$$--Share/MutualFund/Investment/Stocks--$$

[naveen_reloaded]

Hi all..


Many users here have some kinda expirience in shares / mutual fund / investment/stocks etc...

So here is the centralised thread where everyone can talk/share/discuss about the ongoing news/update in the world of shares...

now is the time..

lets start ... from here ...

how much do u know ??
how much do u not know ?

ask here / share here / everyting regarding money...

[enticer86]

^^ thank u... so... lets start..

[naveen_reloaded]

can anyone explain how mutual share work in layman terms>????

p.s please do contribute...

[::cyborg::]

what is mutual shares

[naveen_reloaded]

i think more members here know very less about these stuff..

can anone enlighten us ???

[Head Banger]

How to invest money in share market.

[naveen_reloaded]

i think u should be needing a demat account...

hope someone here who knows these stuff .. reply..

anyone out there ???

[esumitkumar]

a similar thread was started some mnths back "traders thread" but it died
for all newbies : go to investopedia.com and start learning thr ...after reading that ...u can ask any question.....all ur qs all welcome

[enticer86]

Originally Posted by naveen_reloaded

can anyone explain how mutual share work in layman terms>????

p.s please do contribute...

Well am not goin into the technical details here, but primarily a what happens is:
1. Asset Management Company(AMC) like Reliance Capital, DSP etc. pools funds from small investors like us
2. AMCs have professionals that invest after analysing the stocks on the bases such as Fundamentals and Technicals.. they normaly do NOT factor in the Sentiments.
3. Their NAV is an indicator of how the fund is doing.

Normally, MFs are supposed to be safer than dealing in the equities yourself, if you are a n00b in the market.

Originally Posted by ::cyborg::

what is mutual shares

AFAIK Mutual Shares is a Fund floated by Franklin Templeton Investments.

Originally Posted by Head Banger

How to invest money in share market.

You can do it in 3 ways now:
1. Primary Market, ie investing thru IPOs
2. Secondary Market, ie investing thru the stock exchange
3. Investing thru Mutual Funds [see above]

Originally Posted by naveen_reloaded

anyone out there ???

Main Hoon Na

[Pathik]

Originally Posted by esumitkumar

a similar thread was started some mnths back "traders thread" but it died

+1
And It wd not be wise to enter the market now.. It is too volatile. many newbies got killed.

[enticer86]

^^ lets make this one sticky.. This wud be stupid fr a tech forum, but if this is done then this forum wud be a One-Stop-Solution types...

[naveen_reloaded]

agree.. ithink today more people are investing in share / MF`s..

its like a business.. and why isthis in tech forumm well.. with online banking and trade.. i think tech plays a important base here ..

i know few offices which rely entirely on net for the share market updates each second...

anyway nice to see people sharing thier knowledge..

let this be stickied...

ok guys here is my wuestion .. my mom invested( since i rquested her to do)
in reliance MF .. natural resource started in jan..

is it a safe bet..??? is it worth??

[manistar]

i don know about the mutual funds as i know shares. but as of now... sbi leads in mutual funds... also check the mutual funds provided by DSP meryll.. it also depends on wat purpose u r gonna invest in mutual funds.. and wen u need the returns... most of mutual funds beefit u only in long run.. so see the past performance of any fund before investing... also look into SIP(systematic invest plan) in which u invest a fixed amount every month is best now... reliance diversified power fund is picking up now...


and there is share called reliance natural resourses it is available now at reasonable price... and its better to get that...

caution: in shares get ideas from all but decision shud be urs and don look for profit... jus try to learn from ur mistakes... read books like outllok money which provided intresting review about shares and mutual funds... look into outlookmoney.com for reference... u can also open a portfolio at moneycontrol.com.. as a trial before actually buying shares...

[naveen_reloaded]

ok .. which has quick money with reasonable safety???

any suggestion for noobs in this field>???

[victor_rambo]

Originally Posted by Head Banger

How to invest money in share market.

You need a common sense and a curious mind that finds the correct answers.

[manistar]

Introduction
In Indian Scenario, Mutual Fund is a corporate body registered with SEBI (Securities Exchange Board of India) that pools money from individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as equity shares, Government securities, Bonds, debentures etc. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors.

