Stock Trading For Dummies- Where To Begin?

You can just walk into a supermarket and choose what you want from variety of products. Stock trading isn’t exactly the same. Stock market investment looks like a golden goose from far, but it comes with its own set of risks. But if you get involved in this smartly, you will surely reap profits. Gold and shares have always been a sought-after investment area for Indians.

If you are just entering this treacherous world, the main question in your mind would be –

“Where do I begin?”

You might choose to ask your friends and relatives and everyone would give you different opinions. Even those who have never invested in shares will start pouring pieces of advices on you. If you search on the internet, you might find a few tips and tricks but these at times are very risky.

Here is a guide to help you get started with stock trading.

  • PAN Card

A permanent account number is a primary requirement for doing any financial transaction in our country. This 10-digit unique number is assigned to every individual by the tax authorities for assessing tax liabilities. To be able to invest in shares, the first thing you will need is a PAN card.

  • Find a Broker

Like we said, stock trading isn’t like buying stuff from a supermarket. You can’t simply go to a stock exchange and ask to buy or sell stocks. Authorised people, called as brokers, sell and buy on the market. These individuals, companies or even online agencies are registered by the Securities and Exchanges Board of India and are reliable people who are licensed to trade. Finding a right broker is very important for starting your journey in trading.

  • Demat and Trading account

After getting a pan card and a broker, the next step is to get a Demat and Trading account. Demat account holds stocks or shares in your name and eradicates the need to store shares in a physical state. All the selling and buying happens through the brokers, while the shares are stored in your Demat account.

Trading account is an intermediary which facilitates the buying and selling. The buying and selling of shares requires a trading account. So, in short, you Demat account shows the number of shares you hold, while your Trading account reflects the buying and selling happening in your account.

If you approach a broker, he will take care of all this and open a Demat account for you.

  • Depository Participant

NSDL, National Securities Depository Limited and CDSL, Central Depository Services Limited are the two depositories in India. They have agents in the form of depository participants who are responsible for providing you with an account to store the shares you hold. These hold the shares you buy and release the ones you sell. A broker will help you register with one.

  • Unique Identification Number

If you want to go all out in the share market and if you wish you invest more than Rs. 1,00,000 at a single time, then you will need a UIN.

  • Buying and Selling

The buying and selling takes place through two exchanges: Bombay Stock Exchange(BSE) and NSE (National Stock Exchange) Usually there is a slight price difference between both the exchanges and hence you need to mention the exchange to your broker.

Let us see an example to understand how the buying and selling actually happens.

You need to start by telling you broker about which share you wish to buy in what quantity. If you wish to invest in SBI, by buying 20 shares at a price of Rs.1000, you will inform your broker about the same. After placing the order, online or offline, the broker processes your order when that price is reached. Selling of stocks is done in the same way. The orders remain valid only for a certain time and if the buy or sell price is not reached, your order will get cancelled.

Stock trading is a dangerous place and always use your common sense before making any decisions. Don’t make mistakes like blindly following “Market Analysts” in fancy suits or by borrowing money to invest which might lead you into a debt trap. Don’t blindly follow any trends and observe a company’s long-term stability before making any big commitment.

Happy Investing!

Effective Strategies for Beefing up Your Retirement Account

Retirement saving

Even if you feel you’re already doing a solid job of saving up for your eventual retirement, it’s possible you can do even better than you are now. After all, it never hurts to have more than you need, and that’s especially true when you don’t know for certain what’s coming down life’s pipeline. Besides working with local insurance agents to save money on your policies so you have a bit more to kick back into retirement, there’s more you can do to provide yourself with a more comfortable lifestyle in your golden years.

Retrain Your Focus

It’s always best to start as early as possible not only when it comes to saving for retirement, but saving as much as possible for your retirement. Rather than put off restructuring your savings strategy for a later date, do yourself a favor and start refocusing right now. Think about the fact that the extra bucks you start putting back today can compound over time, so don’t miss out on a golden opportunity when it presents itself.

Save Just One Percent More

One percent might not seem like much, but that small sliver can seriously add up over the years. Saving just one percent more for your retirement than you do now can result in a sizeable annual return. Short-term sacrifice for long-term gain is most certainly the name of the game when it comes to saving money and setting yourself up for success later on.

