Author: Jalaj Khajotia

MY JOURNEY IN STOCK MARKETS

Post author By Jalaj Khajotia
Post date November 14, 2017
No Comments on MY JOURNEY IN STOCK MARKETS

From the beginning, I was having a strong urge to explore about stock/share market. Yeah! I know most of you know about it and refer it as gambling, Satta Bazar etc. Still, there was a curious mind inside me which was looking for new latter to climb on.

My journey started with opening an account with FUNDSINDIA. It is a broker which provide mutual funds services and trading & demat account. I was very keen to buy my first share. Eventually, I bought my first 20 SBI shares. Those shares I am still holding and they have grown over 15% since I bought them. Now coming to my background, I was already having a decent knowledge of Mutual Funds and general financial instruments. But till now I have mainly invested in bank FDs and MFs.

Let me tell you MFs and stock markets are entirely different as in the MFs your money + others pooled money will be actively managed by some experienced person and in the later one you will be the manager of your investments. So if on some bad day stock market crashes then you will investments will also crash giving you a shock.

Read: Are stock markets a gamble?

My few observations.

With greater risks, comes great rewards. So is the case with stock markets. If you willing and can put your time into learning about stocks then you should definitely try it.
Take the calculated risk: Don’t just go and buy a stock because someone has just said to buy it. This kind of strategy could fetch you some money but for the long term, it could doom you.
Park some liquid cash in your account for your living: Don’t listen to others who are stopping you from entering here. But make sure whatever you are investing in your surplus cash and is not needed actively for you living.
Make your investment strategy: You should be at least sure for how long you are going to invest. This kind of decision could vary from time to time and also depends on your short and long-term goals. Just make sure whatever you do try to have faith and discretion in your decision.
Last but not least: open your trading account with a discounted broker. There are numbers of brokers available online which provides a trading platform and a Demat account. Some of them also provide stock recommendations. But make sure to see their brokerage charge before filling the application form. Currently, I have an account with Zerodha.

Read: Meet Zerodha, a discount broker

I am an amateur stock market investor and maybe like you. I am still learning and exploring this new area of trading and investment. Don’t be afraid of new terms or things you don’t understand. Cheers.!!

Tags First Time Investors, Investment Journey

Important Concepts

KNOW ALL THE JARGONS USED IN MONEYCONTROL APP

Post author By Jalaj Khajotia
Post date November 14, 2017
No Comments on KNOW ALL THE JARGONS USED IN MONEYCONTROL APP

Nowadays mobile is in use everywhere and we have tons of mobile app to make our life easy. MoneyControl is one such app which is very popular among investor and traders. It provides brief stock updates and latest information about companies listed on exchanges.

Ever wondered what all that jargon in the app mean?

MoneyControl app also provides full information about company financial reports like P/L and balance sheets. It can be easily used as a primary level of research for any company.

This is the homepage of the MoneyControl mobile app

On the home page of MoneyControl, it lists Indian and global indices. I guess everyone will be familiar with Nifty 50 and Sensex.

Nifty SML 100 Free– Index consists of top 100 small cap companies.

Nifty Mid 100 Free- Index consists of top 100 mid-cap companies.

Nasdaq– Index of American stock exchange

Dax– Index of Frankfurt Stock Exchange

My portfolio– This section could be used to track all your investments on daily basis.

You can add stock, mutual funds, loans and other fixed sources of income.

Now let us check the main page of any stock. For reference, we will be discussing Ujjivan Financial.

Last Traded Price– It is shown on the top i.e. 358.30. Also known as current market price (CMP).

Volume– Total number of contracts traded for this particular stock. Here the value is 11,123,451.

Bid Price and Offer Price– Bid price is a price quoted by people who want to buy shares and they are quoting their price and quantity. When bid match with the sellers asks price, the trade will happen.

The offer price is the price at which a seller is ready to sell. Note, this data keep on changing per second.

Always notice bid is less and ask is high. Because Bidders want shares at low prices and Askers/Sellers want their shares to be sold at high prices.

For more information, you should refer Market Depth.

Today’s Low/High- this is the maximum and minimum price at which stock traded during the day.

L/U Price Band- Lower and upper price band is the minimum and maximum price at which stock could trade in a day. It prevents unwanted volatility in the market. The stocks which are traded in options and futures do not follow circuit filter.

52WK Low/High– It is the maximum and minimum traded price of the stock in a year.

Market Capitalization– It is the product of current stock price and total no. of free shares of the company.

