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Tag: portfolio diversification

  • Large Cap vs Mid Cap vs Small Cap: Key Differences That Actually Matter

    You don’t need to be an expert to invest in stocks. But knowing a few simple things makes the whole process a lot less confusing. One of those things is understanding what people mean when they talk about large cap, mid cap, and small cap stocks.

    Sounds technical, right? It’s not.

    It’s just about the size of the company — not the number of employees or buildings, but how much the company is worth on the stock market.

    Let’s break this down in the plainest way possible.

    What’s “Cap” Anyway?

    So, “cap” is short for “market capitalization.” That’s a fancy term for a simple idea.

    You take the price of one share. Multiply that by the number of shares the company has out there. That gives you the total market cap.

    If a company has 10 crore shares and each one is ₹100, the market cap is ₹1,000 crore.

    That’s it. No magic. Just basic math.

    Where Do Large, Mid, and Small Come In?

    Now that we know what market cap is, companies are sorted based on how big that number is.

    In India, there’s a general rule based on rankings:

    • Top 100 biggest companies = Large Cap
    • Ranked 101 to 250 = Mid Cap
    • Ranked 251 and below = Small Cap

    It’s not about the business being good or bad. It’s just where they stand in the pecking order.

    Let’s talk about what each one means for you, the investor.

    Large Cap: The Big Guys

    These are the companies most people have heard of. Names like Reliance, TCS, Infosys. They’ve been around for years, if not decades. They’re part of the system.

    When you invest in large caps, you’re usually getting into stable, well-established businesses. They tend to handle economic ups and downs better. They’ve got experience. They’ve got cash. And they’re usually under a lot of watch — media, analysts, regulators.

    Do they grow fast? Not really. That ship sailed years ago. But they can give you slow, steady returns. And sometimes they pay dividends too. You may not double your money in a year, but it’s not a rollercoaster either.

    They’re the kind of stocks you don’t have to watch every day. You can hold them and go about your life.

    Mid Cap: The Ones on Their Way Up

    Mid caps are interesting. They’re not new, but they’re not giants either. Think of them like fast-growing companies that have proven something — but still have room to run.

    These are businesses that might dominate in a specific region or niche. Maybe they’re expanding. Maybe they’re investing in new tech. They’re not done growing, but they’ve survived the early startup chaos.

    With mid caps, you get a mix. More growth potential than large caps. But more risk too. They might spike in good times and fall in a market dip. They’ve got the energy of small caps with a bit more structure.

    For investors who want something between steady and spicy, mid caps make sense. But you still have to pay attention. One bad quarter can hurt.

    Small Cap: The Wild Cards

    Here’s where it gets interesting. Small cap stocks are the smaller, younger companies that most people don’t know about. They’re new to the game, often under the radar.

    These can be game-changers. Or disasters. Or both — depending on when you get in and how long you stay.

    The appeal? They move fast. They can go from ₹20 to ₹200 in a year if something clicks — new product, new market, investor buzz. But the risk is just as real. They can crash just as fast. Sometimes for no clear reason.

    These stocks aren’t always easy to buy or sell. Volumes are lower. Prices swing more. You have to dig deeper, read reports, understand the business. And still, you’re betting on what might happen.

    Small caps are not for the faint-hearted. But they can offer serious upside if you choose well and time it right.

    So Which One Should You Pick?

    That depends. There’s no perfect answer. It’s about what you want from your investments.

    For those seeking stability, approaching retirement, or preferring not to monitor their portfolio frequently, large caps are a safe place to start.

    Those comfortable with some risk and aiming for higher growth than the industry leaders may find mid caps offer that extra edge.

    Younger investors with time on their side, who can handle market swings and are willing to do thorough research, may find small caps exciting—just be sure not to concentrate your entire investment in them.

    Most people do a mix. Some large caps for the base, some mid caps for growth, and a small slice of small caps for that extra pop.

    Can Companies Change Category?