The fund performance depends on
1) Type of the funds
2) Investment objective of the fund
3) Current financial market conditions

The most common performance measures of the fund are
1) Change in Net Asset Value (NAV)
2) Total Return
3) Total Return with dividend reinvested at NAV
4) Expense Ratio
5) Income Ratio
6) Portfolio turnover Rate
7) Transaction Cost
8) Fund Size
9) Cash Holdings
10) Borrowing by Mutual Funds







1) Change in NAV

The price or value of one unit of a fund. It is calculated by summing the current market values of all securities held by the fund, adding in cash and any accrued income, then subtracting liabilities and dividing the result by the number of units outstanding.

NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. Buying and selling into funds are done on the basis of NAV-related prices.

For NAV change in percentage terms –
Formula is
(Absolute change in NAV/ NAV at beginning) * 100

If period cover is less or more than one year annualized NAV change is given as
(((Absolute change in NAV/ NAV at beginning)/ Months covered)*12)*100)

Example
NAV at beginning = Rs50. NAV after 10 months =Rs60
Therefore annualized NAV change is ((((60-50)/50)/10) *12)*100 = 24%

Limitations- It does not take in to account the dividend distributed by the fund to investors in the interim period.


2) Total Return

This method corrects the limitations of the NAV change measure.
Formula for total return is
((Distributions + Change in NAV) / NAV at beginning)*100

Example
NAV at beginning = Rs50. NAV after 1Year =Rs60.
Interim dividend distribution Rs5 per unit.
Therefore total return at year end - ((5+ (60-50))/50)*100=30%

Limitation- This method ignores the fact the distributed dividends also get reinvested if received during the year.


3) Total Return with dividend reinvested at NAV

Total return with reinvestment is a measure of cumulative wealth accumulation.
Formula is
((((1+div/ex-dNAV)*endNAV) - begin NAV)/begin NAV) *100

Example
Investor purchased one unit at Rs50 per unit. NAV after 1Year = Rs60. Interim dividend distribution Rs5 per unit when NAV was Rs55. The distribution of Rs5 was reinvested in the fund at Rs55 per unit, giving the investor 5/55 = 0.09 unit, making his total holding 1.09 units.
Therefore the actual return at year end (65.4-50)/50 *100= 30.8%.
Note that this is higher than simple total return of 30% calculated by the previous method.

While computing these returns the following points need to be taken care of

1) Effect of loads – The above examples assume no load funds. In reality the investment amount will be lower if there is an entry load. Therefore the investor’s return has to be reduced by the initial load paid.
2) Time period -While computing the returns it is imperative to use the performance data over the same time period for two different funds.


4) Expense Ratio

Expense Ratio is an indicator of funds efficiency and cost effectiveness .It is defined as a ratio of total expenses to average net assets of the fund.

For example funds with small corpus size will have a higher expense ratio affecting investor returns than a large corpus fund.


5) Income Ratio

A Fund’s Income Ratio is defined as its net investment income divided by its net assets for the period.

The ratio is a useful measure for evaluating income–oriented funds, particularly debt funds. It is not recommended for funds that concentrate primarily on capital appreciation.


6) Portfolio Turnover Rate

Portfolio Turnover Rate measures the amount of buying and selling of securities done by a fund. It is defined as the lesser of asset purchased or sold divided by the fund’s net assets.

This percentage is a good indicator of the extent to which the fund is active in market deals. However high turnover rate indicates high transaction cost charged to the fund.

High turnover rate does not necessarily mean greater efficiency and for newly launched schemes that are not yet fully invested, it is not meaningful to use the turnover rate.


7) Transaction Costs

Transaction costs include all expenses related to trading such as brokerage commissions paid, stamp duty on transfers, registrars’ fees and custodians’ fees. Therefore transaction cost has a significant bearing on fund performance and its total return.


8) Fund size

Small fund are easier to maneuver and can achieve its objectives in a focused manner. Large funds gain through greater risk bearing and management capacity.


9) Cash Holdings

The percentage of a fund’s portfolio held in cash can be an important element in its successful performance. Large cash holding increases a fund’s liquidity, cushions it’s against decline of market prices of shares and bonds and guard against large, consistent net redemptions. But large cash reserves lower the return on the portfolio.


10) Borrowing by Mutual Funds

Borrowing enhances per unit earnings and this strategy holds good when interest rates are not very high. In general, in India, Mutual Funds are not allowed to borrow to increase their corpus.

SEBI Regulations allow Mutual Funds to borrow only for the purpose of meeting temporary liquidity needs for a period of not more than six months and to the extent of 20 percent of its net assets.



