Revisiting Margin of Safety Formula by Benjamin Graham For Value Investors

Many of you may never heard about Benjamin Graham. The above photograph is of Benjamin Graham whose book, The Intelligent Investor is most popular among the value investors from all around the world. In fact, Warren Buffet, the legendary investor follows the investment principles given in his book.

The Intelligent investor book has completed the 50 full years and still today its value investing principles are world famous. This is my most favourite book on the stock investing. Warren Buffet once upon a time was a student of Benjamin Graham. The Margin of Safety formula by Benjamin graham is the most popular formula in the world. Let me tell you that What is Margin of Safety Formula and why is it so much important in the world of investments?

The formula as described by Graham in the 1962 edition of Security Analysis, is as follows:

V* = EPS X (8.5 + 2g)

V = Intrinsic Value

EPS = Trailing Twelve Months Earnings Per Share

8.5 = P/E base for a no-growth company

g = reasonably expected 7 to 10 year growth rate

Where the expected annual growth rate “should be that expected over the next seven to ten years.” Graham’s formula took no account of prevailing interest rates.

The above is that margin of safety formula which has passed through all the tests and in all the market conditions. Many finance gurus and investors have challenged this formula but still the formula is un beaten eve today.

In 1974, Graham has revised the formula. Whish is as below.

Graham suggested a straight forward practical tool for evaluating a stock’s intrinsic value. His model represents a down-to-earth valuation approach that focuses on the key market-related and company-specific variables.

The Graham formula proposes to calculate a company’s intrinsic value V* as:

V* = EPS X (8.5 + 2g) X 4.4 / Y

V: Intrinsic Value

EPS: the company’s last 12-month earnings per share

8.5: the constant represents the appropriate P-E ratio for a no-growth company as proposed by Graham

g: the company’s long-term (five years) earnings growth estimate

4.4: the average yield of high-grade corporate bonds in 1962, when this model was introduced

Y: the current yield on AAA corporate bonds

To apply this approach to a buy-sell decision, each company’s relative Graham value (RGV) can be determined by dividing the stock’s intrinsic value V* by its current price P:

RGV = V* / P

An RGV of less than one indicates an overvalued stock and should not be bought, while an RGV of greater than one indicates an undervalued stock and should be bought.

If you want more explanation about this formula than buy the Book Intelligent Investor by Benjamin Graham and read it’s Chapter 20. It’s Chapter 20 has all the details about margin of safety formula.

Watch the above video. it’s the Warren Buffet’s tribute to Benjamin Graham. According to Buffet, Chapter 8 and Chapter 20 of the book The Intelligent Investor will set a basic mindset of investing in your brain. And after that you will just have to prevent your emotions to erode this mindset.

In 1949, when Warren Buffet was just 19 years old, he picked up the book The Intelligent Investor and that single book has changed his entire life according to him. This is because the investment principles in that book are still effective for making profits in the stock market.

Benjamin Graham was a professor of Warren Buffet in his second semester.

So in my opinion, rather than following the hot stock tips and investing blindly in the companies about which you know little to nothing, it is advisable to learn the margin of safety formula from the book intelligent investor.

If you really want to become a successful investor in your life than Chapter 8 and 20 of this book are extremely important for you. Invest in your own Knowledge first and that will give you the highest dividends in the long run.

What Do You Say?…!!!

What is the Difference Between Insurance Agent, Broker and Financial Planner?

How is an Insurance agent or Wealth/Portfolio Manager different than a Financial planner ?

Do You Know that Insurance Agent, Broker and a Financial Planner all are the different things. I mean different kind of professionals. Bt unfortunately, people don’t know this. And the Insurance Agents call themselves a Financial Planner. In fact, in today’s world almost everyone call himself a Financial Planner and claim you to manage your money. In this Article, I will tell you the difference between all of these.

Agent

An agent is a person who has entered into an 'agency contract' with an insurance company for the purpose of selling insurance for that company. An agent is not an employee of the insurance company, but rather an independent contractor. The agent, unlike a broker, has the authority to bind coverage (legally obligate the insurance company to provide coverage according to the terms and conditions as bound).

Thus, the main job of the agent is to sell the financial products of the Insurance Company with which it has tied up.

Broker

A broker is a person or firm that has permission to seek insurance quotations for an insured (client) or prospective client. A broker is not an insurance company employee. As a representative for the insured, brokers will approach several insurance companies in an attempt provide quotations and coverage to adequately insure the client's exposures.

Thus, the Broker is someone who has tied up with several insurance companies so that he will suggest you the Insurance products according to your financial needs. In other words, a Broker is unbiased.

Financial Planner

A Certified Financial Planner is one which has a degree of CFP (Certified Financial Planning) and it authorized by government to do so. A Financial Planner will help you to manage all of your money related issues such as debt management, long term investing, Tax Planning, Insurance Planning and many others.

Thus, all of the above are the different things. You Should take advice only from the Broker or the Financial Planner and not from the Agents.

ICICI Pru Pinnacle Review

Here is one more Unit Linked Pension Plan (ULIP) in India. As you know that I hate ULIPs and I will show you later on in this article that why I hate it. Insurance and Investment is the worst combination that investors do. Now, let us first of all discuss that What ICICI Pru Pinnacle really offers and why you should not buy it?

Let me tell you that what’s new in Pinnacle. Well, this fund guarantees you the highest NAV on daily basis, in the first 7 years of the fund. Here is what exactly the fund offers.

In this product, the fund will guarantee the highest Net Asset Value (NAV) recorded on a daily basis, in the first 7 years of the fund, subject to a minimum of Rs.10. The guarantee will be applicable only at maturity. The period of 7 years starts from the date of launch of Pinnacle Fund and will end on the completion of 7 years . (24th Oct 2009 to 24th Oct 2016).

How Does the Policy will work?

Well, in this policy, first of all you will have to select the premium amount and sum assured for the policy. From this they will deduct the premium allocation charge and the rest of the amount will be invested in the Pinnacle fund which will primarily invest your money in equity for the growth.

You will have to pay the premium for the first 3 years only. Now, I have gone through the Brochure of this scheme but they have not mentioned anywhere that how much premium charge they will deduct and how much money will go towards the long term investing. Sounds like an opaque fund.

See the above illustration given in the brochure of the scheme. According to the illustration, A 35 years old male is paying Rs.3 Lakh of Annual Premium for 3 years. The term of the policy is of 10 years and the Sum Assured is Rs.15 Lakhs.

Now, after thee 10 years at the rate of 6% p.a. and 10% p.a., he will get Rs. 11.62 Lakhs and Rs.16.22 Lakhs respectively.

Now, What I don’t like about the policy is the sum assured. Well, for paying Rs.3 Lakh of annual premium, you are getting just Rs.15 Lakh of the Life Insurance Cover. While in case of any Term Insurance Policy, by paying just Rs.20,000 every year you will get a life insurance cover of Rs.75 Lakhs.

So Which is better? And you can invest the rest Rs.2,80,000 in some good equity diversified mutual fund and if we assume that the fund will give you just 10% annual return, you will still end up with Rs.20 Lakhs after 10 years (If you invest Rs.2.8 Lakhs for first 3 years in the fund and than stop investing in it). Now, the ICICI pru Pinnacle will give you just Rs.16.33 Lakhs after the end of 10 years and the the life insurance cover of just Rs.15 Lakhs.

Now, just think that if you will die than do you think that your dependents will survive on the Rs.15 Lakhs only? I don’t think so.

The only problem with ULIPs is that they don’t provide much life insurance cover. Even after buying ULIPs, you will have to buy one more term insurance policy to cover your life insurance. Because Rs.15 Lakh of Life Insurance is not at all sufficient.

So in my opinion, you should go for Term Life Insurance + Equity Diversified Mutual Fund Combo. Rather than paying Rs.3 Lakhs of heavy annual premium to buy just Rs.15 Lakhs of Life Insurance Cover and get Rs.16 Lakhs after 10 years, it is advisable to pay Rs.20,000 every year to buy Rs.75 Lakhs of pure term life insurance cover and invest rest of the money in 2 or 3 good equity diversified mutual funds.

What Do You Think?…..

SBI GETS Review: Gold Investment in SBI

Let us today review the SBI Gold Exchange Traded Scheme (GETS). SBI GETS is the Gold ETF which primarily invest in physical gold and its 1 unit (NAV) tracks the price of 1 gram of gold in real time. Thus, the price of 1 unit of SBI GETS will be that of 1 gram of gold on that day.