    Absolutely. A small cap that grows steadily can become a mid cap. A mid cap that performs well year after year might get into the large cap club.

    This isn’t fixed. It shifts as companies succeed or struggle. So your portfolio might shift too.

    That’s why some investors check in every six months or so and make changes. Nothing fancy. Just making sure the balance still matches their comfort level.

    A Few Things to Keep in Mind

    1. Market mood matters.
      In bull markets, mid and small caps often shine. In downturns, large caps usually hold better.
    2. Liquidity can be an issue.
      Small caps might not have enough buyers or sellers at the price you want. That can affect your ability to get in or out.
    3. Noise vs. signal.
      There’s a lot of chatter around small and mid caps. Not all of it is useful. Don’t follow hype blindly.
    4. Track your blend.
      You might start with a certain balance between large, mid, and small. But as prices change, that balance shifts. A quick portfolio check every now and then helps.
    5. Don’t overreact.
      Stocks move. Some days will be red. Others green. Look at the business behind the stock, not just the price today.

    Wrapping It Up

    Large cap, mid cap, small cap — they’re just different sizes of companies. And each one plays a different role in your investing story.

    You don’t need to know everything. You just need to know enough to make decisions that feel right for you. What are you comfortable with? What are your goals? How much time do you have?

    This isn’t about picking the perfect stock. It’s about understanding what kind of ride you’re getting on.

    Some people want the expressway. Others don’t mind the bumpy road. The important part is knowing which vehicle you’re in — and where it’s taking you.

    Disclaimer:
    This blog is for informational use only. It does not offer investment advice or recommendations. Investing in the stock market carries risk. Always do your own research or consult a certified financial advisor before making decisions.

  • The Benefits of Commodity Trading in India

    Commodity trading is the buying and selling of physical goods, such as agricultural products, metals, and energy sources. In India, commodity trading has become increasingly popular in recent years, as investors look for new opportunities to diversify their portfolios and potentially generate higher returns.

    Here are a few of the key benefits of commodity trading in India:
    Diversification: One of the primary benefits of commodity trading is that it allows investors to diversify their portfolios. By including commodities in their portfolio, investors can reduce their exposure to traditional asset classes such as stocks and bonds, which can help to reduce overall portfolio risk. This is particularly important in today’s volatile economic environment, as diversification can help to protect against market downturns and minimize the impact of any individual investment on an investor’s overall portfolio performance.

    Potential for higher returns: Commodities can be an attractive investment option for investors who are looking for the potential for higher returns. Many commodities, such as gold and oil, have historically performed well during times of economic uncertainty and market volatility, which can make them a good choice for investors who are seeking to protect their wealth. In addition, commodities can offer attractive risk-reward profiles, as their prices tend to be more closely tied to underlying supply and demand dynamics than other asset classes.

    Inflation hedge: Commodities are also often seen as a good way to hedge against inflation, as their prices tend to rise when the cost of living increases. This can make them an attractive investment option for investors who are looking to protect their purchasing power over the long term. For example, gold has traditionally been viewed as a safe haven asset that can protect against inflation, as its value tends to increase when the purchasing power of other currencies declines.

    Liquidity: Commodities are typically highly liquid, which means that they can be easily bought and sold on the open market. This can make them a good choice for investors who need to quickly access their funds or who are looking to actively manage their portfolios. In addition, liquidity can be particularly important in times of market stress, as it allows investors to easily buy or sell their investments as needed.

    Regulation: In India, commodity trading is regulated by the Securities and Exchange Board of India (SEBI), which ensures that the market is transparent and fair for all participants. This can give investors confidence that their investments are being handled in a professional and trustworthy manner. In addition, regulation can help to protect investors against fraud and other forms of misconduct, which can be a concern in some less regulated markets.