Criteria for peer group comparison

Only funds with similar characteristics can be compared .Some important criteria for fund comparison are

a) The investment objectives and risk profiles – Two funds having the same investment objectives and risk profiles should be compared. For example it will not be appropriate to compare an equity fund with a debt fund because the former target growths and high capital gains, whereas the later is meant for risk-averse investor and focuses on regular income.

b) Portfolio composition -Portfolio composition of two funds should be similar. For example, a government securities fund can not be compared with another scheme that invests in riskier corporate debt.

c) The credit quality and maturity profile - For two debt funds credit quality as indicated by percentage of investment made in instruments with different ratings should be similar and the average maturity period should also be similar.

d) Fund size - It is advisable to keep fund size in mind and compare two funds of the same size. Big funds have greater diversification benefits such as risk sharing, while small funds are easier to manage for quick adjustments.

e) Expense ratio- Funds performance can be impacted with high and low expense ratio.

Even for two funds with similar characteristics as specified above, there returns must be calculated on a comparable basis. Hence,

1. Returns of two funds should be compared over the same periods only
2. Only average annualized compound returns are comparable.
3. Only after–tax returns of two different schemes should be compared.



Evaluating the Fund Manager/Asset Management Company

The investor must evaluate the fund manager’s track record. Good fund managers have the following characteristics.

1. Operate with a long term perspective
2. Do not sacrifice investor value by excessive trading which generates high level of transaction costs.
3. Turn out more consistent performance
4. At least match major market indices
5. Able to sustain bearish market phases better than other funds

An external credit rating agency – CRISIL – provides a FUND MANAGEMENT PRACTICE RATING on overall fund management quality and best practices followed by an Asset Management Company.

References: information collected from newspapers articles and materials from various websites. merely its a collection and not my work.. i jus collected and presented it.. i framed this for my publication in my college magazine but i didnt publised it... sorry i cudnt remb the websites i searched that time... before 10 months





i think my thread went much in depth.. i ll make it simple wen i gets time..

[esumitkumar]

ok .. which has quick money with reasonable safety???

biggest mistake nooobs do ..share mkt isnt a make quick bucks n run away mkt...try to analyze the things first and see how much money can u invest safely widout risking ur daily life .........

start reading ET and keep a eye on commentary by rediff stocks ....

and first start learning by investopedia

[enticer86]

Originally Posted by naveen_reloaded

ok guys here is my wuestion .. my mom invested( since i rquested her to do)
in reliance MF .. natural resource started in jan..

is it a safe bet..??? is it worth??

I invested in that as well.. and its a gud well... See in the context of Indian Economy, any industry with a reasonable growth potential is normally a safe bet.

Originally Posted by manistar

i don know about the mutual funds as i know shares. but as of now... sbi leads in mutual funds... also check the mutual funds provided by DSP meryll.. it also depends on wat purpose u r gonna invest in mutual funds.. and wen u need the returns... most of mutual funds beefit u only in long run.. so see the past performance of any fund before investing... also look into SIP(systematic invest plan) in which u invest a fixed amount every month is best now... reliance diversified power fund is picking up now...


and there is share called reliance natural resourses it is available now at reasonable price... and its better to get that...

caution: in shares get ideas from all but decision shud be urs and don look for profit... jus try to learn from ur mistakes... read books like outllok money which provided intresting review about shares and mutual funds... look into outlookmoney.com for reference... u can also open a portfolio at moneycontrol.com.. as a trial before actually buying shares...

Sorry but I have a few contradictions:

1. Reliance Nat. Res. Fund is not available in market... its not even listed yet!
2. One can NOT learn from mistakes in this field... You said you know abt shares well- how come you don't know abt the "Random Walk Theory" ??
3. Reading books can only give the basic information, for proper trading you need to gain practical exposure which comes ONLY after sitting in front of the terminal.
4. Pls, do not confuse between and "investor" and a "trader".

Originally Posted by naveen_reloaded

ok .. which has quick money with reasonable safety???

any suggestion for noobs in this field>???

Try Infrastructure then...

Originally Posted by esumitkumar

biggest mistake nooobs do ..share mkt isnt a make quick bucks n run away mkt...try to analyze the things first and see how much money can u invest safely widout risking ur daily life .........

start reading ET and keep a eye on commentary by rediff stocks ....

and first start learning by investopedia

+1

[naveen_reloaded]

now we are talking ...
thnks manistar.... thats was great...those 30% , 24 % are profit u get if u invest on each share ??? am i right>???