Learn Everything There Is to Know About Your 401(k)

If you currently contribute to your 401(k) account with your employer, you’re most certainly off to a great start when it comes to your retirement. That being said, it’s possible you’re not using your account to its full potential. Sit down with the payroll department to get the specifics on your company’s retirement account to see if you can contribute more without negatively impacting your overall income. For instance, there are considerations to make regarding your tax bracket and how your contributions impact your bracket level. On a related note, be sure you take full advantage if your employer matches any contributions you make to your account.

Make Your Raise Work for You

When you receive a raise, congratulations are most certainly in order, but so, too, is a bit of introspection. Rather than buying more with your raise, why not save more? If you’re comfortable with your current lifestyle and financial outlook, you can divert a portion of your raise towards your retirement account.

Invest Your Tax Refund Rather Than Spend It

If it’s your tax refund you’ve received instead of a raise, you still have a solid opportunity to boost your retirement savings. Specifically, think about putting your tax refund into a traditional or Roth IRA or a myRA. If you like, you can even choose to apply your contribution to your tax return for the current year, or the next tax year; talk with your accountant to determine which would be better for your specific financial situation.

Utilize Catch-Up Contributions

Employees over the age of 50 will do well to look into catch-up contributions for their IRA and 401(k) accounts. These contributions can be of serious help if you didn’t start saving up for retirement when you were younger, or if you weren’t able to contribute as much as you wanted to your retirement accounts. Meet with your employer to explore your options and see what your contribution limits are.

The future isn’t certain, and neither is the state of your retirement. To mitigate potential stress in your later years when you should be enjoying yourself, put back as much money as you can now.

How you can Save Money on Home and Auto Insurance Together

Home and auto insurance

Insurance is one of the safest means of safeguarding yourself and your precious possessions from unforeseen losses. An individual or an asset can be easily covered for a seemingly low fee charged by an insurance provider. The risk borne by an individual or an asset gets pooled alongside other policies and premiums collected by the insurance provider. However, a policyholder is expected to check several options and consider certain conditions while signing up.  Policyholders tend to vary in their business policies and this gets reflected in their premium structure and coverage benefits mentioned in the policy papers.

5 tips on how you can actually save money on your insurance have been shared below:

Do Comparison Shopping

In order to achieve the best deals with your insurer, you may consider doing your own research. You must achieve 3 different quotes from eminent insurance providers and check them. All you need to do is to fill out an online application form at a provider’s website. You may do comparison shopping by opting for the same features and calculating the premium costs. Although an insurance agent may help you in obtaining the right coverage, they will charge a commission for their service.

Communicate Directly

You may get in touch with any qualified insurance agent in your attempt to identify the right discounts and cheaper protection, but that will increase your overall insurance cost. Again, there are insurers that will reach out to you directly and lower the cost of a middleman. Progressive and Geico are car insurance providers that reach out to you directly. Direct policies are often an inexpensive option although they may not be the cheapest one for you.

Increase the Deductible

A higher deductible helps an insurer in being liable for a lower settlement value. By opting for a higher deductible, you may reduce your premium cost. You may choose to opt for a deductible worth up to $1000, although the most acceptable amount of deductible is $250 for most types of insurance. The different deductibles enable insurers to develop a flexible cost structure for their policies.

Opt for a Single Insurer

Discounts on insurance policies are offered by insurers for covering multiple cars, precious possessions, and properties. Eminent insurance providers have come up with a wide range of policies designed to match your needs. Another way to save money is by bundling your home and auto insurance policies. The costs pertaining to customer services and issuance of multiple policies are fixed. This helps insurers in extending coverage at lower costs. It even helps them in retaining customers making it more difficult for the policyholders to maintain the coverage discount. A consumer doesn’t want to deal with such a time-consuming process very easily.

Don’t File Small Claims

It’s certainly tough to follow than saying it, but it’s probably the main reason why you apply for coverage. You must avoid filing smaller claims as these claims raise your premium cost in the long run. Saving a small portion of your monthly expenses can help you pay for small things that you file for. Raising the deductible even helps in ensuring that you’ll look forward to larger claims only.

Keeping the factors in mind while comparing your policies will certainly place you in the driver’s seat when it comes to beating risks. Make sure you discuss and get all doubts clarified before signing up.

7 Myths of Early Retirement You Need to Know!

Early retirement

The idea of an early retirement is particularly appealing for the fact that it enters you into a point of life where you have all the three basic requirements to enjoy it – Time, Health and Money. It’s far enough down the road that you’ve earned enough money and it’s not so far that your body has started to give up. For many people, it is an escape from their dull and monotonous corporate lives and follow their passions, do a quirky job they love, live their life on the edge, embark upon social and humanitarian services and take similar risks they’d never have dared of earlier or were unable to, due to the lack of the above three mentioned requisites. For others, it’s a time they could give to their loved ones and focus on their family building and have a nurturing social life.