    Potential for price appreciation: Finally, one of the main benefits of commodity trading is the potential for price appreciation. Commodities are physical goods that can be subject to price fluctuations based on changes in supply and demand, and these fluctuations can create opportunities for investors to profit from price movements. For example, if an investor believes that the price of a particular commodity is undervalued, they may buy that commodity in the hopes that its price will eventually rise.

    In conclusion, commodity trading can offer a number of benefits for investors in India, including diversification, the potential for higher returns, protection against inflation, liquidity, regulation, and the potential for price appreciation. By including commodities in their portfolios, investors can potentially reduce risk, generate higher returns, and protect their wealth over the long term.

  • The Role of Fundamental Analysis in Building a Diversified Investment Portfolio

    Fundamental analysis is a key tool for investors who are looking to build a diversified investment portfolio. It involves evaluating the underlying financial and economic factors that can impact a company’s stock price, with the goal of identifying stocks that are likely to perform well in the long term.

    One of the main benefits of fundamental analysis is that it helps investors to make informed investment decisions based on objective data, rather than relying on market speculation or short-term trends. By analyzing a company’s financial statements, management team, market conditions, and other relevant factors, investors can gain a deeper understanding of a company’s strengths and weaknesses, and make informed decisions about whether or not to include it in their portfolio.

    In addition to helping investors to identify potential investments, fundamental analysis can also play a key role in portfolio diversification. By analyzing a wide range of companies in different industries and sectors, investors can build a portfolio that is less vulnerable to market fluctuations and is better positioned to weather economic downturns.

    There are several key steps that investors can take when using fundamental analysis to build a diversified portfolio:

    Identify your investment goals: Before you start analyzing individual stocks, it is important to have a clear understanding of your investment goals. Are you looking to generate long-term growth, generate income, or a combination of both? Knowing your goals will help you to choose the right mix of stocks and other assets to include in your portfolio.

    Evaluate the company’s financial health: One of the key factors to consider when conducting fundamental analysis is a company’s financial health. This involves analyzing its financial statements, including its balance sheet, income statement, and cash flow statement, to assess its profitability, debt levels, and other key indicators of financial stability.

    Analyze the company’s management team and business model: In addition to its financials, it is also important to assess a company’s management team and business model. This can involve evaluating the experience and track record of the management team, as well as the company’s competitive advantage and growth potential.

    Consider the industry and market conditions: It is also important to consider the industry and market conditions in which a company operates. This can involve evaluating the overall health of the industry, as well as any potential risks or opportunities that may impact the company’s future performance.

    Diversify your portfolio: Once you have identified a list of potential investments, it is important to diversify your portfolio by including a mix of stocks from different industries and sectors. This can help to reduce the overall risk of your portfolio and increase the chances of long-term success.

    In conclusion, fundamental analysis is a powerful tool for investors who are looking to build a diversified investment portfolio. By evaluating the underlying financial and economic factors that can impact a company’s stock price, investors can make informed decisions about which stocks to include in their portfolio and how to diversify their holdings to reduce risk. By following these steps, investors can increase their chances of long-term success and achieve their investment goals.

  • The Benefits Of Investing In Corporate Bonds

    Bonds are debt market products that, as their name suggests, pay a fixed interest rate annually or at regular intervals and can be redeemed at the end of a certain time period. Bonds are fixed-income securities that act as a private company’s assurance to raise money for operating costs. Most of these bonds are traded on the secondary market and are also available to investors as “dematerialized” bonds. Before you buy private sector bonds, here are some things to think about.

    1. Is it backed by a reputable business group?

    These corporate bonds from the private sector are at risk of default, but government bonds are not. As an investor, default risk may have two effects on you. First, the company can have bad financial results and be forced to stop making principal repayments and periodic interest payments. Second, even if the bond is traded on the stock market, it could be downgraded by the rating agencies. This would cause the price of the bond to drop.