The main purpose behind launching this scheme is to attract the investors who want to invest their money in gold. So Why SBI GETS and not the physical gold?

Well, this is because the physical gold has 3 main disadvantages.

- Safety & Security Issue
- Purity Issues
- Wealth Tax

If you want to invest in physical gold means in gold coins and bars than the above 3 will be the main concerns about the physical gold. But the advantage of SBI GETS is that, it’s the Paper Gold also known as Demat Gold.

The paper gold does not have any purity or safety issues. And more over, it does not attract any wealth tax. While owning a physical gold above certain limit attracts the wealth tax.

The Capital Allocation on SBI GETS is as follows.

- Gold and Gold Bullion – 90-100%
- Money Market Instruments – 0-10%

SBI Gold ETF Versus Other Fund House ETFs

What is the difference between the SBI GETS and the gold ETFs offered by other fund houses? Kotak, Benchmark and Reliance also offer the same kind of ETFs than what is the difference? Well, there is not a dime of difference between them. All the gold ETFs work on the same fundamentals.

I have invested in Reliance Gold ETF. Should I Exit from it and shift to SBI GETS?

Many people ask me this question. Well, if you have already invested in one ETF than there is no need to shift to another ETF. This is because ETFs don’t function like Equity funds where they have to chase the benchmark and the peers. Here the Gold ETF has to provide you the value that gold offers you.

When you invest your money in Gold ETF, the fund manager will invest that money in physical gold and gold bullion market. That’s all. So the NAV will fluctuate according to the price of gold in the world market. That’s all.

But well, if you have never invested in Paper Gold than SBI GETS can be a good fund to start investing in Gold.

Gold Investment Tips for Dummies

Gold is the most precious asset class in the world. And any portfolio should have a gold allocation in it. However, there are certain tips that you should know before investing in gold and this article is all about the gold investment tips for people who have never invested in gold and want to start investing in the gold.

Never Invest More than 10% of your Total Portfolio Worth in Gold

Many people ask me that, in the last 5 years the gold has outperformed the equity so should they shift their all of money invested in equity to gold for better returns? Well, No. Doing this will be a fool’s plan. The gold price has appreciated so much because the US government has printed literally trillions of dollars in the economy and this newly printed money has diluted the purchasing power of the existing money and because of this the gold price has driven to sky high. If we see the past 400 years of gold price movements than the gold has just beat the inflation in the long run.

Remember that gold is not for the capital gains. It can just maintain the purchasing power of your money by beating the inflation. But it does not provide any capital gains. So never invest more than 10% of your overall portfolio net worth in gold. For the Capital gains, Equity is the only asset class which provides highest returns in the long run.

Gold has no utility while businesses provide employment and serve the economy

Investing in a gold is a good idea. But always keep in mind that Gold is never superior than businesses and human beings. Of course gold is more valuable than the printed money. Because the more money the governments and central banks around the world print, the more dilution of the purchasing power of the money occurs.

The main limitation of gold is that the gold does not have any utility. While Businesses have utility so Businesses add more value in the life of people than gold. Except jewellery and in some fine machinery, gold has no utility at all. So Why this philosophy is important to understand before investing in gold?

Well, because suppose if you have a gold worth of 1 million dollars and a business worth of 1 million dollars than which is better? Of course, the value of both your business and gold is the same but still the business is more valuable than gold. Because it provides you a steady income, creates the employment in the economy and adds the value in the life of people.

Just tell me that how much time you can live on a gold having worth of 1 million? Not infinitely right? But you can live on your business having the same value for hundreds of years.

When you invest in Equity, you are investing in businesses but when you invest in gold, you are investing in something which has no utility.

Physical Gold Versus Demat (Paper) Gold

There several ways to invest in gold. The commonest ways are physical and demat or Gold ETFs. The advantage of investing in Demat gold is that, you don’t have to worry about its security and wealth tax. Because there is no issue of purity, security and wealth tax in case of demat gold. While in the physical gold, you will have to worry about all the 3 things.

So keep in mind the above 3 facts before investing in gold and you will never fail in gold investing.

Investing in Gold Coins in India

Gold is the most precious asset class for the Indians since past several hundred centuries. Since thousands of years, Indians primarily invest in gold. And in the recent past, because of the US Government’s money printing activities, the gold price has driven to the sky high.

There are several forms of investing in gold in India. Out of which one way to invest in gold is the Gold Coins. You can invest in gold coins only for the investment purpose or for making the jewellery in the future.

Gold is extremely important for Indian Weddings. Now, let me tell you that How to Buy Gold Coins in India?

Well, now a days not only the jewellers but also the banks offer the gold coins. You can go to SSBI, ICICI or HDFC Bank branch in your local area and buy a certified gold. I personally buy Gold Bars and Coins for the investment purpose fro ICICI bank or HDFC Bank local branches near me.

And My experience of buying gold coins from the Banks is relatively good than buying from the jewellery shop. This is because it’s easy and convenient to buy a gold coin from your local bank branch.

Remember that Gold is a good asset class to diversify your portfolio. But the over all portfolio allocation of gold in any portfolio should not be more than maximum 10% of the total portfolio net worth. What many people do is after watching the tremendous appreciation of the gold in the past few years, they are shifting their equity holdings in the gold for good profit. But this is the false strategy.

We have a past proven data of several hundred years that equity has outperformed any other asset class in the long run. So never invest more than 10% of the overall value of your portfolio in the gold.

Pros and Cons of Investing in Gold ETF in India

Gold ETF are also known as Gold Exchange Traded Funds. There are certain advantages and disadvantages of investing in Gold ETFs in India. In this article I will explain you those pros and cons about investing in Gold ETF in India.

There are several advantages of investing in Gold ETF rather than Physical Gold. The one commonest advantage is you don’t have to fear about the security of the gold if it is a Demat Gold (Gold ETF). Another advantage is that the demat gold is the weightless while the physical gold is of heavy weight. And the third advantage is that the gold etf don’t attract the wealth tax because you actually don’t own the gold in the physical form.

Now, this is very important. The physical gold will attract the wealth tax above the certain limit. But the demat gold will not attract the wealth tax at all. This is the main advantage of owning a gold in the paper form.

Ok. So now let us discuss the disadvantages of the Gold ETF fund. Well, the only disadvantage of gold etf is that the fund management fee. The fund house can chare up to maximum 1% as a fund management fee. So this means that every year, 1% Gold will be eroded from your total wealth. This is the only thing that I don’t like about the Gold ETFs.

But well, if you want to accumulate gold for your daughter’s wedding in future than the gold etfs are the best way to accumulate the small amount of gold regularly over the time.

Investing in Gold Stocks is Different than Investing in Actual Gold

All of you MUST have heard about the Gold Funds and Gold ETFs (Exchange Traded Funds). But very few people know that there is a huge difference between both of them. Gold Funds Invest primarily in the shares of the gold mining companies around the world. They don’t invest in the physical gold. While Gold ETF funds invest only in the physical gold and not in the shares of any gold mining companies.

So in the true sense, Gold Funds are the Equity funds (Sectoral funds) While Gold ETF are the funds which invest in Physical gold.

Now, What is the main difference between investing in gold stocks and investing in the real gold?

Well, Investing in gold stocks means investing in the gold mining company. This means that your investment will fluctuate according to the price of the share of that company and not according to the price of the actual gold. While if you invest the same amount of money in the physical gold than your that investment will fluctuate according to the price of the real gold.

Many people have a false belief that investing in gold stocks means they are investing in the physical gold. But well, this is not the true. Investing in gold stock means you are the equity investor and not the bullion investor. If you invest in physical or demat gold than and only you are the bullion investor otherwise you are the equity investor.

Foreclosure Charges by Reserve Bank of India (RBI)

Many people ask me the Foreclosure/Preclosure charges by RBI. Well, RBI has not set any standards for how much the banks should charge the foreclosure charges. And that’s why different banks can charge different charges from you for the foreclosure of your loan.

Most of the Banks will charge 2% of the Total Loan amount for the Foreclosure charge.

I know that this is much higher and charging this amount on the total loan amount is unfair. But I have received the complaints from many HDFC and ICICI bank loan holders about this and that’s why I came to know that these banks charge this much of higher foreclosure charge.

