Steps for New Investors

Steps for New Investors

All new investors will always ask about what kind of "individual" stocks they should be investing in. I know they will more than likely lose their invested money and lose it quickly. There are few main steps, in my opinion, every new investor should ask themselves before they invest in anything.

Step 1:

Do you have an emergency fund in place? Many people simply do not plan for the worst, and then when the worst happens they have no money to get them through their rough patch in life. Before anyone decides to invest in anything they need to make sure they have an emergency fund in place. This is to cover themselves in case of an unexpected life emergency such as the lose of a job.

Step 2:

Do you know anything about investing in the stock market? Many people see television shows that make it seem like it is so simple to pick a stock and make money off of it. Well that simply is not true. It is very difficult for any investor, especially a novice investor, to consistently pick winning "individual" stocks. If you have never invested in the stock market in your life; then you need to take the time to at least learn the basics or you will lose money very quickly.

Step 3:

Do you know how to pick the right broker? In today's fast-paced online trading environment there are many online brokers who offer very different services at very different prices. Commission cost can be very expensive for someone that wants to be an active trader. However, there is a trend in today's world that has brought on a lot of competition in the online broker world. A few brokers actually offer commission free trading, but of course they do not offer a lot of the trading tools offered by more expensive brokers. This means if you can teach yourself what you need to know, instead of relying on a brokers assistance, you will have a much more cost effective way of trading by using a commission free broker.

Step 4:

Do you have the time to pick the right stocks? In this fast-paced world spending hours looking over stock charts is probably not realistic. Which means today's average investor probably needs to make the decision of whether they should simply invest in mutual funds instead of "individual" stocks, or use a professional technical analysis company to assist in narrowing down their choices. There are a few good companies out there that specialize in this kind of assistance, but there are also a lot of bad one's as well. So investors should do some research to get some unbiased reviews of these companies. Every new investor really has to take the time to understand what they are getting themselves into before they invest any of their hard earned money. I have seen to many people jump into the stock market without any real knowledge of what they are getting themselves into.
About the author: Chad Surges has a Bachelor's Degree in Business. He invites you to visit his website for free information about different investing techniques and strategies: www.lucky-dog-investing.com

Knowledgeable investors can determine when it is time to get in and out of certain sectors. Once investors figure out which sectors are the strongest; they can then determine which companies within those sectors look the most profitable.

Bull, Bear, or Sideways Market :

So what is a Bull, Bear, or Sideways Market?Bull markets occur when the major indexes, the DOW, NASDAQ, and S&P 500, are all going up. (GOOD FOR MOST INVESTORS) Economy as a whole is in good shape and investors are willing to put money into the market.
Bear markets occur when the major indexes, the DOW, NASDAQ, and S&P 500, are all declining. (BAD FOR MOST INVESTORS) Investors are basically selling their shares for whatever they can get for them and the economy as a whole is not doing well.
Sideways markets are basically a point when the indexes simply stall out and they are neither going up or down.
Different variations of these trends have occurred at different points in the history of the stock market. The trends can be long or short depending on a wide variety of factors.

Sectors of the stock market :

As you watch CNBC you will hear the term sector being thrown around a lot. A stock sector is a group of companies that belong to a similar industry.
Some examples would be the retail sector, pharmaceutical sector, automobile sector, or oil sector.
No matter how well the stock market is performing overall; there will always be sectors of the stock market that are doing good or bad at different times for various reasons.

Know about transfer of physical shares.

After a sale, the share certificate along with a proper transfer deed duly stamped and complete in all respects is sent to the company for transfer in the name of the buyer. Once the transfer is registered in the share transfer register maintained by the company, the process of transfer is complete.

Buy back

Buy back is a process by which a company can buy back its shares from shareholders. A company may buy back its shares in various ways: from existing shareholders on a proportionate basis; through a tender offer from open market; through a book-building process; from the Stock Exchange; or from odd lot holders.
A company cannot buy back through negotiated deals on or off the Stock Exchange, through spot transactions or through any private arrangement. Clearing and Settlement.

stock split

A stock Split is book entry wherein the face value of the share is altered to create a greater number of shares outstanding without calling for fresh capital or altering the share capital account. For example, if a company announces a two-way split, it means that a share of the face value of Rs 10 is split into two shares of face value of Rs.5 each and a person holding one share now holds two shares.

Know about Bonus Issue.