    2. Don’t try to find more ways to make money

    Going down the grading curve to find higher yields on private bonds is very common, even among fund managers. For instance, a corporate bond with a AAA rating will have the lowest interest rate. But if you choose bonds with an AA or A rating, the yield will be higher because these companies are more likely to pay higher rates than AAA companies. Even though not every AA or A-rated company will go bankrupt, it is a risk, so you should be careful. If you can’t sell the bond on the secondary market or don’t have time to keep an eye on how the company is doing, the risk is higher.

    3. Keep in mind that private-sector bonds make you pay more in taxes

    Your actual returns depend on how the tax treatment works out in the end. When you buy private bonds, the interest you earn is taxed at your highest rate, say 30%. So, if the bond pays you an interest rate of 11%, your real yield after taxes is only 8.7%. (11-3.3). Even though the lock-in term may be longer, it may be better to invest in an infrastructure bond that saves taxes. For example, if the interest rate on a tax-free bond for infrastructure is 6.5%, the effective after-tax yield will be 9.3% (6.5/0.7). In reality, an infrastructure bond has a higher effective yield and a much lower risk of default.

    4. You might find that investing in debt funds is a better idea

    If you want stability, debt funds may be a much better option for you. Debt funds let you benefit from both the interest on bonds and the growth of your capital when interest rates go down. The second benefit of debt funds is that they build a portfolio of different types of debt instruments with different levels of risk. This makes your overall exposure risk much lower. It’s hard to come up with this much variety on your own. Third, unlike bonds, which are usually hard to sell quickly, debt funds are easy to buy back. Price anomalies can also make it so that the prices don’t reflect the bond’s true value. Last but not least, debt funds are much better than private sector bonds when it comes to taxes. If you choose a debt fund’s dividend plan, you can take out the profits without having to pay taxes because dividends from debt funds are tax-free in the hands of the investor.

    The yield on private sector bonds is a little bit higher than that on bank FDs, but the risks are also a little bit higher. Before putting money into private sector debt, you should know this.

  • Are Tax-Free Bonds Right For You?

    In the past few years, investors with a lot of money have been more interested in tax-free bonds. Large infrastructure players can raise money at the end of the fiscal year by selling tax-free bonds. By offering these tax-free bonds, the government can help pay for infrastructure. There are two main types of bonds that don’t have to pay taxes. Let’s try to understand them better.

    First, there are Section 54EC bonds. If you buy them with the money you made from a sale, you can get a tax break. Because of the benefit in Section 54EC, you won’t have to pay tax on your capital gains. The interest that investors get from Section 54EC bonds will be fully taxed in their hands. Second, there are bonds that the investor doesn’t have to pay any taxes on. This means that interest is paid on them regularly. If you are in the 30% tax bracket, a 6% tax-free bond will give you an effective yield before taxes of 8.57 %.

    Does it make sense to buy Section 54EC bonds?

    HNIs seem to want these bonds a lot because they see it as a good way to lower their capital gains tax. But there are a few important things you should remember about buying these bonds. To make up for the tax benefit, the returns on these bonds are much lower than on regular bonds and bank FDs. So, it only makes sense if you really have capital gains that you need to pay less tax on. Second, to get a tax credit under Section 54EC, you must invest the whole amount, not just the capital gains. There is a cost to that in the form of missed chances to invest in other things. So, unless capital gains make up a big part of your total sales profits, these bonds aren’t very helpful.

    Taking into account the indexing benefits of long-term holding might be a better way to figure out how much capital gains tax you have to pay. If, after accounting for indexing, your total tax bill is less than 10% of your income, it makes sense to pay down the tax and put the rest of the money into investments that will make you more money. You can also use Section 54 to your advantage if you use the money to buy another property. Taking into account the lock-in period and the opportunity cost of investing the whole return, the tax savings bond may not be worth much to investors.

    Are bonds that don’t get taxed a good choice for investors?