EPS (earning per share) – profits earned per share. It is calculated by dividing total profits by total no. of shares. It signifies profitability of the company and individual share.

P/E(Price to earning ratio)– Refer to the division of stock price by EPS. It signifies how much valuation in the market of the company. A high P/E denotes people are bullish on the stock and are expecting higher earnings growth in coming time.

Book Value-It gives a rough idea of the true value of the business. Usually used for financial companies.

Dividend– It the money paid by company from profits to its shareholder

Dividend Yield– Actual dividend is usually misleading so people use div. yield as a factor to compare stocks and to find total dividend paid by the company over a year. The dividend yield could be calculated as dividend yield percentage of CMP.

Market lot– It is generally one for equity shares but few SME companies are traded in some minimum quantity like 1000 or 2000. So an investor/traded can buy in multiples of the market lot only.

Face value– A share of stock has a market value and a face value. The market value represents the current value that one share of stock trades at. The face value, also known as par value, is the legal capital of the share. The face value of the stock has no effect on the value of the stock but has legal and accounting consequences for the company. A company determines the face value of stock before distributing shares. The face value of a share of stock doesn’t change, while the market value can vary based on company performance. A company can’t sell stock for less than face value,

but it can sell it for more. The difference between what shareholders pay for a share and the face value is referred to as additional paid-in capital.

Usually, maximum face value is 10 and minimum face value is 1.

Industry P/E– Average P/E of companies in the same sector.

Deliverable– Percentage of shares which exchanged hands on a day. So here only 17.46% shares of total volume exchanged hands and rest were only traded during.

Understand the meaning of delivery in Stock Market

Wanna invest in Mutual Funds? Not sure where to start? Read

I hope this brief article has helped you in increasing your understanding of using Moneycontrol app.

Tags finance terminology, First Time Investors, Fundamental Research, Moneycontrol

Book Review

HOW TO MAKE MONEY WORK FOR YOU: INSIGHTS FROM RICH DAD POOR DAD

Post author By Jalaj Khajotia
Post date November 14, 2017
No Comments on HOW TO MAKE MONEY WORK FOR YOU: INSIGHTS FROM RICH DAD POOR DAD

Independence is what everybody desires for very much. Yet only some of us are able to achieve it. Today I will share some of the highlights from a masterpiece book “Rich dad poor dad“.

The book is about financial Independence which still remains untaught in high school and colleges. We all want to be free from the headache of thinking constantly about money but only a few of us want to take the risk which will make us free from it. The book contains wisdom about personal finance and some takeaway lessons which we never got during out schooling and graduation. Here are some of the excerpts from a book Rich Dad Poor Dad by Robert T. Kiyosaki.

The rich don’t work for money.
It is not how much money you make. It is how much money you keep with you.
An asset put money in your pocket but a liability takes money out of your pocket.
If you work for money, you give the power to your employer. If money works for you, you keep the power & control it.
Often in the real world, it is not the smartest who get ahead, but the bold one.
If you waiting for the right time for doing the right thing. Then you are waiting for all the traffic lights to be green for the most part of the journey before even starting your trip.
Workers/Employee work hard enough to not get fired & owner pay enough so that workers/Employee won’t quit.

Mentioned below are the areas will define success in wealth creation and improve your financial IQ

Accounting
Investing
Understanding Market
The law
Tax advantages
Protection from lawsuits

Here is the basic difference between business owner and an employee. This is the reason why rich become more rich and poor remain poor.

Read: Some of the bitter truths about the stock market

What does business owner do?

They Earn
Spend
Pay taxes

What does a salaried person do?

Gets Salary
Pay taxes
Spend

Remember Failure inspires winner. Failure also defeats losers.

Now, here are some tips which will get you started in creating wealth for future?

Find a reason greater than reality, the power of spirit.
Make daily choices, the power of choice.
Choose your friends carefully, the power of association.
Master a formula & then learn a new one, the power of learning quickly.
Pay yourself first, the power of self-discipline.
Pay your brokers well, the power of good advice.
Be a giver, the power of getting something for nothing.
Use asset to buy luxuries, the power of focus.
Choose heroes, the power of myth.

Folk, these all are some beautiful pieces from the book Rich Dad Poor Dad by Robert T. Kiyosaki. If you want to get financial independence at an early age, do consider following some of his advice. And if you want to dive deep into his thoughts about creating wealth do give a read to his book.

Read: Know all the jargons regarding stocks?

Happy wealth building.

