The post How to Start Investing in Stocks: A Beginner’s Guide first appeared on Corp India News.
]]>There is no fixed amount of money that you require to begin investing, however to put it to experiment, let’s suppose you have an extra $10 a week that you’d like to invest, in this article, we walk you down the easy steps into your investment journey and show you how to maximize your returns while minimizing your costs. But, before that it’s crucial to identify which kind of investor are you! Read on to learn more.
What kind of investor are you?
Investing blindly may not be our first advice to you since there are risks involved in investing without appropriate knowledge. When opening a brokerage account, online broker such as Charles Schwab or Fidelity ask you about your investment goals and the levels of risk you’re willing to take, so it becomes crucial for you to ask yourself, what kind of investor am I, after all?
You can either take an active participation in managing your growth or you can prefer to “set it and forget it”. Traditional online brokers allow you to invest in stocks, bonds, exchange-traded funds (ETFs), index funds and mutual funds. Before that, lets learn about the various brokerage services that are available to you and how to choose what fits your bill!
Online Brokers
Investment brokers either provide full-service or discount. As the name suggests, full-service brokerage ranges from financial advice for retirement, healthcare and everything related to monetary processes. Full-time services come with substantial fees, including a percentage of your assets, transactions and yearly membership fee. Usually, the full-service brokers prefer charging according to your net worth. Traditional brokers justify their high fees by giving advice detailed to your needs.
Discount brokers
Once upon a time, discount brokers were treated as an exception, but with growing investment needs, they have become the norm. As the landscape of financial services in 21st century progresses, online brokers provide you with tools to select and place your own transactions, along with educational materials on their sites and mobile apps. They also offer a set-it-and-forget-it-robo-advisory service.
In addition, if you are an investor willing to invest in stocks, you must take into account that there are number of discount brokers with minimum deposit bars against certain fees that are charged to accounts that don’t have a minimum deposit, or you could try Robo-advisors.
Robo-Advisors
After the devastating global depression in the financial market in 2008, RoboAdvisor was introduced as a new breed of investment advisor by Jon Stein and Eli Broverman. Their primary aim to introduce RoboAdvisor was to utilize technology to lower costs for investors and streamline investment advice.
Since Betterment (the first robo-advisor company) launched, other financial services companies have stepped up their game by establishing robo-like advisory services. According to a report by Charles Schwab, a renowned online broker, suggested that approximately 58% of Americans would like to take to robo-advice by 2025 for an easier investment process. And we wonder, why not? Algorithm has taken over the internet to solve many problems that were once manually solved. If you prefer algorithm to make decisions for you, including tax-loss harvesting and rebalancing, then look further than a robo-advisory. It’s also best suited for investors looking for a long-term wealth building.
Investing through your employer
It’s not easy or ideal to invest into your retirement plan while you have just begun your career. You may find yourself on a tight budget for investment in the beginning, but the truth is you probably won’t even miss a contribution that small when you work based retirement plans deduct your contributions from your paycheck before taxes are calculated. Suppose you are comfortable investing 1% of your total salary, gradually you can increase it as you get annual raises. You’re unlikely to miss the additional contributions. If you have a 401(k) retirement account at work, then you may be investing in your future already with allocations to mutual funds and even your own company’s stock.
Minimums to Open an Account
Contrary to how easy stock investment marketers make it sound to enter the investment game, let us tell you, there is no such thing as a free lunch. It’s more like one-hand-give-one-hand-take policy that works best in stock investment. One of the basic requirements to begin investment is to invest into your Demat account. Every financial institute demands for a certain minimum deposit to keep it as a security without which your account application remains incomplete. Some firms won’t precede your application the sum of below $1,000. Others may often reduce costs, such as trading fees and account management fees if you have a balance above a certain threshold. Still others may offer a certain number of commission-free trades for opening an account.
Commissions and Fees
As economists like to say, there’s no such a thing as free lunch. Though many attempts to eliminate commissions on trades by ETFs offering index investing to everyone who wants to trade with bare-bones brokerage accounts, however, brokers will find their way to make money from their customers in one way or another.