RBI has not set any rules about how much the banks can charge as a foreclosure/preclosure fees. Now, suppose if your loan amount is too high say for example in crores and you feel that your bank had not told you about such a high foreclosure charges during the time of taking a loan than the best way is to go for The Banking Ombudsman Scheme by RBI.

I have read on several forums that people are highly unsatisfied with the foreclosure charges that banks take from their customers. And there is no maximum limit set by RBI for this.

So better to go with Banking Ombudsman scheme during the time of dispute.

If you have any good or bad experience about Foreclosure of your loan than let me know by commenting on this post.

How to Buy Real Estate with bad Credit?

Do you know that if your credit score (FICO Score) is damaged than also you can buy a real estate with this bad credit. The Bad Credit will not stop you from taking a home loan. But it is just that your lender will ask you a higher interest rate from you because your credit score is not good enough.

If you have recently passed through the Foreclosure or Bankruptcy than your that credit score will stay with you for the next 10 years. But it doesn’t mean that you can not get a mortgage loan. I advise you to go for the mortgage loan after 4 years of your bankruptcy of foreclosure.

If you wait for 4 years than your lender will give you better interest rates for your home loan. Another way to buy real estate with bad credit is that, you simply put 20-35% Down payment and your lender will accept all of your terms. Your lender will also give you the lowest possible interest rate if you put this much payment down. So in my opinion, putting at least 30% money down is a good idea for people with Bad Credit.

According to the laws, you can not file the bankruptcy for the next 7 years once you file it. So in my opinion, you should constantly try to improve your FICO Score. Just stay away from bad debts and liabilities. If possible, don’t use credit cards. Not taking a debt for long term will automatically improve your credit score.

Work hard to earn more so that your financial statement looks cool. The positive cashflow on your financial statement is very important. It will help you to improve your FICO Score.

Thus, This is how you can buy real estate even with a bad or damaged credit.

How to Buy Real Estate with No Money Down?

Real Estate is one of the good investment for those who want to make Capital gains as well as Cashflow income (Rental Properties). However, you can not buy a real estate in one payment and that’s why mortgage loan is MUST to acquire the real estate. When it comes the mortgage loan, Down payment of minimum of 10% is necessary.

However, there are some ways by which you can get approved for the mortgage loan for no money down. Yes, buying a real estate with no money down is possible. But for that your Credit score (FICO) MUST be excellent. Your Credit History MUST be perfect and your Income should generate enough cashflow which can cover the mortgage payments.

Than and only you may qualify for the mortgage loan with no money down. The internet is full of courses and programs which will teach you how to buy a real estate with no money down. But In my opinion, buying a real estate with no money down is a Fool’s plan. You should at least put 10% Down payment.

Because buying a real estate with no money down means the interest rate for the mortgage payment will be high and any change in the interest rate will turn your rental property into a negative cashflow and after that you will have to put money from your pocket.

Most of the real estate gurus will tell you that buying a real estate with no money down is a smart idea. But it’s not. You will end up paying higher interest rate. But well, if you have put 30-40% money down and you have a good FICO score than your bank will ask for you the lowest interest rate for your mortgage payment.

So it is possible to buy a real estate with no money down but my advice to you is that you should not go for it.

How to Invest in Tax Saving (ELSS) Mutual Funds?

You can invest up to Rs. 1 Lakh of Capital in the Tax Saving financial products that come under Section 80C to save the tax every year. And the ELSS or Equity Linked Saving Schemes come under Section 80C. Now, in this article I will teach you that How to invest in ELSS funds?

Well, let me tell you that what most of the people do and after that I will explain you that why you should not do this. Well, what most of the people do is, they rush to invest in ELSS at the end of the financial year means just before 31st March every year. So from January to March is a season of Tax Saving mutual funds in India.

Mutual Fund Distributors make lakhs and crores of commissions by selling tax saving mutual funds. But I advise you to plan your tax saving from the first day of the financial year means from the 1st April. Chose some good equity diversified ELSS fund having a past record of proven performance. If you don’t know how to analyze the mutual funds than the simple way to find the best ELSS fund is go to Valueresearchonline.com and chose some 4-star or 5-star rated fund from that website.

Don’t chose more than 1 Tax Saving fund. 1 ELSS is enough for the purpose of tax saving. I know several people who have collected 4-10 ELSS funds in their portfolios. But well, there is no meaning of it because under Section 80C, the maximum limit for tax saving is just Rs.1 Lakh and most of the people invest Rs.30,000 in PPF which is also a Section 80C tax saving investment. So only Rs.30,000 remains for the tax saving after PPF investments. So 1 ELSS fund will be more than enough.

And on the top of this, Life Insurance Premium and Child Education fees also come under Section 80C so very little left behind at the end for tax saving.

Now, plan your Section 80C investments. I mean take a piece of paper and pencil and write down the various investments that you are going to do for Section 80C. Say for Example,

PPF – Rs.50,000
Life Insurance Premium – Rs.20,000
Mediclaim Policy – Rs.10,000
Child Education Fee – Rs.10,000
Tax Saving Mutual Fund – Rs.10,000

The above is just the one example. You can add many more things in the above example. So This is how you should invest in tax Saving Mutual Funds.

How to Invest Money in Banks?

There are several ways of investing in Banks. If you have school going kids than giving them the education about how they can invest in Banks is very important. This article is all about the various ways of investing in your Banks.

Savings Account

The most commonest way of investing in banks is Savings account. Just visit your nearest bank and open the savings account for you. The Savings account will give you 3-4% interest per annum. In comparison to other financial products available in the market, it is the lowest interest rate. But still for the learning purpose it is good.

Open the savings account in the name of your kid as a joint holder. And every month tell your kid to save and deposit some amount of money from his pocket money. Also give him knowledge of how to fill the cheque and passbook. This will be a very good exercise for him.

Fixed Deposits

Once your child saves some amount of money in the savings account, it’s time to shift that money into Fixed Deposits offer by the bank. The fixed deposits come with lock-in period of 15 days to 10 years and because of this lock-in period, they offer 2-3% higher interest rate than the savings account.

Open the Fixed Deposit and teach your child the power of compound interest. Teach them the importance of start investing early.

Recurring Deposits

This is just like investing some fixed amount of money every month in the fixed deposit. Over the time the small accumulated amount of money will grow into a huge corpus.

Government Bonds

Government Bonds are just like the Fixed Deposits but they offer a little bit higher interest rate than the regular fixed deposits. You can invest in Government bonds via your bank.

Demat Account

Once your child enters into thee High School. It’s time to open the Demat account for him and start investing in the share markets. Stock markets are volatile but in the long run, the risk of the stock market becomes NIL and they give the excellent returns. The Basics of stock market and how it works is very important to understand for your child. Because studies have proved that those who learned the stock market investing in their early life became more financially free and secure than those who did not.

Thus, the above are the few possible ways to invest your money in the bank.

How to Invest Money Like a Smart Investor?

Have you ever think that How Do Smart Investors invest money? Well, there are certain characteristics of a smart investor. I will discuss those characteristics about the smart investor in this article.

The first character of a smart investor is that, A Smart investor never overpay. Yes, no matter how lucrative or hot the investment is, but the smart investor never pay more than the actual value of that asset. Take the example of the stock market. When most of the people buy stocks? Well, most of the people buy stocks when the stock market is going up.

And when the stock market crashes and the shares of most profitable companies are selling at 50% discounted price, they run away. The smart investors do exactly the reverse. Means when the market is up, they stay away from it. And when the market is down, they rush to buy.

Another important characteristic of a smart investor is that they always analyze the financial statement of the company before buying its stock. They never believe in the hot tips. If after analyzing the financial statement, he thinks that the company is really worth to invest in, he will invest.

A Smart investor invest for the long time horizon because he knows that the more time he will invest, the more compound interest will work in favour of him to make him more rich. The Smart Investor never speculate in the market.

Thus, the above are the some characteristics of the smart investor. If you want to become a smart investor than apply all of the above characteristics in your life. Remember that, Investment is not Risky but the Investor is Risky. So Change yourself and be less risky when it comes to investing.

How to Invest in Gold in India?

Gold is the most precious asset class for the Indians since thousands of years. Indians simply love to invest in Gold. India is world’s largest consumer of gold. It consumes every year almost 800 tonnes of gold and out of which 95% Gold is in the hands of Individuals.