    As was already said, these tax-free bonds involve investing in a business that focuses on infrastructure and will allow you to get interest without having to pay taxes on it. When taxation is taken into account, the effective returns are at first higher than those of taxable bonds. During the lock-in period, however, your bonds are pretty much just sitting in your demat account. This can be quite discouraging. Since this asset doesn’t really make money over time, the key question is whether or not the lock-in period is worth it. The bond’s value hasn’t changed much, so it would be better to stick with traditional bonds and fixed deposits (FDs), which don’t have lock-in periods and can be quickly and easily turned into cash.

    Why not think about debt funds as a better option?

    Through debt, you should be able to meet your basic needs for security and guaranteed profits. Choose debt funds if you want to make the best choice. First, you won’t have to pay taxes on the dividends you decide to get. Second, debt funds are easy to cash out because they are liquid and can be sold in less than two days. Third, investors worry about interest rates and the chance of a default. The risk of interest rates will be looked at separately, but the risk of default can be cut down by focusing on risk-free G-Sec funds. Now, let’s talk about the risks that come with interest rates. In the current economic situation, rates have stayed low, which means that they should help with debt funds. When market rates go down, the NAV of debt funds goes up, so investors can make money from both interest and capital gains. Even bonds that don’t have to pay taxes don’t help in this way.

    In the end, it’s easy to get sucked in by how appealing tax-saving bonds seem, but you need to do the math right. Before you decide whether or not to buy these tax-free bonds, look at what else you can do.

  • The Benefits Of Futures Trading In India

    An index future is a futures contract on a market-wide or sectoral index. For example, the NSE has futures on the market-wide Nifty index and liquid futures on the Bank Nifty index (which is a sectoral index of liquid banks). Both of these indices are very liquid, which means that they are traded a lot by both individual and institutional investors. Why are index futures becoming very popular in India? What are the pros of trading in index futures? The once-famous Badla system on the BSE, which involved trading in stock futures, led to the growth of index futures trading in India. Let’s talk about how to trade index futures, but let’s also think about how trading index futures might help traders.

    1. Stock risk can be avoided by taking a broad view of things.

    Let’s say you’ve decided to invest in banking stocks, but it’s hard to know which ones to buy. Private banks are having trouble with valuation, and PSU banks may be worried about nonperforming assets (NPA). A better plan would be to look at the banking industry as a whole, which will naturally diversify your portfolio. You can do that by buying Bank Nifty Futures and joining the trend of banks going up. The benefit is that you can keep this position open for as long as you want by rolling it over every month for a marginal cost of about 0.50%.

    2. You can trade both long positions and short positions.

    If you are long, which means you are buying, it is fine. What if you don’t like banks? You can sell short banking stocks on the stock market, or you can sell the stocks you already own. But because rolling settlements are used on Indian markets, you can only short stocks during the day. The other option is to sell stock futures of specific banks, but this time you run the risk of losing money on a specific bank. All of these problems might be solved if you just sold the Bank Nifty index futures. If you think the Indian market as a whole will go down, you can just sell Nifty futures.

    3. You can trade index futures with less money

    When you trade futures, keep in mind that you need to trade on margin. But margins on indices like the Nifty and the Bank Nifty are usually lower than margins on individual stocks. This is because an index is made up of several stocks, which gives it a natural way to spread out risk. Because there is less risk, you need less margin to buy an index futures position. By doing this, it will be made sure that less money will be locked up.

    4. You can lower your risk with index futures.

    This is a very important part of how you manage your portfolio. As a private or institutional investor, you can hold a large number of stocks in your portfolio. You think that the market will correct by 10% to 12% once the US Fed raises interest rates. You are also sure that the drop in the value of your stocks will only last a short time and that they will go back up in value in a few months. You could keep your money, but selling Nifty futures would be the best way to lower your risk. When the market goes down, you can make money by selling Nifty futures contracts. This will lower the average cost of the stocks you own. You will be in a better place in three months, for sure.

    5. The risk of not being able to sell these index futures is low

    We frequently observe liquidity problems in particular equities or stock futures. Index futures, on the other hand, almost never have liquidity risk because institutional investors like them. Because of this, the bid-ask spreads are also not very big. Because of this, it’s usually safe to trade in these index futures because you won’t run out of cash. This is one of the main reasons why people trade index futures all over the world.