While investing in shares the motive is not only capital gains but also a proportionate share of surplus generated by the company from the operations once all other stakeholders have been paid. But the distribution of this surplus to shareholders seldom happens. Instead, this is transferred to the reserves and surplus account. If the reserves and surplus amount becomes too large, the company may transfer some amount from the reserves account to the share capital account by a mere book entry. This is done by increasing the number of shares outstanding and every shareholder is given bonus shares in a ratio called the bonus ratio and such an issue is called bonus issue. For example,If the bonus ratio is 1:2, it means that for every two shares held, the shareholder is entitled to one extra share. So if a shareholder holds two shares, post bonus he will hold three.

WIPRO

Wipro Ltd has announced the following Audited results for the quarter & year ended March 31, 2007:
The results for the Quarter ended March 31, 2007The Company has posted a net profit of Rs 8189 million for the quarter ended March 31, 2007 as compared to Rs 6575 million for the quarter ended March 31, 2006. Total Revenues has increased from Rs 35469 million for the quarter ended March 31, 2006 to Rs 38744 million for the quarter ended March 31, 2007.The results for the Year ended March 31, 2007The Company has posted a net profit of Rs 28421 million for the year ended March 31, 2007 as compared to Rs 20205 million for the year ended March 31, 2006. Total Revenues has increased from Rs 103796 million for the year ended March 31, 2006 to Rs 139527 million for the year ended March 31, 2007.The Consolidated results are as follows:The consolidated results for the Quarter ended March 31, 2007The Group has posted a net profit of Rs 8561 million for the quarter ended March 31, 2007 as compared to Rs 6179 million for the quarter ended March 31, 2006. Total Revenues has increased from Rs 31132 million for the quarter ended March 31, 2006 to Rs 43331 million for the quarter ended March 31, 2007.

The consolidated results for the Year ended March 31, 2007The Group has posted a net profit of Rs 29421 million for the year ended March 31, 2007 as compared to Rs 20674 million for the year ended March 31, 2006. Total Revenues has increased from Rs 106258 million for the year ended March 31, 2006 to Rs 150008 million for the year ended March 31, 2007.

SATYAM COMPUTER RESULT'S

Satyam Computer Services Ltd has announced the following Audited results for the quarter & year ended March 31, 2007: The results for the Quarter ended March 31, 2007 The Company has posted a profit after taxation of Rs 3975.00 million for the quarter ended March 31, 2007 as compared to Rs 2899.00 million for the quarter ended March 31, 2006. Total Income has increased from Rs 12875.20 million for the quarter ended March 31, 2006 to Rs 17784.00 million for the quarter ended March 31, 2007. The results for the Year ended March 31, 2007 The Company has posted a profit after taxation of Rs 14232.30 million for the year ended March 31, 2007 as compared to Rs 12397.50 million for the year ended March 31, 2006. Total Income has increased from Rs 50122.20 million for the year ended March 31, 2006 to Rs 64100.80 million for the year ended March 31, 2007.

Know about a no-delivery period, ex-dividend date, ex-date.

Know about a no-delivery period.

No-delivery period means during a perticular period , any investor should not buy that perticular share/security for delivery purpose.Whenever a company announces a book closure or record date, the Exchange sets up a no-delivery (ND) period for that company's share/security. During this period only trading is permitted in the security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that investor's entitlement for the corporate benefit is clearly determined.

Ex-dividend date.

The date on or after which a share/security begins trading without the dividend (cash or stock) included in the contract price.

Ex-date.

The first day of the no-delivery period is the ex-date. If there is any corporate benefits such as rights, bonus, dividend announced for which book closure/record date is fixed, the buyer of the shares on or after the ex-date will not be eligible for the benefits.

Learn about book-closure/record date.

Book closure and record date is to know more exactly the shareholders of a company as on a given date.Book closure mean's closing of register of the names or investors in the records of a company. Companies announce book closure dates from time to time. The benefits of dividends, bonus issues, rights issue accruing to investors whose name appears on the company's records as on a given date, is known as the record date.

Any investor might purchase a share-cum-dividend, cum rights or cum bonus and may therefore expect to receive these benefits as the new shareholder. In order to receive this, the share has to be transferred in the investor's name, or he would stand deprived of the benefits. The buyer of such a share will be a loser. It is important for a buyer of a share to ensure that shares purchased at cum benefits prices are transferred before book-closure. It must be ensured that the price paid for the shares is ex-benefit and not cum benefit.

What is a contract note?

It is a note that describes the rate, date, time at which the trade was transacted (i.e. selling or buying in share's) and the brokerage rate. A contract note issued in the prescribed format establishes a legally enforceable relationship between the client and the member in respect of trades stated in the contract note. These are made in duplicate and the member and the client both keep a copy each. A client should receive the contract note within 24 hours of the executed trade.

