of delivery-based trading are:

There is no waiting period, so you can keep the shares even if the market is going down and sell them when the price is right.
Some banks and other financial institutions give loans based on the stock you own. So, when you are going through a hard time, your shares can help you out.
If you see that a company is making money, they might declare a dividend per share. Then, if you own shares in these companies, you will get dividends for each share.
If you keep your money in a bank, you will only get 6-7% in interest per year. But if you use that money to buy shares in companies that are growing, you could make 15% or more on your money. Even some stocks can give you returns of 30–40% per year. Long-term trading is the best way to make money on the stock market.
If a company makes a lot of money, it might give out bonus shares. If they say 1:1, you could get a free share in addition to the ones you already own.

Conclusion

Do your research on the companies whose shares you want to buy before you buy them. Try to buy the shares when they are trading for less than what they are worth. If you do this, your chances of succeeding will go up. Knowing when to buy and when to sell is helpful for both intraday traders and traders who buy and sell for delivery.

December 7, 2022
Should You Invest In The National Pension Scheme?

If you’re looking for assets that can lower your tax bill, the National Pension Scheme (NPS) should be at the top of your list. In addition to the tax benefit, NPS is a great way to invest if you want to increase your wealth and build up a strong retirement fund. This article will talk about the tax benefits of the National Pension Scheme and why it should be on your list of investments that save you money on taxes.

The main goal of the NPS is to make sure that account holders continue to get a steady income after they retire, even if their investments have made a lot of money.

What is the NPS program and how does it work?

Before we look at the tax benefits of the NPS scheme, let’s take a closer look at how it works. People who have an NPS account can make regular payments to their account while they are working.

If you are a Tier I subscriber, you must give at least Rs. 6,000 per year. If you are a Tier II customer, there is no minimum amount you must give. If you do decide to give, you may contribute Rs 250. A person with an NPS account can take out about 60% of the money in their account after they retire. With the remaining 40% of the total amount invested, an annuity should be bought so that there is a steady source of income after retirement.

What are the basic parts of NPS tax savings?

Not sure if investing in the NPS plan will be worth it? NPS has many benefits, such as being a cheap way to save for retirement and invest. It is important and helps you plan for retirement, and it also gives you stable long-term returns and a good income after you retire.

Here are some more reasons why NPS is good:

It’s up to the investor to decide where to put their money.
Investments in the NPS are handled by people who are qualified to do so.
The person who uses the account can decide how much to give each month.
Accounts in the NPS can be managed from anywhere in India.
NPS gives you a tax break.

Let’s look at the NPS Income Tax Benefit in more depth. Under Section 80CCD, NPS gives tax breaks of up to Rs. 1.5 lakhs (1). Also, Section 80CCD(2) of the Income-Tax Act says that the employer’s contribution to the NPS can only be deducted from taxes up to 10% of the employee’s salary (base plus DA).

Salary people who have already claimed the tax exemption of Rs. 1.5 lakh under Section 80C can save more money on taxes through NPS. Section 80CCD lets people who have NPS accounts and invest up to Rs 50,000 get a tax break. This is true for both salaried and self-employed people (1B). Section 80CCD allows this extra deduction, but only for owners of Tier I NPS accounts (1B). Unlike Tier I NPS accounts, Tier II NPS accounts are not affected by Section 80C of the Income Tax Act.

Another thing to remember about the NPS tax benefit is that the deduction under Section 80CCD is available to both salaried and non-salaried people (1). But under Section 80CCD (1), the most a paid professional can deduct is 10% of their income for the year. Those who don’t get a salary, on the other hand, pay 20% of their gross annual income.

An important point

The government has also agreed to raise the costs of the NPS fund manager from 0.01% to 0.09%. This is a small raise to make sure that the pension fund’s management can pay for it. IPOs and more than 200 stocks are now available to NPS fund managers.

October 18, 2022