    6. Index futures can help you spread out your investments.

    Even though this point is more about taking advantage of opportunities, it is related to the one about minimising risks. You have a portfolio that is mostly made up of financial assets right now. You think the RBI rate hikes pose some risk, so you want to make your money safer by investing in industries that don’t change as much, like FMCG and IT. Even though it is possible to buy these stocks, it will cost money and tie up money if this is a short-term opportunity. A better plan is to use FMCG index and IT index index futures to spread out your portfolio. You can structure your portfolio to be more diverse in this way with little risk and cost.

    7. Trading in index futures costs a lot less.

    This doesn’t need to be said again. The commission and STT rates for index futures are much lower than those for stocks or even stock futures. In fact, most brokers also offer fixed brokerage packages for indices, which makes them cheaper than stock futures. Take full advantage of the fact that index futures cost less.

    You might do well trading index futures because they have less risk and could give you a bigger return. But index futures are useful for more than just trading!

  • This Diwali, Invest In Gold With Gold ETF

    Indians have always liked gold a lot, and this has been true for a long time. India didn’t get its first gold exchange-traded fund until 2007, though (Gold BeES). Gold is the asset that these ETFs are based on. Gold ETFs also give you a way to invest in the gold market in India.

    And this Diwali, when it is considered auspicious to invest especially in gold, you can buy its ETF on the share market with your Zebu trading account.

    Exchange-traded funds (ETFs) for gold, also called gold ETFs, are open-ended mutual fund plans based on the price of gold, which changes all the time. There are a lot of costs involved in making real gold. Gold ETFs are a way for investors to get into the gold market. They are a great choice for long-term investors who want to beat inflation.

    Gold is also a safer investment than stocks because it doesn’t change as much. Because of this, it gives you the chance to invest in gold and trade stocks. Some fund companies make money by buying and selling gold bullion. Because of this, they have to keep a close eye on the market. The price of real gold has a straight-line effect on how much gold ETFs are worth. Not only do they not skimp on purity, but they also make sure it is always available everywhere in the country.

    Who should buy gold exchange-traded funds?

    Gold ETFs could be a good choice for investors who want to add exposure to the gold market to their portfolios. It’s a low-risk investment that careful investors should look into. The money is used to buy standard gold bullion that is 99.5% pure. Gold ETFs are a low-risk investment, even though they are bought and sold on stock exchanges. People can buy gold ETFs instead of real gold if they don’t want to pay money to store it or pay extra taxes.

    What Gold ETFs are and what they offer Flexibility

    You can buy gold exchange-traded funds (ETFs) online and put them in your Demat account. The asset management company buys and sells them on a stock exchange (AMC). Even in the Demat format, gold ETFs act a lot like real gold.

    Liquidity

    Gold ETFs are very liquid because they can be traded on the stock market at the going rate during a trading session. Also, transaction costs, such as broker fees and government taxes, are lower than with real gold.

    Smaller capital requirement

    When you go into a shop, you will need a lot of money to buy gold. When you buy and sell gold ETFs, on the other hand, you can choose how much you want to buy and sell.

    It’s easy to take part in the gold market

    Gold exchange-traded funds give investors access to the open, successful, and safe gold market (ETFs). Also, they have a lot of cash on hand because gold is easy and quick to exchange.

    Long-term investment

    Gold ETFs are not subject to a wealth tax like real gold is. Safety and storage are also not issues with a Demat account. Because of this, you can keep your ETFs for as long as you want.

    Tax-efficiency

    Gold ETFs are a tax-friendly way to store gold because the profits they make are taxed as long-term capital gains. Still, sales tax, VAT, or a tax on wealth won’t make things harder.

    Trading on a platform (NSE)

    Investors in gold ETFs can trade in a clear way on the National Stock Exchange (NSE), which is a stock exchange platform.