In this article I will show you the pros and cons of various ways to invest in Gold in India. By and large, you can invest in Gold in 2 ways in India – Physical and Demat (Paper Gold).

Physical Gold -

Physical Gold is of 3 types.

- Bars
- Coins
- Jewellery

This is the traditional way to invest in gold since centuries. Simply visit to your nearest jewelry shop and you will find all the above 3 forms of gold to invest. Pay money according to the international price of gold for that day and take the gold. It’s that much easy.

However, there are certain disadvantage of investing in physical gold. One commonest disadvantage is fear of safety. Anybody can steal your physical gold and you will have to suffer a financial loss. Another main disadvantage of physical gold is heavy weight. Because of its heavy weight, its really difficult to store it in large volume.

And the third disadvantage is, above the certain limits, the gold attracts the Wealth Tax which is 1% annually. The only advantage of investing in physical gold is that you can make jewellery from it and use it on various occasions like marriage of your daughter.

Demat Gold / Paper Gold / Gold ETFs -

If your sole purpose of possessing a Gold is the Investment purpose than Demat Gold is the best thing. The main advantage of paper gold is that you don’t have to fear about any security of it. It doesn’t attract any wealth tax because you don’t own actual gold and you can sell it in the secondary market at the rate of real time gold in the international market.

And this is the reason why Gold ETFs are very much popular in India. If you want to add a Gold in your portfolio as a new asset class than simply buy some Gold ETF Fund. It’s that much easy. Gold BeEs, Reliance Gold ETF and Kotak Gold ETF are the best Gold mutual funds in India. They will store the physical gold on behalf of you so you don’t have to worry about the physical gold possession security.

Demat Gold is the recent trend of investing in Gold in India.

Thus, this is how you can invest in Gold in India.

How to Invest in Share Market in India?

India is a second largest emerging economy in the world after China and the India is growing like anything. Thus, Stocks are the best asset class for the people who want to grow their money. It is because in the next century, the businesses in India will flourish like anything. Many people in India still don’t know that How they can invest in the stock market. So let me discuss this topic in this article.

Well, you can invest in the Indian Share market in 2 ways. One is the Direct way and the other is the Indirect way. I will discuss both the ways here.

The Direct way of investing in the Indian stock market is, you open the demat account and invest your money directly. There are several brokers and brokerage houses in India. The few examples of reputed stock brokers are ICICIDirect, Indiabulls, Sharekhan, 5 Paisa.com, Angel Broking, Motilal Oswal, Kotak Securities, DBI Demat services and many others…

Just fill the form and submit your passport size photos, identity proof, residential proof and PAN Card copy with the form. And your demat account will be opened. Now a days everybody is providing online demat accounts. So you can buy and sell shares online from your online account. According to me, this is the most convenient way to invest in the stock market directly.

But before choosing the broker, analyze the brokerage charges of every broker. My Demat account is with ICICI Direct which charges 85 paise per 100 rupees of transaction. Which is a little bit higher. On and average brokers will charge you 50 paise per 100 rupees of transactions which is a reasonable price.

Some demat accounts like Reliance money offer packages in which by giving fixed amount of money, you can trade unlimited for a certain time period.

Another way of investing in the Indian Stock market is the Indirect way. Means here you invest via Mutual funds, Pension Plans, ULIPs and other equity linked financial products. Here the fund manager of that financial product will take the investment decision on behalf of you and invest in the share market. The main advantage of this method is that, not the everybody is expert in the stock market. So you can simply divert your money towards the fund manager and he will do the rest for you.

If you don’t get time from your job than you can go for the indirect method of investing in the stock market. Simply choose some good equity diversified mutual fund having a past record of good performance and invest in that fund and go to sleep.

I hope that this much information will be useful to you to start investing in the Indian Share market.

How to Invest in Mutual Funds in India?

Are you a first time Mutual Fund Investor and don’t know how to invest in Indian Mutual Funds? Than this article is for you. This step by step guide will help you to buy a best mutual fund for you.

Step: 1 How to Select a Best Mutual Fund?

The first step of buying a mutual fund is that you have to select a good mutual fund for you. There are so many mutual funds in India that buying selecting a mutual fund itself is a job. So I advise you to first of all visit Valueresearchonline.com website. It is India’s best mutual fund rating agency.

Choose 4-star or 5-star rated mutual funds from this website. The good thing here is that these people have done all the hard work to done the mutual fund investing on behalf of you. You just have to choose 4-star or 5-star rated mutual fund to invest.

The fund rating agencies give every fund the star rating by keeping in mind several criterias such as past performance, performance with benchmark, performance with peers, fund manager, advanced portfolio stats and many more. So you don’t have to analyze all of these things.

Step: 2 How to Buy Mutual Funds Offline?

Well, you can not buy or sell mutual fund units in the secondary market like regular shares. You will have to buy and sell them through the fund house only. There is no other option here. So just search the web with Google and find the website of a fund house which scheme you want to buy.

Once you find the MF website, visit that website and find the nearest branch or customer care number of your city. Visit your nearest branch with required documents and cheque payment and invest your money in the mutual fund of your choice.

Another way to buy mutual funds is that, you don’t need to go to the branch of the fund house in your city. There are several brokers and agents and also the insurance agents do this for you. Just contact your broker or insurance agent and he will do the rest of the procedure for you. Remember that always pay your payment or SIP via Cheque only in the name of that fund house and mutual fund scheme. Never give hard cash money to anyone.

Step: 3 How to Buy Mutual Funds Online?

Now a days, if you have an online demat account than you can buy the mutual funds online with your online demat account. Sharekhan, Indiabulls, ICICIDirect, Kotak Securities, SBI Online Demat, Motilal Oswal and many other brokers offer online demat services. You can place your MF purchase order online and invest in mutual funds online.

Thus, this is how you can invest in mutual funds in India.

Should I Buy Mutual Funds with my Credit Card?

This is one of the commonest query about mutual fund that people ask me via e-mail or phone. Many of my friends ask me that they have missed one or two SIP payments so should they use their credit cards to pay their SIP? or should they buy mutual fund units with their credit cards?

Well, Are you NUTS?…???

Buying Mutual Funds with Credit Cards or paying SIP with credit cards is a Fool’s Plan.

Well, honestly speaking, don’t treat your SIP payments like loan EMIs. They are not mandatory. It is good if you can pay your SIP regularly and with discipline. However, it is not mandatory like your Loan EMIs.

The main purpose of mutual funds is the investment of your money. And borrowing money from your credit cards at 30-50% annual interest rate to invest it in mutual funds to get 15-20% of annual return on your investment is not at all a good idea.

In general, borrowing money to invest it is not a good idea. Either you should save money for the long term investing or you should forget investing. But in no way, borrowed money should be used to buy Mutual Funds or any other investments.

This is a very basic fundamental of investing. Warren Buffet is world’s second most richest person and the legendary investor. And he had never borrowed money to do any investments. And that’s why he is rich. According to him, “Nobody ever goes broke who doesn’t owe money”. And he is very right.

So never borrow money to buy mutual funds.

Buying Used Cars may be a Wise Financial Decision

What Do you think that buying used cars can be a wise financial decision? I know that most of you will say that buying a second hand car is not at all a wise financial decision right? But well, this is not the truth. Buying used cars can be a wise financial decision.

In fact, around two thirds of the millionaires from all around the world own a second hand car according to various studies done on the millionaire households. This is because most of the millionaires think that a newly bought car will lose more than 60% of its value within first few years from you buy it.

So if you buy a second hand car than somebody else will already suffer that 60% financial loss. And this is the reason buying a used car can be a wise financial decision.

Now, you will ask me that but I love cars. And if everybody in the world will buy second hand cars than what about enjoying the life? Well, I am not against the new luxurious cars. I am just saying that buying luxurious cars from your hard earned money (Paycheck) is not a good idea. Most of the people take a loan and buy a luxurious car and after that pay their car loan payment from their monthly paycheck or hard earned money.

Now, what if you will suffer a job loss or financial downside? Well, in that case you will have to compromise with that car. Than how the true rich people buy those luxurious cars? Well, the true rich people first of all work hard to create and grow their assets (Business & Investments) and once their assets will be grown, their assets will start throwing passive income for them.

And Rich afford all of their luxuries from Passive Income. Yes, So even if rich stop working someday, the passive income from their assets will afford all of their luxurious cars and other things.