[victor_rambo]

Originally Posted by Pathik

+1
And It wd not be wise to enter the market now.. It is too volatile. many newbies got killed.

ha ha,
BTW Pathik, did you see the investors morcha ar SEBI office few days after Rel Power IPO? I had a hearty laugh! Those noobs knew nothing of stocks and were creating a fuss. They were demanding inquiry of how the share took such a beating within 1 minute of listing. I think it was covered on Zee Business!

[enticer86]

Originally Posted by naveen_reloaded

now we are talking ...
thnks manistar.... thats was great...those 30% , 24 % are profit u get if u invest on each share ??? am i right>???

Thats for each Unit of the MF.

[naveen_reloaded]

Originally Posted by esumitkumar

biggest mistake nooobs do ..share mkt isnt a make quick bucks n run away mkt...try to analyze the things first and see how much money can u invest safely widout risking ur daily life .........

start reading ET and keep a eye on commentary by rediff stocks ....

and first start learning by investopedia

thats a nice piece of advice...

sorry but my friends said investing in shares will get u lot of money than in MF`s!!!

thats y i asked..

is it really worth investing in shares .. than in some fixd bank deposit, things like that???

[enticer86]

Originally Posted by naveen_reloaded

thats a nice piece of advice...

sorry but my friends said investing in shares will get u lot of money than in MF`s!!!

thats y i asked..

is it really worth investing in shares .. than in some fixd bank deposit, things like that???

It is true but only when the markets are NOT falling.. It also depends on you investment and time horizon.

[naveen_reloaded]

ok ..
where cn i find news/updates regarding shares... ??

any relieable site??

and also i have seen my friend doing daily transaction/buying shares and selling them online..

i just want to know .. how could one be knowing all the value changes .. is there a software regarding this ??

another tihng on normal investment of say 50k in MF and in share...

which will bring me profit???

[enticer86]

^^ see you are basically a noob, so pls do not compare with ur frnds... u'd end up losing ur initial inv.. WHy do u hav to start now when the markets are falling.

Yes, ppl have softwares only then they kno values of all shares... they get to know everythin, form volumes to values and all.. and Indicators- whether to buy or sell.

On an initial inv of 50k, you'd earn more in equities, but then theres always the risk factor.. also it depends not only on the choice of ur equities but also on many other factors.

[naveen_reloaded]

Originally Posted by enticer86

^^ see you are basically a noob, so pls do not compare with ur frnds... u'd end up losing ur initial inv.. WHy do u hav to start now when the markets are falling.

Yes, ppl have softwares only then they kno values of all shares... they get to know everythin, form volumes to values and all.. and Indicators- whether to buy or sell.

On an initial inv of 50k, you'd earn more in equities, but then theres always the risk factor.. also it depends not only on the choice of ur equities but also on many other factors.

no i havent started investing anything except in MF .. reliance natural resource

i amstill learning...

my simple question...

we recently heard that shares went down.. one simple thing .. we all know that india will develop and keep developing .. ifthats the case then why does share holders sell them abruptly @ those times..( read the time the sensex went down below 15k)

why is it so .. couldnttehy just have had the shares with them.. anyhow the market will boom again..i simply dont get it >?>?

[esumitkumar]

we all know that india will develop and keep developing .. ifthats the case then why does share holders sell them abruptly @ those times.

thats y im repeatedly saying read investopedia....as ur q is concerned..its the sentiment of the traders ..basically thr r three types of traders ...day trader,swing trader and long term trader..

DT buys n sells within same day
swing trader 2-5 days
long term - depends on his gain/loss appetite ...

why mkt falls --> only due to sentiment of day traders ...take 9/11 situation..that happened..american economy falls ..impacts all world as export/import frm US is much so mkts crash so everyone is trying to sell his shares ..so shares of that company r excess in mkt..so its price falls .........and BSE,NSE is determined by prices of top 30 companies shares prices ..thats y

so naveen learn n grasp easily n slowly..me too learning..dont know much abt futures and options

[viruss]

Originally Posted by naveen_reloaded

ok ..
where cn i find news/updates regarding shares... ??

any relieable site??

and also i have seen my friend doing daily transaction/buying shares and selling them online..

i just want to know .. how could one be knowing all the value changes .. is there a software regarding this ??

another tihng on normal investment of say 50k in MF and in share...

which will bring me profit???