    Easy transactions

    You can use it as security for loans and list it on the stock exchange to buy and sell it. Since there are no costs to enter or leave, transactions go more quickly and smoothly.

    Risk elements

    The NAV, or net asset value, of a gold ETF can go up or down with the market, just like any other stock fund. In a similar way, other costs, such as the fee for managing the fund, can also change the results.

    This Diwali, if you are interested in investing in Gold, open a Zebu trading account and start investing today. It only takes 5 minutes.

  • If You Are A Student, Here’s Why You Should Invest Today

    Indians are renowned for their sophisticated financial reasoning, yet there is a severe lack of information and investment appetite when it comes to understanding investing and financial diversification. Young professionals find it challenging to file their taxes, learn about the equity markets, or engage in trading and investing since schools and colleges did not place enough focus on teaching pupils about these significant life subjects.

    Less than 10% of Indian families participate in alternative assets like mutual funds or equities, the bulk of which choose to preserve their money in bank accounts. When it comes to stock trading and investing, gold, post office savings, and real estate are favoured.

    While there is nothing wrong with safer investment options like Savings and Fixed Deposits, that money’s value could eventually decline due to inflation. This highlights the necessity of early education in stock trading and investing, educating kids about the ideas of compounding, the stock market, portfolio diversification, and much more that may make them more financially literate as adults.

    College students have an advantage over other adults who begin investing in their 30s since they are youthful, active, and have the passage of time on their side.

    Consider a capital of Rs100. It has the potential to earn 10% a year in returns when invested in Nifty 50 stocks. Rs 110 will be the total sum for the first year, Rs 121 for the following year, and Rs. 133 for the following year.

    For college students, the power of compounding really shines since it gives their money more time to grow.

    Early investment also enables them to take measured risks without worrying about how they would damage their families and livelihoods. In reality, it provides insight into stock evaluation and investment dangers, enabling customers to evaluate current share prices and watch their rise and fall in order to make wise decisions.

    Recently, the Sensex and Nifty both reached their all-time highs when it was thought that Indian shares were valued at their highest ever levels. Although the pandemic has led to a weak economy, negative growth, and the lowest GDP ever, the stock market is shattering all previous records. People who lack understanding tend to label anything as “gambling” or unrelated to reality. However, with the right information and its understanding, you can build generational wealth in a few decades.

    Since students are beginners in investing, even a little investment if done properly, may generate significant returns over time and serve as a reliable source of income. It is a fantastic chance for students or recent graduates to generate enormous returns and support their families. It is crucial to have an accurate understanding of the market before starting to invest, even if it is for a small capital.

    Here’s a quick tip for student investors:

    Invest in businesses or brands that you use frequently, in products that you require frequently and that are in great demand. By doing this, you boost your chances of getting a positive return because you are a consumer of the brand and are assisting them in growing sales and making profits, which will eventually increase the brand’s stock value and benefit you.

    It goes without saying that investing is a wise approach to increasing money. However, investing all of your funds in the market out of a desire to make money is not a good idea. Trade wisely by becoming knowledgeable about the financial market. Being an early investor, especially during the market’s all-time high, should enable you to take advantage of the benefits and see your net worth increase.

    What investing choices are available to college students?

    The most fundamental type of financial investment, a savings account enables you to safely deposit money while receiving interest. On certain occasions, the real rate of return obtained from an investment, also known as the annual percentage yield, exceeds 0.50%.

    Fixed Deposits: These types of accounts are comparable to savings accounts but have a fixed term and a higher fixed interest rate.

    Stocks: By acquiring a stock, you are effectively buying a share of a certain corporation. Depending on how much stock they possess, the shareholder is entitled to a piece of the corporation’s assets and income.

    Mutual funds: Mutual funds pool the money contributed by several investors and invest it in stocks, bonds, and other assets. The “portfolio” refers to the particular stocks, bonds, and assets that the funds are invested in.