This is how rich think.

How to Buy a Car like a Millionaire Way?

Do you know that how most of the millionaires in USA and worldwide buy a Car? I know that what’s going in your mind. You MUST be thinking of luxurious sports cars in your mind right? But well, this is not the truth. According to one survey done over 3.5 million US Millionaire households, more than two thirds of millionaires had 3-4 years old second hand cars.

Well, yes. this is really a truth. This is because most of the millionaires in that survey told that they don’t like to buy something which rapidly depreciate in its value over the time. A newly bought car will loose more than 60% of its value within first 4 years you buy it. So why not buy 3-4 years old car when someone else has already suffered a depreciation?

And this is the logic why most of the real US millionaires buy second hand cars. So now you will ask that than what about those luxurious cars on the roads? Who drives those luxurious cars? Well, the upper middle class. The upper middle class people buy luxurious cars to look cool and rich. They just look rich but their financial statement shows something different. On their financial statement, they are full of liabilities and deep in debt.

These people work hard to fuel their luxurious lifestyles. But in reality they are not rich but they are deep in debt. So you will ask me that than millionaires and multi-millionaires never buy those luxurious cars? Well, yes. They buy. But they never buy a car which is more than 1% of their net worth. Another important thing is that true rich and wealthy people first of all develop assets and afford all of their luxuries from the passive income from their assets. This is the main difference between rich and everyone else.

The middle class people buy luxurious items from their active income (Paycheck and hard earned money) while rich people work hard to develop Assets (Businesses, Investments, Intellectual Properties) and later on those assets throw passive income for them and rich afford everything via their assets.

So Just tell me that Do you buy a Car like a Millionaire Way?…!!!

How to Buy Mutual Funds Online in India?

You can buy mutual funds directly from your fund house or buy it online. Yes, it is possible to buy mutual funds online. But for that you MUST have online demat account. Now a days every broker offers online demat account services. So just open online demat account with some good broker.

I personally use ICICIDirect.com demat account. So i will show you here that How do I buy mutual funds online from my demat account?

Once you will login into your ICICIDirect account, click on the “Mutual Funds” Button. You can see in the above screenshot various options to buy and sell mutual funds. Now, see the upper most option of the left sided first column. It is “Purchase / SIP”.

So first of all decide that weather you want to invest lump sum amount or you want to start SIP. Here I will show you that How to do SIP online with your demat account in any mutual Fund. Click on the SIP button and you will be redirected to the next page.

See the various options above in the screenshot. Now, click on “Create a Systematic Investment Plan”.

Now, see the above screenshot. Choose the fund house which you want to buy. And after that choose the mutual fund scheme.

Say for Example, in the above example, I have chosen the Canara Robeco Equity Diversified mutual funds. There are 4 MFs in this category. Now click on the SIP button of the fund in which you want to start SIP.

Now, see the above screenshot. Fill all of your SIP details online and click on “Proceed for Confirmation”.

You Are Done…!!!!

Yes, it’s that much easy. Buying mutual funds online is this much easy. If you have online demat account other than ICICIDirect than also the procedure will be the same. It can be Sharekhan, Religare, Indiabulls or any other broker. You can buy mutual funds online just like the same way.

How to Buy Mutual Funds in India?

Mutual Funds are the best investments for those who don’t get time from their jobs and professions to analyze and manage their investments. In this article, I will show you that How to Buy Indian Mutual Funds?

Well, there are basically two ways to buy mutual funds in India. One is you directly buy it from the fund house. And the other is you buy it from your Demat Account via your broker. Remember that you can not sell your mutual fund units in the secondary market to other investors like shares. You will have to buy and sell the units from the fund house only.

How to Buy Mutual Funds Directly from a Fund House?

Let me clarify you here that you don’t require demat account to buy mutual funds. If you want to buy shares than the Demat account is MUST. But in case of mutual funds, demat account is not mandatory. What you can do is, you can search the Google for the website of any fund house.

Say for Example, in the above screenshot, I have searched for Reliance Mutual Fund. Now, go to the website of Reliance Mutual Fund (Or any other mutual fund) and look for nearest branch in your city. Take the contact details or customer care number of your city and call the customer care executive.

The Customer care executive will send you the representative to your home or alternatively you can visit your nearest branch and fill the form and buy mutual funds/

How to Buy Mutual Funds from Demat Account?

Another way to buy mutual funds is from your Demat account. Just call your broker or open your online demat account (If you have) and buy mutual funds from your demat account.

Thus, both of the above are the 2 possible ways to buy mutual funds. Once you buy the mutual fund units, you will have to redeem it with the fund house only. You can not sell your MF units to another investor in the secondary market just like shares.

However, ETF (Exchange Traded Mutual Funds) are the funds which you can buy and sell in the secondary market.

How to Buy Shares in India in easy way?

Do you want to invest in the Indian Stock Market? But don’t know how to buy shares in India? Than this article is for you. I will show you in this article that how you can by shares in India the easy way. Well, before 1995, it was possible to buy physical shares but after that Government off India has strictly banned this practice. So today you can not buy shares in physical forms or sell your shares to anyone directly.

Whenever, you want to sell your shares, the Bank/SEBI/Broker has to interfere. Today the shares are traded only in the DEMAT Forms. Demat is a short form of Dematerialization. It means that the shares are now in the paperless digital forms. So you need to open the Demat account to buy and sell shares in India.

Demat Account is compulsory for buying and selling shares. Without having the demat account, you can not buy the shares. And if you have old physical shares in your possession than first of all you will have to convert them into Demat form and than and only you can sell them.

How to Open a Demat Account?

Well, there are several brokers and banks which offer demat account services in India. Few reputed brokerage companies are ICICI Direct, Kotak Securities, SBI Demat, HDFC Securities, Sharekhan, Indiabulls, 5Paisa.com, Angle Broking, Religare, Reliance Money, Motilal Oswal..etc… These are just the few names. There are literally hundreds of such kind of brokers in every city of India.

First time, you will have to fill the long tireding form. I remember that when first time I opened my demat account with ICICI Direct, they took around 35-40 signs from me on a 50 page form. Yes, the Demat form is very lengthy to fill.

The recommended documents to open the Demat Account are PAN Card (MUST), Identity Proof, Bank account details and Residential proof with 6 passport size photographs.

Online Demat Accounts -

Previously, if you want to buy shares than you will have to call your broker and your broker used to buy shares from your demat account from his terminal. But now, every broking house offers the online demat services. They will provide you username and password. And just like opening your Gmail or Facebook account, you can access your Demat account online in split of seconds and buy shares from it.

In offline method, you will have to write down a cheque to your broker and the cheque will take 1-2 days to clear. But in the online form you can transfer funds from your savings account to demat account with just few clicks away.

Brokerage Charges -

Every brokerage house offers you different brokerage charges. So you should first of all cheque the brokerage charge before opening the demat account. I have account with ICICIDirect.com and they charge 85 paise brokerage fee for me which is a little bit high.

But many other brokers charge just 50 paise per 100 rupees of brokerage fee which is fairly reasonable. Recently because of the competition many brokers charge just 20 paise per 100 rupees brokerage chare for delivery of the shares and just 5 paise per 100 rupees for trading. Which is very low and affordable price.

So check the brokerage charges before opening the Demat account. I hope that this much information will be useful to you. And from this information I am sure that you will be able to buy Shares in India in easy way…!!!

How to Download and Fill Reliance Mutual Fund SIP Form?

There are basically two types of Reliance Mutual Fund SIP Forms available. You can download them from the following links.

Reliance SIP Enrollment Form (Download)

Reliance SIP Cancellation Form (Download)

Now, let me explain you that how to fill these forms and which are the requirements with this form?

You will have to fill the name of the applicant with the proof of your PAN Card. You will also have to fill the folio number of your mutual fund scheme in which you want to start the SIP.

Now, go to the bottom section of the mutual fund. Select your payment mechanism. Weather you want to go for Cheque Payment option or with ECS Auto Debit Facility? In any case, you will have to make your first payment with cheque so write down the cheque number and after that the subsequent payments will be debited through your bank account with ECS facility.

This single page form along with the PAN proof and first cheque of SIP payment are the 3 basic requirements to start SIP in the Reliance Mutual Funds.

Now, What if you want to Cancel your future SIPs?