With every trade stock that you earn, a certain surcharge goes to broker by default, either through buying or selling. The minimum brokerage fees charge beings with $2 per trade, and can be as high as $10 for some discount broker. Some brokers may charge nothing for commissioning, but will make up for it in some or the way since no charitable organizations running brokerage services.
Fees can add up and affect your profitability depending how frequently you trade. Stock investment can cost you a lot if you roll-in and roll-out frequently, especially with a small amount of money available to invest.
How it really works
It’s crucial to remember that a trade is an order to purchase or sell shares in one company. If you wish to buy 5 different stocks at the same, this will be considered as five separate trades for which you will be charged for each one separately.
Suppose you want to buy stocks of five companies with a budget of $1,000. To put perspectives together, you will incur $50 as trade cost—assuming the fee is $10—which is equivalent to 5% of your $1,000. If you fully invest the $1,000, your account balance will be reduced to $950 after applying the trading costs. This decline represents loss before your investments even before you trading. Don’t you worry, losses lead to new gains and stock market is the perfect playground to play!
Plot twist
Suppose you sell these five stocks, you will have to incur the trade cost all over again which is $50. To begin the round trip of buying and selling, another $100 is debited, or 10% of your deposit amount of $1,000. You are not eligible to regain the initial invested expenses if your investments cannot make it enough to cover these basic expenses. The world of stock market has its high, don’t let the lows discourage you.
If you plan to trade frequently, check out our list of brokers for cost-conscious traders.
Mutual Fund Loads
Mutual is another effective way to grow your finances, and very popular in Indian family systems. Besides the trading fee, there are miscellaneous costs associated with this investment type. Mutual funds are pools of investor funds managed by highly skilled professionals who invest in an organized manner, for example, large-cap U.S stocks, Muthut Finance, Kotak Mahindra, Sharekhan, to name a few large and small finance companies providing mutual funds service.
The process is tad more like “the-long-way-home” with many fees associated with the process of mutual funds. MER (Management Expense Ratio) is one of the crucial fees that are charged by the management team each year based on the number of assets in the fund. One weird thing about MER is that the higher the MER, the more it affects the fund’s overall returns.
To acquaint you with finance jargons, you must remember a number of sales charges called loads at the time of purchasing your mutual fund. There are also front-end loads, no-load and back-end load funds. Its crucial to understand that has a prior load before buying it. To be sure, check out your broker’s list of no-load funds and no-transaction-fee funds if you save on extra charges.
On a brighter side of mutual funds for beginners is the advantage of fees compared to commissions on stock. The advantage is that fees remain same regardless of the amount that you invest. You can invest as little as $50 or $100 in a mutual fund as long as you meet the minimum requirement. The term for this is called dollar-cost averaging (DCA), must try!
Diversify and Reduce Risks
If you are looking for your free meal ticket in investing, look no further than diversification. Diversification allows you to invest in a range of asses in order to reduce the risk of one investment’s performance and secure your overall returns on investment. To help you remember this better, we’d like to say “Don’t pull all your eggs in one basket.”
The challenge with diversification is that is nearly impossible to have a well-diversified portfolio, so be careful while investing. Suppose with a $1,000 deposit you must invest in one or two companies at the most. This may increase you risk, but to be honest, that when the major benefit of mutual funds or ETFs’ comes into focus.
In terms of diversification, the greatest difficulty in doing this will come from investments in stocks. As mentioned earlier, the costs of investing in a large number of stocks could be detrimental to the portfolio. With a $1,000 deposit, it is nearly impossible to have a well-diversified portfolio, so be aware that you may need to invest in one or two companies (at the most) in the first place. What makes a single stock more diversified than the other is large number of stocks and investments within a stock fund.
Stock Market Simulators
One of the most valuable tools of the 21st century is stock market simulators. If you are someone who wants to gain experience in trading without risking money in the process, good news is there are an array of trading simulators available for you to choose from. Our favorite one is Investopedia’s simulator which is entirely a free-ware tool.
What’s better than imaginary money being used for wide portfolios of stocks options, ETFs and other securities? Stock market simulators are exactly this dream come true. The good part is that some of these simulators typically track real-time price movements of investments and other notable considerations such as trading fees or dividend payout which allows you to pitch your ins and outs strategy, consequences of virtual investments without any risks so that when you take to trading in real-time and with real money, you are well-equipped with accurate knowledge to prevent financial losses. Some simulators even allow users to compete against other participants, providing an additional incentive to invest thoughtfully.