Naveen ,
the value of your share/MF can be found on various sites. for e.x rediff,moneycontrol,yahoo etc.
value of rMF is called NAV (Net Asset Value)
MF are roughly divided into two parts. Close Ended n Open ended

Now,
Mutual Funds:- These are nothing but Qualified Investors who manages your money using their experience and pre-conceived notions. The main person who handles all these assets they have collected from the public is called as Manager of the Scheme. And he is responsible for the performance of the Fund Scheme. So Managers work profile and his past experience is all the matters..

These people are supposed to be collecting money from people and then investing that money into Equity or Debt or Futures and Options etc etc.......


Asset Management Companies (AMC):-
The different companies concerned with the work of collecting money from the public and then managing it are called as Asset Management Companies..
Eg. ICICI, Reliance, HDFC etc etc

While collecting money from the Public, every Asset Management Company comes with a scheme in the market which focuses on some themes like Diversified/sector oriented/infrastructure..

Eg.
Fund Name Type
Reliance Diversified Fund Thematic/Sector Oriented Fund
ICICI Prud Infra Thematic/Sector Oriented Fund
Reliance Growth Diversified Fund
And the name of that theme after the name of that AMC is the Name of That Scheme which gives you primary information about the motto of that scheme.



Now coming back on the subject of Analysis, the important things to be taken into consideration are:-


Fundamental Analysis:

1) Manager:- Name, Work Profile, Experience, Past Record, Risk Profile etc etc.
2) AMC Name:- Which would give you some idea about the working strategy of the Fund Scheme. Means is it reliable? Is it Aggressive? Risk Profile?
3) Scheme:- The name of the scheme indicates most of the things you use in the analysis. Means is it a Thematic/ sector oriented fund or a diversified one. What is its primary focus.
4) Past Record:- If the scheme is older than 2 years then it is quite easy to analyze the scheme as we get its past record to do our Fundamental cum Technical Analysis.
5) Theme/Focus:- This is so much important one while analyzing the mutual fund. Cause if it is a Diversified Fund then it doesn’t matter much. But if it is a sector oriented fund then in which sector you are investing? Does that sector would yield in the future? And if yes then for how far it can continue giving you good returns?
6) Company Holding:- Which companies this fund is holding? Do those companies are reliable? Are those companies aggressive? Are those companies can continue yielding in the long term? How much percentage of the total assets this Mutual Fund has invested in top 5 holdings of the scheme? As much less it is it would lower your risk profile in the time of Market crash….Mutual Funds don’t switch companies in the short term or frequently. And though they have to, they try to be efficient for the next time. So company holdings can give you fair data for the sake of analysis.
7) Allocation:- Means hows the allocation of the funds has been carried out…How much of the funds has been allocated to the top five funds, top ten funds and likewise you can come to know about the risk involved…

[manistar]

there are real ups and downs in market. but it doesnt shows v cant earn from it... v can earn from shares if v open our eyes little bit wider.. and as u said shud be curius to learn things... thats wat i said dont come in to earn... first learn the fundas.. i asked the folks to read the magazines jus to gain those fundas... and its very first staep.. this is my exp.. i watched the market for two years and only then made my first investment.. my choice is small caps.. i m investing thru my dad demat and trading acc... and got some 50k thru it in one yr... i accept i dont know much as rohan.. very eager to learn...
i cannot accept that one cannot learn from mistakes here... it has risk.. but i remb the lines

ships are safe at harbour but they arent made for that....

[viruss]

Lessons To Be Learned Before Entering Markets....

What is Investment?
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.

Why should one invest?
One needs to invest to:
1) earn return on your idle resources
2) generate a specified sum of money for a specific goal in life
3) make a provision for an uncertain future


What are various options available for investment?
One may invest in:
1)Physical assets like real estate, gold/jewellery, commodities etc. and/or
2)Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc.or
securities market related instruments like shares, bonds,debentures etc.



What are various Short-term financial options available for investment?
1)Savings Bank Account
2)Money Market or Liquid Funds
3)Fixed Deposits with Banks


What are various Long-term financial options available for investment?
1)Post Office Savings
2)Public Provident Fund
3)Company Fixed Deposits
4)Bonds
5)Mutual Funds