Well, first of all download and print the SIP Cancellation form (see the above screenshot). Fill the details of your SIP amount, Folio number and MF Scheme. Also fill your bank account details from which you have started ECS. And sign at the end and submit it to any Reliance outlet.

At the bottom of the form there is a slip. Keep it for the future purposes. The slip is a proof that the branch officer has accepted your request to cancel the SIP.

So this is all about Reliance Mutual Fund SIP and SIP Cancellation. If you have any query than ask me by commenting on this post.

Financial Planning and Analysis Jobs in Bangalore

According to the various surveys, Bangalore is the city of India which has highest number of HNIs (High Net Worth Individuals) and that’s why the financial planning, portfolio management services (PMS) and wealth management industry are flourishing in Bangalore.

And there are lots of Financial planning and analysis jobs in Bangalore. This is because wealth management and portfolio management companies need the certified Financial planners and people who are expert in investment analysis and the financial planning.

So if you are in Bangalore and passionate about the Finance field than you have a good job opportunity in Bangalore as a Certified Financial Planner and analysts. Many Banks need this skill.

However, in my opinion, if you are intelligent and confident enough than you should start your own Financial Consultancy business rather than doing a job in Bangalore. It will take a time to develop a list of HNI clients but owning your own business is worth it in the long run rather than owning a job.

The Financial planning is a huge industry. And the Bangalore is full of software professionals who don’t have time from their day to day work to manage their personal finances. And this is the reason why financial planning firms are growing in numbers in Bangalore in the past few years.

If you can provide true value to the clients than there is a big opportunity in this market. So what are you waiting for? Start working on this idea…!!!

Are Best Stock Tips Really Worth?

I am from Ahmedabad, Gujarat. And people of Gujarat are very much passionate about stock market investing. This is because since my childhood, I am seeing many people who have made their fortunes from the stock market. But well, there are some disadvantages also.

The commonest disadvantage is many financially illiterate people are searching for “Best Stock Tips” or “Hot Stock Tips”. And you will find every Tom, Dick and Harry telling you the best stocks hot tips in Gujarat. In fact, me and many of my friends have lost lots of money behind such kind of hot stock tips which were so hot that they burned my Bank Balance…!!!!

I remember that when I started investing in the stock market when I was in my Second MBBS, I met so many so called stock market gurus and financial advisors and I invested in virtually every stock market hot tip and lost almost all of my money.

So the question is that, Are such kind of tips really worth?

Well, The truth is that they are not. If they were so much worth and trustworthy than why someone would tell you such a profitable stock tips for Free? In they were true than why not the person who tell you such nonsense tips make money from it?

So in my opinion, there is nothing like best stock tips in this world. You will have to analyze the stocks by yourself or consult the certified financial planner or some reputed stock broker who can advice you about investing in the stock market.

If you are willing to invest your time than the best thing is to do it by yourself. And if you don’t have a time to invest in the stock market by yourself because of your job or a profession than the simple and easy way is to divert your money on some equity diversified mutual fund.

But you should control your Greed. The Stock market hot tips have never made anyone rich and financially free. And even if you make some profit from such kind of tips, it is next to impossible to sustain this profit for the long time horizon. And the key of becoming successful in Investments is that, your investments should generate consistently above average (Or at least Average) returns in the long run.

So forget about Best Stock market tips…!!!

Which Are the best Stocks to Buy in India?

Let us today discuss about the best stocks to buy in India. But well, don’t expect from me that here I will give you a list of 10 bluechip stocks and recommend you to invest in those stocks. When it comes to stock market tips, most of the brokers and so called financial experts do the same.

And the commonest bluechip stocks in India are Reliance Industries, TCS, HDFC, SBI, ICICI, BHEL and Infosys. But well, this article is not about giving you a spoon faded list of best stocks to buy in India. But in this article, I will show you that how you can find best stocks in India?

Well, there are several methods of searching the best stocks. One simple and straight forward is, you learn to analyze the financial statements. The Intelligent Investor book by Benjamin Graham is the best book to learn about how to analyze the financial statements. But well, this advise sounds really good but the problem is that practically it is not possible to follow for most of the people. Because most of the people in India don’t get any time from their job or profession to learn all these things and even after learning, analyzing the financial statements of each and every company of India on quarterly basis.

If you can give this much time than it is the best way to pick best stocks at right time. The second way to find good Indian stocks is, go to Valueresearchonline.com and find the list of 5 star rated equity diversified mutual funds. Now, analyze the portfolios of such mutual funds and also watch for the top holdings of such mutual funds. See the below screenshot.

The above is a screenshot of the portfolio of one 5-star rated equity diversified mutual funds. The above are the top holdings of that mutual fund. You can see that Reliance, ICICI, Infosys, TCS, ONGC, SBI, BHEL and ITC are the top holdings of the above fund.

Now the above is a large cap fund so you will find large cap stocks in its portfolio. But if you want to invest in midcap stocks than analyze thee portfolio of some 5-star rated midcap mutual funds.

Well, The main limitation of this strategy is that, you don’t know here that when the fund manager has bought these shares and when he will exit from these shares. This method is only to give you some rough idea about which stocks are popular in the fund managers.

Now, let me discuss here the third method of finding best Indian Stocks. Go to Moneybhai.com and see the top players portfolio.

The main advantage of Moneybhai.com is that, it is the virtual stock market game which tracks the real time prices of the Indian stocks. See in the above screenshot the top most holdings of the best portfolio. Here the top holdings are Valecha Engg, Novopan, First Winner and Surana Corp. You may not have heard about any of these stocks. But they have given the excellent returns in the past.

So What you can do is, make a list of these stocks and analyze these companies or ask your broker about the past history of these companies and take the investment decision.

Thus, this is how a dummy can also find best stocks to buy in India. If you have any more queries than please ask me by commenting on this post.

Which Are the Best Stock Brokers in India?

India is full of Stock brokers. And we don’t have any comparison chart of reviews of various brokers. And that’s why it is very difficult to find out that which broker is the best stock broker for you.

There are several brokerage companies like ICICIDirect, Sharekhan, Angel Investors, Motilal Oswal, HDFC Securities, Kotak Securities, Indiabulls, 5Paisa.com, Reliance Money and many more. However, which broker is the best is really a difficult task.

I personally use ICICIDirect.com for investing in stocks and mutual funds. And I am quiet happy with its performance. But well, if you are a day trader than ICICI Direct is not for you because it doesn’t provide live terminal. And another thing is that their brokerage charges are little bit higher.

Another good broker is the Sharekhan. Few years back, I had trading account with Sharekhan. They provide the live terminal as well as regular reports and stock recommendations via e-mail. Now, this is great. If you are a newbie to the stock market than such kind of reports can help you to take the informed financial decisions.

Reliance Money is costly. If your trading volume is low than Reliance Money is not for you. In my opinion, go for Reliance money only if you have a large trade volume. Than and only it will be cost effective.

I am from Ahmedabad and many of my good friends have a nice experience with Angel Broking. And they have given me the nice review about Angel Broking. They also provide you the good stock recommendations for the investments. For old customers, they have only 20 paise brokerage charges (One of my very close friend told me this). Now, this is really cheap in comparison to 85 paise with ICICIDirect and 50 paise with other brokers.

In my opinion, you should check the brokerage charges and the online services first before selecting a broker for you. Because these are the two important criterias to select a best broker for you in India.

Anyways…I Hope that this much information will be useful to you. If you have any good or bad experience with any Indian brokers than let me and other readers of this blog know by commenting on this post.

How to Find Best Mutual Funds to Buy?

There are literally above 700 mutual fund schemes in India. But which fund to choose is itself a job. Because the market is full of different kind of mutual fund schemes. There are several categories of mutual funds in India so which category MF you should choose is also a job.

In my opinion, if you want to build a Mutual Fund portfolio than its composition should be like this.

- Equity Diversified Mutual Funds – 2 or 3

- Debt Mutual Funds – 1 or 2

- Tax Saving (ELSS) Mutual Funds – 1 (Because the maximum limit for tax saving under section 80C is just Rs.1 lakh)

So now you understand the basic construction of your portfolio. Now, the second part is how to find best mutual funds in all of the above 3 categories means Equity Diversified, Debt and ELSS?