Now that we you know it’s more complicated than just selecting the right investment (a feat that is difficult enough in itself), you must keep being aware of the restrictions that you may face as a new investor, we hope this piece was helpful enough to inspire you get you started with your investment venture. However, having said that, we would never stop recommending you to do your homework to choose brokers with whom you would like to open an account.
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The post How to Start Investing in Stocks: A Beginner’s Guide first appeared on Corp India News.
]]>The post Share Markets close higher on the first of FY23: Sensex recaptures 59k mark first appeared on Corp India News.
]]>The Sensex jumped 828.11 points or 1.41% to 59,396.62 during the day and settled at 59,276.69, while NSE Nifty rallied 205.70 points at a 1.18% rise, settling at 17.670.45.
NTPC, PowerGrid, State Bank of India, HDFC, IndusInd Bank, Mahindra & Mahindra, HDFC Bank, Bajaj Finance and Axis Bank from the 30-share Sensex pack were the star players during the first trading session of the new financial year. While shares of Tech Mahindra, Sun Pharma, Dr Reddy’s, Titan and Infosys remained sluggish.
What about other stock markets?
Talking about other Asian stock exchanges, Seoul and Tokyo ended lower, while Shanghai and Hong Kong too performed well.
European stock exchanges mainly were trading higher, while the overnight trading session of the US stock exchanges ended on a negative note.
Talking about the over market sentiments this week, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, “Indian equity markets gave positive returns this week. Globally too, equity markets remained broadly resilient, led by optimism on progress in Russia-Ukraine negotiations,”
“On the other hand, commodities saw some correction from the recent highs. In India, markets saw broad-based gains with most sectoral indices giving positive returns”, he added.
Speaking on the current inflation in the Crude Oil market, he said, ” Crude oil prices corrected this week, and that is some positive for import-dependent countries including India,”
Notably, the international oil benchmark Brent crude jumped 0.22% to USD 104.94 per barrel.
Reason behind good opening:
As per the stock exchange data, Foreign Institutional Investors (FIIs) bought shares worth Rs 3,088.73 crore on the last day of the previous financial year. This move had set the momentum for the opening day of the new financial year. For 2021-22 fiscal, the BSE Sensex jumped 9,059.36 points or 18.29%, while the Nifty rallied 2,774.05 points or 18.88%.
Additionally, the official data suggested that the production of eight infrastructure sectors expanded by 5.8% in February, the sharpest growth in the last four months, on the back of better output of coal, natural gas, refinery products and cement industries.
The post Share Markets close higher on the first of FY23: Sensex recaptures 59k mark first appeared on Corp India News.
]]>The post Quick guide on how to open a Demat Account first appeared on Corp India News.
]]>What is a Demat Account?
A Demat account is a shortened version of a dematerialization account is an account to hold financial securities in the electronic form, whether it is equity or debt. Specifically, these accounts are meant to convert share certificates from physical to electronic format, thereby providing greater accessibility for account holders. In addition, unlike past times, where stocks and shares used to be exchanged as certificates, the Demat account simplifies these exchanges without burdening of paperwork.
An online Demat account carries your financial securities in a safe form, just like a bank account that guards your liquid cash. There are two open depositories in India, CDSL (Central Depository Services Limited) and NDSL (National Depository Services Limited). You can seamlessly operate your equities, bonds, ETFs (exchange-traded funds), mutual funds, and invest in IPOs (Initial public offerings) through a Demat account.
There are minimal documents required for opening a Demat account, and you can go through the following list for easy preparation of collection documents:
- Proof of photo identity cards such as Aadhaar, PAN, voter ID, driving license, etc.
- Two passport-sized photographs.
- Evidence of your residence includes electricity bills, lease agreements, license, passport, telephone bill, gas bill, apartment maintenance bill, ration card, etc.
- Evidence of your bank account with a bank’s passbook or account statement (not older than three months) and a cancelled cheque.
- Proof of income with a copy of your most recent paycheques or tax return (compulsory for the currency and derivatives segment).