    Exchange Traded Funds (ETFs): While ETFs and mutual funds both consist of a group of assets, ETFs are specifically created to track a certain index, industry, commodity, or another set of assets. As a result, you may have an ETF that tracks real estate or corporate bonds. You should invest in low-cost, well-diversified ETFs as a college student since they provide you access to hundreds of stocks without requiring you to individually examine each one.

    Index Funds: An index fund is a similar thing to a collection of assets, but it is tied to an index, such as the Nifty 50 or the Sensex. One benefit of index funds is that they often have cheaper costs as no professional takes the time to choose stocks or bonds for the portfolio.

    Bonds: A bond is, in the simplest sense, a loan from an investor to a borrower, such as a particular corporation. Bonds are an essential component of a balanced portfolio because they may lessen the impact of a decline in the stock market.

    As you can see, there are several options for students to choose from. However, they require a significant amount of knowledge to get started. This is where Zebu School comes in. We have market experts who teach about the basics of the share market and help investors make the right financial decisions. Our courses are simple and pocket-friendly and can help you make the most out of the share market. To start learning today, please get in touch with us now.

  • 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.

  • Equity Market vs Commodity Market – Part 2

    Investors in the stock market can choose to keep their stocks for only one trading day. Stocks, on the other hand, are great investments for the long term because they can be kept for many years or even decades. For commodities trade, on the other hand, the time frame is very different. On the commodities market, contracts that are usually short-term are bought and sold. Also, unlike stocks, they have an end date, which means you have to trade them before the deadline. So, the commodities market is a great place to invest for short-term goals.

    Compared to trading stocks, trading commodities often goes on for longer hours. Stocks can be bought and sold from morning to afternoon. However, commodities can almost always be bought and sold.

    Here are a few more differences between the stock market and the commodity market.

    Bid-Ask spread: The bid-ask spread, which is a measure of liquidity, is lower for stocks. In the stock market, the bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a buyer is willing to accept.

    Margin: The margin requirement for trading commodities is lower than for trading stocks. So, it lets traders take bigger risks, which can be very dangerous when the market moves quickly and in large moves.

    Key indicators: For equity traders and analysts, the most important things are the quarterly results, the company’s dividend payments, and the state of the economy as a whole in the country. When trying to understand the market, traders in the commodity market put more weight on the demand and supply situation than on other factors. Also, traders in commodities have to pay more attention to macroeconomic factors than traders in stocks, who focus on the fundamentals of the companies and their markets.

    Traders and market analysts thought that investing in commodities was a bit easier because it was mostly based on supply and demand. Before deciding how to invest in the stock market, you need to do more research. When you buy a security, for example, you need to look at the company’s earnings and how it has behaved in the past. To understand the copper market, on the other hand, you mostly need to keep an eye on the outlook for industrial growth. So, there are less things to keep an eye on in the commodities market than in the stock market, which may be good for a new trader.

    Stocks can be traded directly in the cash part of an exchange, but commodities must be traded using derivatives.

    Similarities between the stock market and the commodity market

    Both the stock market and the commodity market are affected by many different factors. Take the case of interest rates. Changes in interest rates affect both the market as a whole and the companies that depend on those rates. The interest rate affects how much it costs to keep inventory on hand, which in turn affects the price of goods.

    Pick either stocks or commodities

    Investors can choose to trade on the stock market or the commodities market, depending on how much risk they are willing to take. On the stock market, a common strategy is to buy an investment and hold on to it for a long time. This is not possible when trading commodities. Whether you trade stocks or commodities will depend on how willing you are to take risks.

    If you’re looking for short-term returns, the commodities market might be a better choice. However, investing in stocks is more likely to help you reach your long-term goals. So, investors should keep in mind that stocks and commodities are different in how they are owned and how long they are held.

    Open an account with Zebu to trade and invest in both stocks as well as commodities. Get in touch with us to get started today.