Here the concept of Mutual Fund rating comes. All of this job is of Mutual Fund rating Agency. A MF rating Agency will give the star rating to all the mutual funds according to its past performance, investment style and many other factors. But unfortunately, there are literally half a dozen fund rating agencies in India that finding a good MF rating agency again is a job. I mean which fund ratings you should believe and which you should not?

I don’t know about the other fund rating agencies. But I personally like the Valueresearchonline.com very well. I personally visit Valueresearchonline to select 4-star or 5-star rated mutual funds to buy. I like Valueresearchonline because their fund ratings are based on the transparent criterias. If you want to follow just 1 fund rating agency than follow valueresearchonline.com

Anyways…So I hope that this much information will be useful to you to find a best mutual fund for you.

Which is the Best Mutual Fund for SIP?

Do you want to know that which kind of mutual funds are best mutual funds for the SIP? Well, in my opinion, Equity Diversified mutual funds are the best mutual funds to start SIP. This is because the SIP works best with Equity. SIP means Systematic Investment Plan and the SIPs are mainly designed for investing in the Equity.

Because of SIP, you will buy less units when the market is up so you will stop over paying and you will end up with buying more units when the market is down. In the real life, people do exactly reverse and that’s why they suffer the financial loss. SIP imparts the discipline in your life. And that’s why SIP works well with the Equity Mutual funds.

SIP also works best with the Gold ETF mutual funds. Now, the next question is that which mutual funds are best to start SIP? Well, the list of best mutual funds keep changing every few quarters so I advise people to visit Valueresearchonline.com and find some good 4-star or 5-star rated mutual funds and start doing SIP in these finds.

Selecting the mutual funds from fund rating agencies make your job easy. Once you start SIP in some good 4-star or 5-star rated equity diversified mutual fund than monitor the fund ratings of your portfolio every 6 months. No need to check it on the daily basis. What most of the investors do is, they check the fund ratings on the daily basis. But well, these are not the stocks but the mutual funds so nothing will happen to it overnight.

What I advise to people is that, start investing as early as possible via SIP route. Because the earlier you start, the more compound interest will work in favour of you to make you richer.

Which Are the Best Mutual Funds to Invest in India?

The list of best mutual funds in India varies every year. This is because of the several factors like fund manager, performance, change in investment style of the fund and many other factors. In this article I will show you that how you can find the best mutual funds to invest in India?

Well, there are literally hundreds of mutual fund schemes in India. So which scheme to select for the investment is itself a job. Thanks to mutual fund rating agencies which have made our job easy. I will show you in this article that How I personally find the best mutual funds to invest in India.

Well, I personally use the Valueresearchonline.com to find the best mutual funds for me. These people give every mutual funds from NR (Not rated) to up to 5 star ratings. So you just visit the website and choose 4-star or 5-star rated mutual funds to invest. It is that much easy. No need to consult and financial advisor or financial planner to select the best mutual fund for you.

First of all visit the website and go to the bottom of the home page. You will find the “Fund Selector” section. In the fund selector section choose the type of fund you want to invest. Say for example in the above example, I have selected Open Ended, Equity Diversified Mutual funds having a past return of minimum 3 years with 5 star rating. Now click on the “Get Data” button.

Now, see the above screenshot. Once you click the “Get Data” button, you will be redirected to the list of 5 star rated equity diversified mutual funds. Now, select 2 or 3 mutual funds from the above list and invest your money in that funds.

This is how you can find the best mutual funds to invest in India. Valueresearchonline has made your job to find best mutual funds for you easy. Now, every 6 months, check the star ratings of your mutual fund. If it drops from less than 3 stars, than its time to exit from that fund and invest in new fund.

You can choose the 4-star and 5-star rated mutual funds in any categories by using this tool and build your own mutual fund portfolio.

Website Flipping: When is the Right Time to Sell Your Website?

Website Flipping is the hottest money making opportunity on the internet. Now, the question is that when is the right time to sell your website and for how much? Well, there are several reasons to sell the website and the commonest trend is that when your website becomes worth of thousands of dollars, sell it.

I have closely analyzed the Flippa.com and Sitepoint.com marketplace and I have also analyzed several deals. Most of the websites sold for between US $ 500-10,000. Well, now in my opinion, if you have developed some small site and sell it for few hundred bugs than it is alright. But according to me, you should not sell your website until you think that after selling your website you will become financially free for the rest of your life.

Yes, if after selling your web business you can’t become financially free than there is no meaning of selling that valuable web property. After all why did you work so hard to develop a website/blog which attract literally thousands and hundreds of thousands of people every month and generate a steady cashflow for you?

Many Internet entrepreneurs think that after selling their one fortune, they will invest that money in the other fortune and again sell it for huge profit. But well, honestly speaking, the chances of doing this are very slim. There are very few people in this world who have successfully developed another successful venture after selling the first one.

So today suppose if you think that after selling your website, you will become financially free or there are very less years left in your life to enjoy than and only sell your website. If you have not crossed that mark of financial freedom than it’s not the right time to sell the website.

Another common mistake many entrepreneurs do is, they start several websites simultaneously at once hoping that all of them will be authority websites in their Niche but well, this is not the truth. Rather than that if you focus on developing only one website than it will grow to such a level that you can sell it for millions of dollars from that level. But it’s the human nature that it wants to do several things at a time.

Thus, in my opinion the right time for selling the website is only when if you think that you will be totally financially free and will no longer have to work for the rest of your life. Of course, you can continue working after the financial freedom. There is nothing wrong in that. But the key factor for selling your fortune is the Financial Freedom…!!!

Earning Money and Managing money both r entirely different skills.

Because of bad spending habits of youngsters , developed countries like USA and europe emphasise more on Financial Literacy in children.

so it is a good practice to teach your children about savings and investing as early as possible.

Teach by playing Games -

Financial Literacy through games is always a good option.
you can teach your child about money management by investment through board games.

2 most popular games available r CASHFLOW 101/202 & MONOPOLY

Cashflow is all about collecting and payment of rent plus knowledge about Assets and liabilities.
it also gives the knowledge about financial statement, good debt and bad debt.
you are a winner of game if your monthly passive income becomes twice than your monthly expense.

The game Cashflow has broken all the records of MONOPOLY.

MONOPLOY is a same game like cashflow quadrant . its also about collecting and paying rents and abour good property deals.

both of these board games teach financial literacy to your children in a very cost effective manner.

give your child a birthday gift of these games instead of some unuseful costly things.

both of these game have online versions.

Another game is "the game of life". it also teaches you financial literacy.
the uniqueness of this game is that the child actually thinks long-term and gets a sense of the ups and downs in life.

There are several online games also.

A popular link is,

www.practicalmoneyskills.com/english/resources/games/

it has around 5 games that teach you financial literacy.

Different Exercise for Growing Child -

if your child is in high school than he is older for these kind of games.
so you have to try some real life techniques to teach him financial literacy.

open a savings account of your child in a bank and ask him to save money from his pocket money.

also teach him the basic principals of Mutual Funds and stock market investing.
let him start the minimal SIP (Rs.500 per month) in Mutual Fuds.

let him see growing his money.
this will teach him that noboday can become crorepati overnight.

tech him compound interest.

if your child want a bicycle than just don't go and buy it.

your child will become a weak and needy for money.
instead teach him how to save money.

ask the child to save money every month for 6 months from his/her pocket money.
than set a target that if he/she needs a bicycle at the end of six months, how much he/she has to save every month to reach that target.

if your child reaches that target in definite time, you can reward him with one time bonus as an incentive. this will motivate him to save even more.

Financial Literacy is very important for young children.
as once they develop bad expensive habits. it is difficult for them to save money and become financially independent.

so teach them young....!!!!!!!!

How to Sell a Website for Profit and Determine it’s Worth?

Websites are the virtual real estates of the Internet. Owning a website is exactly same like owning a piece of real estate or rental property in the real world. And as your house, real estate or rental property has value, your website also has value. You can buy and sell your website for a profit (or a loss) just like your home or any other kind of real estate.

Now, the question is that How to sell your website for profit and where to sell it? I will explain you in detail in this article about both of these questions. First of all let me tell you that which are the online market places where you can sell your web properties. The best places to sell your website on the internet are Flippa.com and Sitepoint.com

Now, let me tell you that how you can sell your website for a huge profit? Well, see. It’s simple. The more value your website/blog adds into the life of people around the world, the more web traffic it will attract from the search engines and directly from visitors and the more revenue it will generate and more valuable it will become.