Book Review

MUST READ FOR FIRST TIME INVESTORS: STOCK TO RICHES by Parag Parikh

Post author By Jalaj Khajotia
Post date November 14, 2017
No Comments on MUST READ FOR FIRST TIME INVESTORS: STOCK TO RICHES by Parag Parikh

It is wonderful that you have decided to get started with your investment journey in the stock market. Today I will highlight some of the common mistakes in the stock market from a wonderful book STOCK TO RICHES by Parag Parikh.

But remember there are no shortcuts in this path. During your journey as an investor, you will definitely learn a lot about market and lot of things. All this learning will help you to become a smart investor.

Remember, as becoming a doctor, engineer or learning any other occupation takes time so is the investment. You cannot become a successful investor overnight. Becoming an investor is your choice but being a successful investor through an act of discipline.

Today I will be sharing few insights from a recent book which I read.

Obvious prospects for physical growth in a business do not translate into obvious profits for an investor.
People curse markets to be ruthless and wealth destroyer etc. But it is not always the case.
It matters that which company shares are you going to buy but what matters most is what price you paid for it to buy.
You should keep individual stock exposure to around 10% and an industry exposure to 20%. This will help in getting you more profits in long term.
Before starting any investment write down your vision for your portfolio.
Whenever you invest in any stock you should write the rationale behind each investment. This could also be applicable to mutual funds.
If you are deciding not to do anything that also is a decision. Sometimes we decide to sell a stock which has appreciated in value but later on not acting on our decision is also a decision.
Never get married to stocks or any type of investment vehicles. Every investment vehicles have a purpose and once that is achieved you should sell that vehicle.
Never get carried away with free lunches in stocks and AGM (annual general meetings). Usually, companies go for share split or give bonus shares to their shareholder to achieve their purpose. Everyone usually become overwhelmed with this cause and start acting regards to this.
Beauty may lie in the eye of the beholder but value often lies in the eyes of buyers.
Past performance is no guarantee for future performance.

Read: How to make money work for you?
Happy investing.

Tags common mistakes in the stock market, finance terminology, First Time Investors, Must Read Book

Important Concepts

YOUR STOCK TANKED 10%, DO NOT AVERAGE OUT

Post author By Jalaj Khajotia
Post date November 1, 2017
No Comments on YOUR STOCK TANKED 10%, DO NOT AVERAGE OUT

Buying a stock is easy but to remain invested in the same for a long time is very difficult. That is the basic reason not everyone is able to create wealth from the stock market. Today in this post we will understand why averaging out a stock is not a good idea.

Why does an investor think that once he has purchased a stock it should always go up?

The stock market does not care whether Ambani has bought shares or you. It all works on demand and supply concept.

Averaging out the stock: Averaging out means buying an equal number of stocks when a stock falls below your purchase price thereby reducing your average buy price.

Every investor has a different way of investing. Some think when prices go down, it is always an opportunity to add up. Whereas some investors say it is wise to start booking profits when prices go up.

If every investor does research properly then there will not be a much demand-supply gap in the market.

What will you do when your purchased stock starts falling below your buying price?

Will you buy more or sell at a loss?

Most of the new investors have a tendency to buy more stocks when its prices go down, in order to decrease the buying price. But foremost an investor should understand why the stock price has corrected/fallen so much.

Investors seldom think deep about the business of the company in which they are investing their hard earned money. Novice investors are happy investing in any stock as long as it increases in price. But the moment it starts going below for their purchase price, it became worrisome for them. An investor should know why he entered or bought in the first place. If an investor knows the idea and moat behind his investment they obviously he can reap a lot of profits without worrying about its future.

Read: Why stock prices change?

Some of the reasons for the decrease in stock price

Some negative sentiments against the company are being spread which could be temporary.
The company may be facing a tough time in managing its business.
Raw material prices have been fluctuating in the market. The aviation sector is very susceptible to crude oil prices.
You have entered at very high valuation and stock may go through a consolidation phase.

If nothing wrong with the company then also you should not go and buy the moment the stock fall below you purchased price. As an investor should let the prices settle down before making any hasty decision. In some case, there may be some news which is not out in public and some people are trying to manipulate the stock prices.

Averaging out could be very deadly if your prediction is wrong about the company. If stock prices start falling again then you will lose double of the previous invested amount.

Read: Why long-term investment creates wealth?

An investor should always know the answer to this question: why he purchased this particular stock at first place?

Tags Averaging out stock, finance terminology, First Time Investors, must know facts

Uncategorized