However, like all things in life, Early Retirement isn’t all white. Before you make such a decision, here are 8 myths and facts you need to know:

  1. “I will have all the time in the world to travel!” – Well, busting this myth requires no rocket scientist. It is evident that when you retire early, you will have to save up all of your earnings for a longer period of time. Post retirement, a regular pay is a sketchy deal for most, and pension plans alone will not suffice the travel extravangza that you might be thinking. So yes, any vacations that you’d plan would require a lot of thought into its budget.
  2. “My expenditure would reduce a lot!” – Assuming that an individual does not fall for this trap at its face value and plans his/her budget accordingly to reduce all unnecessary expenses, it is eventual that most or nearly all will face medical issues down the line. Medicines and healthcare in general add a lot to the budget and effectively increases the expenditure. To remedy that, you can find a health and life insurance, which still sucks the money from your wallets.
  3. “I can focus on my health” – one can feel that they’d get more time to exercise and eat healthy, however studies have indicated that people who generally don’t find anything good to do after retirement see a gradual decrease in their overall health due to lack of mental and physical mobility.
  4. “My Children would be my greatest financial aid!” – This would be a tremendous pressure on them in case you opt for an early retirement. For most parents in their 40s in India, their children have either started or will be going to college. A retirement in 50s would indicate your children saving up for you in a time which is their prime in career building.
  5. “I will be happy and can enjoy life” – the realisation that you now miss your work and a lack of routine or a purpose in life leads to disastrous boredom and an eventual ineffectiveness of the mind. This can push people into depression or deprive them of some necessary mental and emotional stability.
  6. “I have earned enough money to sustain myself for the rest of my life” – no other thought can be as detrimental in case of early retirement as this one. As said earlier, not only the medical expenses increase, but it has been observed that with time, lifestyle in general becomes more and more expensive. The more time passes by, the costlier it gets to live.
  7. “I will never turn back to the corporate world/I will never return to my job.” – This again is supported by countless examples that people either want to get back to their older work life or actually do return to it.

These mentioned points are key for any individual thinking for an early retirement. These problems must be taken with utmost certainty of happening in the post retirement plans.

Investing with an Edge

Investing edge

So, you have decided that you are ready to take the next step.  You are going from a part-time, ‘let’s see how this goes’ attempt at investing, to a major-league, leave no investment behind attitude. Good for you.  Let’s look at how you can take your investment game to the next-level, so you can start reaping the benefits.

No Brainers

Have a plan. You don’t want to end up 6 months down the road in the wilds, mumbling about diversification and Bitcoin. Write it down on your phone, a whiteboard, heck tattoo on yourself if you have to. Just make one, stick to it, and update as needed. The most successful investors, and people in life all had a plan and stuck to it. You want to be like them? You need a plan.

Another thing you should be doing is maintaining some sort of emergency fund. Markets can be volatile places, and having a little liquid cash to back yourself up during unforeseen circumstances is a must. Costs of healthcare, education, car repairs, can all easily reach into the thousands of dollars. Having liquid assets, that is capital that is not tied up in credit cards or debt, can get you through the rough patches, so you can keep investing later.

Lastly, there comes a time when you have to decide between whether you are looking at a potential goldmine, or something is too good to be true. It’s always a bad idea to put all your eggs in one basket, so don’t sink your life savings into an investment you have trouble wrapping your head around. Use a little common sense before you put your money down.

Secret Weapons

Let’s talk about Margin of Safety. In short, the Margin of Safety is the difference between the market price of an asset and what you believe it’s intrinsic value to be. For example, say the price of apples on Thursday was $5 a bushel. However, you know that for the past two weeks apples have been selling at $10 a bushel. That $5 difference is your Margin of Safety, Thursday’s price being lower than what the intrinsic value of a bushel of apples is. You basically want every investment you make to have some Margin of Safety, as you will minimize loss and increase your chance for profit. The term was coined by Benjamin Graham who was an investing mentor to none other than Warren Buffet, so yeah, might be a good idea to take it seriously.

Another pro tip from Benjamin Graham is to embrace the volatility. There will be times when it appears your investments are losing steam. Instead of jumping ship or lamenting the cold nature of the universe, look at times of low growth as opportunities to invest in other areas that might pick up once the markets recover. And the markets will recover. They always do, just like they go back down. Embrace it.