So if you are the owner of some kind of website or a blog than I advise you to first of all create the unique and valuable content on it. Let the reader base of your site grow and let it be profitable by revenue. After that you can sell it anytime.

Now, there are certain parameters that the buyer will look for before buying your website such as Google Pager rank (More than or equal to 3 is better), Alexa Traffic rank (Less than 100,000) is better, Monthly revenue from Adsense and other sources, Web traffic (page views and unique Visitors) and the demographics of the web traffic.

The number of unique visitors and the demographics of the web traffic means from which part of the world they come and from which gender and which age group they are. This is because your buyer will be more interested to know that weather the visitors of your website are useful for his other businesses or not? So clear cut view of the demographics will help you to increase the valuation of your website.

Now, the question is that How much is your website worth? This is really highly unsolved question. This is because in case of real estate, we have a past record of real estate transactions in the same area or same city so we have a fair idea about the current valuation of that property. But the history of web properties is not so much long. So we don’t have enough data about the transactions that take place in the virtual property world.

In the past About.com was sold to NyTimes.com for US $ 10 per unique visitor while facebook’s valuation is based on around US $ 250 per unique visitor. So you can imagine that how wide difference between these 2 valuations method. Now, this is one method of doing the valuation of your website. There are several other methods also.

One method of doing the valuation of websites is by multiplying it’s yearly revenue with some multiplication factor such as 10X or 20X or so. Thus, which method to prefer is really a big concern. Unfortunately, like real estates ad businesses our world doesn’t have any proper valuation methods for the websites and that’s why at which price the buyer and seller will agree is the real valuation of the website.

In my opinion, always think several times before selling your website. This is because sometimes you end up with much less amount than the actual worth of your website/blog. If you think that there is a huge market place is still remaining for your website to grow in the web traffic than you should continue holding it. But if you think that the market space is saturated and now there is no more growth opportunity for your website to grow than and only think of selling.

My another thought is that if you are the website owner and want to sell your web property than wait for next 5 yeas at least (Up to 2015) because I am sure that by then our world will develop proper valuation method of the website valuations.

If you have ay experience about website buying and selling than kindly share your experience by commenting on this post.

About Yaro Starak of Entrepreneurs-journey.com

Yaro Starak is the Australian Internet Entrepreneur. He started his online career since 1998 and up to now, he has developed several internet businesses from scratch and sold them for huge profits. Developing successful web businesses and selling them for profits is the life of real internet entrepreneurs.

Right now Yaro is doing the full time blogging and teaching people about how to make successful living from the blog income from his great authority blog and one teaching program.

Entrepreneurs-journey.com (An Authority Blog by Yaro Starak)

BlogMastermind.com (A Membership program to make money blogging)

Yaro lives 2 hours a day working life style. Means his philosophy is that if you work just 2 hours a day with best concentration using your mind than you don’t need to work for the rest of the day. Not only this but Yaro has travelled 25 best cities of world in the year 2009 and when he came back from his world tour after full 8 months, his bank account was full of money. Because during whole of his trip, he run his blogging business and other membership website businesses successfully.

Isn’t it the amazing life? I mean you can run your business while travelling the world. Well, yes. This is the reality of owning the Internet Business. You can enjoy the dot com life style. Of course, you will have to use your mind very much to grow your internet business like anything.

Watch here What Yaro Starak does when he is not Blogging

Yaro do cooking, travelling and watch the educational DVDs when he is not blogging.

In the recent past, Yaro has also launched the another program,

MembershipsiteMastermind.com

In this program, Yaro will teach you that How you can develop your own profitable membership website.

Thus, in my opinion, Yaro Starak is a great Internet Entrepreneur. All of the Internet Entrepreneurs and Bloggers should take the inspiration from Yaro Starak. What I like about the Information age is that, anyone even a school going kid can put a side business apart on the internet and make money. You don’t require any higher educational degrees or wait until you finish the college to add values in the life of people and to make money.

Because of the Internet now any one from any part of the world can start his own business and compete even fortune 500 companies. So take the Inspiration from Yaro Starak.

Which are the Best FMCG Stocks to Buy in India?

FMCG Stocks are many investors’ choice. Now, first of all let me tell you that what it means by FMCG? Well, FMCG means Fast Moving Consumer Goods. It means that these goods are sold quickly with very low profit. Than how can the producer of FMCG goods make money? Well, they make money on the volume.

There is a little profit margin on every good of FMCG but they sell in volumes and this is the reason why they make large profits for their producers. Toothpaste, Soap, Shampoo, Lotions are some examples of the FMCG.

Here is a List of Best FMCG Stocks to Buy in India -

01) Tasty Bites Eatables Ltd.
02) Kwality Dairy (India) Ltd.
03) CCL Products (India) Ltd.
04) McLeod Russel (India) Ltd.
05) Jay Shree Tea & Industries Ltd.
06) Mount Everest Mineral Water Ltd.
07) Colgate-Palmolive (India) Ltd.
08) GlaxoSmithKline Consumer Healthcare Ltd.
09) Dabur India Ltd.
10) Marico Ltd.

Thus, the above are India’s all time favourite FMCG Stocks. All of the above are the hot favourite FMCG stocks of India. If you are bullish on the Indian FMCG sector than you can increase the FMCG allocation of your portfolio by investing in the above stocks.

Midcap Stocks in India are the good bet for the Aggressive Investors

Midcap Stocks are the stocks which can give you aggressive returns. Large cap stocks can’t give you aggressive return because of their giant size. And because of this, they provide stability to your portfolio in the down market. While midcap stocks provide growth to your portfolio in the up market.

If you want to add some aggression to your portfolio than midcap stocks are the best bet. There are several stocks in this space in India. You can add midcap stocks in your portfolio to achieve higher returns. However, always keep in mind that your core portfolio should be that of only Large cap stocks only. Your Midcap stocks allocation should never be more than the large cap allocation.

Another important thing is that, as your age advances and you come near your retirement, you should gradually reduce the allocation of your midcap stocks and shift the profit into large cap bluechip stocks or in the debt.

Many high paying professionals don’t have time to analyze and manage the midcap stocks in their portfolios and that’s why they simply invest in some good midcap mutual funds. So if you don’t have skills and time to analyze the stock market than you can simply add some midcap mutual fund in your portfolio. Buying one good midcap fund means adding around 30-70 fundamentally strong midcap stocks in your portfolio which is the most easy and convenient way to increase the midcap allocation of your portfolio.

Also remember that midcap stocks can provide you good returns in the good market conditions but at the same time they can hammer your portfolio net worth in very bad manner in the down market and during the down time, Large cap stocks and Gold in your portfolio can provide a stability to your portfolio.

In my opinion, if your age is young means you have just started earning and you don’t have any liabilities or dependents on you than it is advisable to put a large bet on mid cap stocks in India. Because as your age is young and the time is by your side, over the long run, midcap stocks will give you excellent returns…!!!

Which Are the Best Stocks to Buy in India?

India is an emerging economy. And there are around 7000 listed companies on the Indian stock exchange. However, not the all the stocks are worth to buy. Many people ask me for the list of best stocks to buy in India. But well, let me tell you that this list goes change every year. This is because the fundamentals of companies change time to time.

So How to find best Indian stocks to Buy? Well, for this you will have to learn to analyze the financial statements of the companies. you will need to increase your financial IQ. Now, how to learn to analyze the financial statements? Well, I will suggest you one great book from which you will learn all the basic principles of investing and how to analyze the financial statements.

The Book is “The Intelligent Investor” by Benjamin Graham. This book has all the information about finding the best stocks from any stock exchange in the world by analyzing the financial statements of the company.

Now, you may ask me that but I don’t have time to analyze the financial statements of the company. Because I don’t get time from my job and profession. Well, in that case I will advice you to invest in some good equity diversified mutual funds having a past proven record of good performance. The simplest way to find good mutual funds is visit the website Valueresearchonline.com and choose 4-star or 5-star rated funds from it.

If you don’t have time to manage your investments than the best thing is to hand over your money to the fund manager. Your fund manager will take care of the rest. Once you divert your money towards the fund manager, it’s the job of your fund manager to find the best stocks for you. Of course, mutual funds are associated with annual fund management fees but if you don’t have time to analyze and monitor your investments than the most practical thing is to divert your money towards mutual fund.