Know about stock Exchange

Know about Stock Exchange

A place/platform where buyers and sellers come together to transact in stocks and shares. It may be a physical entity where brokers trade on a physical trading floor via an "open outcry" system or a virtual environment.
Now day's it work's through electronic trading system.
In Electronic trading Brokers can trade from their offices, using fully automated screen-based processes. All their workplaces are connected to a Stock Exchange's central computer via satellite using Very Small Aperture Terminus (VSATs)/Bolt system. The buying/selling orders placed by you through your brokers reach the Exchange's central computer and are matched electronically.

Stock Exchanges in India.

1) BSE i.e. Mumbai /Bombay stock Exchange .
2) NSE i.e. National Stock Exchange (NSE).
are the country's two leading Exchanges. There are 20 other regional Exchanges, connected via the Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide trading via their VSAT systems.

Learn about share's

In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT's.

In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company (i.e. Primary market)or can be purchased from the stock market(i.e. Secondarymarket).

How to buy or sell the shares ?
There are licensed members called brokers to process every transaction in the stock exchange .
To trade in shares, you have to approach a broker or sub-broker to open an account called Demat Account. Most stock exchange brokers deal in very high volumes, but for small investors these brokers have a network of sub-brokers who provide them with orders.

The general investors should identify a sub-broker for regular trading in shares and palce his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it .

By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. Sometime's you also run a risk of making a capital loss if you have sold the share at a price below your buying price.
Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues Investments in stocks can generate returns through dividends, even if the price is low or high.

Insurance

What Is Life Insurance?

Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against.

The contract is valid for payment of the insured amount during:
The date of maturity, or
Specified dates at periodic intervals, or
Unfortunate death, if it occurs earlier.

Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. By and large, life insurance is civilisation's partial solution to the problems caused by death.

Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:

That of dying prematurely leaving a dependent family to fend for itself.
That of living till old age without visible means of support.

At the time of taking a policy, policyholder should ensure that all questions in the proposal form are correctly answered. Any misrepresentation, non-disclosure or fraud in any document leading to the acceptance of the risk would render the insurance contract null and void.

Protection:

Savings through life insurance guarantee full protection against risk of death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable.

Aid To Thrift:

Life insurance encourages 'thrift'. It allows long-term savings since payments can be made effortlessly because of the 'easy instalment' facility built into the scheme. (Premium payment for insurance is either monthly, quarterly, half yearly or yearly).

For example: The Salary Saving Scheme popularly known as SSS, provides a convenient method of paying premium each month by deduction from one's salary. In this case the employer directly pays the deducted premium to the insurance company. The Salary Saving Scheme is ideal for any institution or establishment subject to specified terms and conditions.

Liquidity:

In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides, a life insurance policy is also generally accepted as security, even for a commercial loan.

Tax Relief:

Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force.

Assessees can also avail of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise.

Money When You Need It:

A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time.

Children's education, start-in-life or marriage provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies. Alternatively, policy money can be made available at the time of one's retirement from service and used for any specific purpose, such as, purchase of a house or for other investments. Also, loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions).

Who Can Buy A Policy?

Any person who has attained majority and is eligible to enter into a valid contract can insure himself/herself and those in whom he/she has insurable interest. While underwriting proposals, certain factors such as the policyholder’s state of health, the proponent's income and other relevant factors are considered by the Corporation.

Insurance For Women

Prior to nationalisation (1956), many private insurance companies would offer insurance to female lives with some extra premium or on restrictive conditions. At present, women who work and earn an income are treated at par with men. In other cases, a restrictive clause is imposed, only if the age of the female is up to 30 years and if she does not have an income attracting Income Tax.

Medical And Non-Medical Schemes

Life insurance is normally offered after a medical examination of the life to be assured. However, to facilitate greater spread of insurance and also to avoid inconvenience, Many insurance provider has been extending insurance cover without any medical examination, subject to certain conditions.

With Profit And Without Profit Plans

An insurance policy can be 'with' or 'without' profit. In the former, bonuses disclosed, if any, after periodical valuations are allotted to the policy and are payable along with the contracted amount.

In 'without' profit plan the contracted amount is paid without any addition. The premium rate charged for a 'with' profit policy is therefore higher than for a 'without' profit policy.

Mutualfund

Mutualfund is best option to invest in equity market.


What is a Mutual Fund?

Mutual fund is an organisation which collect's the money or fund from the people to invest in sharemarket. Mutual fund issues units to the investors in accordance with quantum of money invested by them.
Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities or equities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Investors of mutual funds are known as unit holders.The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

Sharemarket , Insurance

Know about sharemarket

• What is insurance?

What is mutualfund?