Part of that means becoming an active investor. If you want to really make money on the stock markets, you have to get your hands dirty. While the old adage risk = return can be true, the idea of work = return is much more foolproof. That means doing your research on companies, and being more ready to pull the trigger on a risky investment.

Follow the Rules (Just a Little)

As great as it looked to be the Wolf of Wall Street, let’s remember he got caught, and paid a large price. In fact, pretty much everyone who cheats the system at one point or another runs out of luck. That’s why if you are serious about investing you should be serious about following the law to the best of your ability. Knowing a bit about the penalties surrounding excessive trading, how to look out for unreliable stockbrokers, and insider trading laws will help you later down the line. It is common sense and can save you money. All the top investors in the world made their fortunes legally, and the average investor just wants to make his money work for him. If you want to bend the rules, be a 21st century investment cowboy then be my guest, but just don’t be surprised when the Feds come knocking.

Wrap Up

Becoming the investor you always wanted to be takes a bit of work. However, if you are willing to put in some work, take some risks, and follow these guidelines, you will be well on your way to financial success.

Before you Dive in Stocks: Stock Market Investing Tips

stock market investment

“If you are an individual in the stock market, you should know that the system stacks the deck in its favor.”– Ken Little

The financial system has hugely evolved over the past decades. Things are now more complicated than they were before. With a lot of businesses finding ground and money stashing, people are currently looking for more ways to secure their profits.

The stock market is progressively filling with investors; individual investors. Of course, most people would rather invest on their own; it is an exciting feeling knowing that you can personally control your finances. However, as Money Crashers would agree, investing in equities needs strategies for survival as well as a good understanding of how the market has changed.

Starting out as a stock market investor and especially for the first time will raise a lot of questions on the way. This is because there will be a lot of things to learn, and truth be told; you will not only experience ups but also downs. You therefore have to be ready for what lies ahead. However, this is not to say that you should only look out for the challenging times. Success is also part of the game, but you will need to be patient, disciplined and smart.

The Steady Trader also agree that once you know what to watch and follow the necessary investment process, making money in the stock market will not be as hard. Plus, no-sure formula has been set for success in the stock market; that is why knowing some golden rules and helpful tips is critical.

Stock Market Investing Tips for Beginners

  1. Research the market

Deciding to join the stock market as an individual investor is a big step. That is why you will properly need to do your homework; do not just jump in. Take your time to understand the basics by learning about the individual securities composing the market, among other features. For instance, take time to learn and understand the financial metrics and definitions, the stock market order types, and methods of stock timing and selection.

What are the different types of investment accounts and how are they calculated? It is only when you are familiar with the basics that you can go ahead and make your first investment.

  1. Have a plan and time-frame

Do not join the stock market just because that is what everyone else is doing. Why are you investing in the first place? Is it so you can buy your dream house, or pay your college fees? The purpose will help determine the time frame. If you are investing for education, you are most likely to need the money earlier in future than if you are investing to build a mansion.

With knowledge of your reason and preferred duration, you can easily calculate how much capital you need for the investment as well as the returns. Having a reasonable and measurable goal will help you determine the success of your investment endeavors.

  1. Do not be ruled by emotions

Being a stock market investor means you should be ready for the biggest losses; maybe even bigger ones than you have ever experienced. Because of this, it is easy to get all emotional and negative, especially when you invested huge capital but it bore no fruits. However, as financial analysts from Wilkins Finance advice, be a ‘bull’ instead of a ‘bear’

When you feel all negative about the market, you become the bear, whereas being positive makes you the bull. It is normal for tension to arise when stock prices start moving contrary to your expectations. But be careful not to have your judgment clouded by emotions because then you will only be making decisions in a panic or frenzy.

  1. Spread your risks

Diversify and vary your investments so as to stay in on the safer side. Taking the risk to invest in the stock market is commendable, but taking more such risks is considered wise. Why? What if your one and only investment backfires, will you have a backup plan? One way to recover from loss is buying stocks from different companies; you are less likely to experience losses in all the companies.

  1. Believe in yourself

Avoid the ‘herd mentality’ at all costs. Believe that you can make wise and informed decisions as an investor. It is okay to seek second opinion, but not okay to always follow what other investors are doing. Often, investors run to invest in stocks that many other investors are trading in. But as Warren Buffett once said, you should be fearful when other people are greedy; and only be greedy when they are otherwise.