Steps involved in opening a Demat account in India
Step 1: You need to choose a depository participant (DP), a financial organization like a bank, broker, financial institution, or online investment platform. DP works as a mediator between the investor and the depository. Thus, select your depository participant wisely, suitable for your requirements. You will get the statement of fees for maintaining your account on DP’s website. So, be aware of all charges before selecting your DP.
Step 2: Visit DP’s official website and fill out the online Demat account opening form details. Don’t forget to assign a nominee name, as it will be crucial to handle future transactions. Furthermore, linking your trading account to your Demat account is necessary for trading in stock markets.
Step 3: After completing the form, fill out KYC information (Know Your Customer).
Step 4: You need to submit scanned copies of KYC documents, including identity, income, address proofs, and bank account statements.
Step 5: You will need to go through an ‘In-Person Verification’ process (IPV) after providing KYC details. IPV is a mandatory process to check the validity of your records. DP can either do this online using a webcam/smartphone or at their office, where the investor needs to be physically present at their office for verification.
Step 6: Next in-line, you need to sign a contract with your DP. This contract lists all responsibilities and rights of both the DP and the investor.
Step 7: Once you have signed the agreement, your DP will thoroughly check your Demat account application. After you get the approval of DP, you will be assigned a unique BO ID number (Beneficial Owner Identification Number) that you can use to access your online Demat account.
Benefits of a Demat account:
- A Demat account gives the convenience of holding your securities without maintaining physical records. You can even sell one share as there is no odd-lot problem.
- It nullifies the possibility of forged shares as it is safer than paper and all shares in your account are genuine.
- A Demat account saves a lot of paperwork in the transfer of securities, change in the address, etc.
- You can smoothly access your investment information anywhere and anytime, giving traders an extra advantage of handling multiple accounts.
- It reduces transaction costs, handling charges, and stamp duties on physical share certificates.
- You benefit from multiple securities with a Demat account as it holds the equity share market, bonds, mutual funds, and debt securities under a single roof.
- Depository participant takes care of the transmission of securities, and thus, you need not worry about notifying companies.
- You get an automatic credit in your Demat account for shares out of split/bonus, a merger of companies, etc.
- Closure of the Demat account is as swift as the opening procedure. You need to submit a closure application form signed by all the holders (in case of multiple holders) to DP and transfer all the holdings before closing.
Now that you are aware of all the procedures involved in opening a Demat account hassle-free, you should always be watchful of your financial securities and investment in shares and the stock market with all its risks. In addition, you need to supervise the key market players such as stockbrokers as they can manipulate the market. Nevertheless, if you are eager to invest in equities and relish the benefits of compounding by long-term investing, a Demat account will be ideal for you. Many agents in the market can help you open a Demat account with minimal additional charges. But, you can follow the above discussed easy process of opening a Demat account.
The post Quick guide on how to open a Demat Account first appeared on Corp India News.
]]>The post BSE signs MOU with Federal Bank to list SMEs first appeared on Corp India News.
]]>The collaboration will enable BSE to take advantage of Federal Bank’s SME and Startup clientele to encourage them regarding listing their companies on the stock exchange.
Ajay Thakur, Head of BSE, SME and Startups, said: “We are excited to partner with Federal Bank, and this collaboration will enable us to tap the large SME & Startup client base of Federal Bank spread across the country and educate them on the benefits of listing.
He further said that this step is stepping stone in BSE’s endeavour to further penetrate the SME and Startup ecosystem and provide them with the platform for equity financing.”
BSE, India’s premier stock exchange and a leading private sector bank, Federal Bank, will jointly evaluate the SMEs and startups undergoing the listing process.
Harsh Dugar, Group President and Country Head, Federal Bank, said: “We are delighted to partner with BSE on the SME and Startups space. As one of India’s foremost tech-led banks, this is an area of sharp focus for us. Our full-stack product suite and our deep understanding of this sector make us a banker of choice to the SME ecosystem, and we are confident of significant synergies that both our institutions can derive from this partnership.”
It is to be noted that there are 364 SMEs listed on the BSE SME platform, and 14 companies have been listed on BSE Startups platform until today.
The post BSE signs MOU with Federal Bank to list SMEs first appeared on Corp India News.
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