Friday, 31 August 2018

6 Things You Should Know Before Starting a SIP

Mutual Fund SIP

Welcome friends. There is a new fashion in the market, i.e start SIP. Many peoples are searching about SIP in the internet and most of them are ending up with investment in SIP. But whatever the mutual fund distributors are claiming about their mutual funds and about starting SIP are not fully correct. Here I'm going to discuss 5 points which you must ask your mutual fund adviser or distributor before starting a SIP.

1. Fund Expense Ratio - Expense ratio is the expense which you bear on behalf of your investment. In simple language it is the fees or commission which is given to your mutual fund adviser or distributor. Many investors don't even know that they are paying money to their adviser from their own pocket. So you must ask your adviser to state expense ratio and compare the ratio with other funds in the same category.

2. Average Return - Well, I think everyone is concern about it but still asking is different and analyzing is different. I want to say that compare there average return with other funds. You also check the portfolio of your fund so that you can know in future what is that sector, on which your fund is betting on.

3. Composition of Fund - Composition of fund means the ratio of your fund allocation to different asset catagory. It can be equity, debt, money market,gold, commodities, real estate. You must understand how much portion of your fund is allocated to these categories. This is important because the will define your risk profile and risk taking capacity.

4. Close ended or Open Ended - Open ended fund means you can withdraw your money a day after the day of investment. On other hand close ended fund means you have to remain invested for a specific period, i.e lock in period. It can be one year, three year or five years. This is important to know because everyone time frame of investment is different.

5. Tax Benefits - There are certain funds which are eligible for tax exemptions. They are called ELSS or equity linked saving scheme. You can claim exemption under section 80C of Income Tax Act of ₹150000 in India. If you are investing for ax exemption then make sure your fund is in ELSS Catagory.

6. Market is the King -This point is a common thing which I write in my article. This is because truly nothing is bigger, wiser or better than the market. Before investing you must ask about the market. For simplicity market means Nifty or Sensex. To make it more simple consider Nifty as a fruit. Check its value in any business news channel. You can also check from internet. It's my rule that I never invest when Nifty is high. You can follow this or ignore this. 
This is important and I will give an example to make you understand. In 2008 January Nifty's value was ₹6250 and today Nifty's value is ₹11720 i.e 87% absolute return in 10 years. If some persons would have invested in December 2008 when nifty's value is ₹3000 then today his absolute return will be 290%. You can see the difference of investing in market in different times. So this is a general advise. Again you can follow it or ignore it.

That's all for today. 

Happy Investing.

Monday, 27 August 2018

What is SIP? It's Advantages and Disadvantages

Mutual Fund SIP

Hello friends, in this post we are going to discuss about SIP, its advantages and most importantly which no one will say you, its disadvantages.

So imagine what we used to do in 90's when we were kids. People had piggybanks but I personally had a small box where I used to put coins whenever I get money. There was a lot of emotions behind that and specially I used to fight whenever anyone touched my box. Imagine how our grand parents were saving money. The -most common sources were
  1. Fixed Deposits(FD)
  2. Recurring Deposits(RD)
If I will explain the true meaning of SIP then it will be similar to Recurring Deposits. SIP is modern era's RD. So what does SIP do? In SIP a professional invest money in capital markets on behalf of his/her clients. It's as simple as that. It's as simple as planting a small tree. It is as simple as taking care of your small baby.

Advantages of SIP:-

  1. Safe From Market Fluctuation - One of the most important and remarkable advantage of SIP is, it saves you from market fluctuations. Ups and downs are always happening in markets but if you are doing an SIP, that means you are systematically investing money in all ups and downs of market. So ultimately your buying costs will be averaged out. And it will only happen if you will remain invested for atleast 15-20 years.
  2. Small Investments - In India SIP can be created with a minimum of ₹1000. And believe me that's very small account like our traditional investment RD. Most important thing is your ₹1000 is further invested in different company by diversifying your portfolio by your mutual fund manager. You can even start and SIP in ELSS category with ₹500. I suggest to students to start SIP in ELSS. Believe me its beneficial than all investment options.
  3. Tax Exemption - This is a welcoming step by Indian Government that you get tax exemption if you invest in ELSS that is equity linked saving scheme. You can claim expemtion under section 80C upto 100000 per annum.
  4. Expertise of Experts - There is no need to pay lakhs of money to professionals. Because your 1000 is managed by industry professionals with vast experience. So you can assume at least your money are in safe hand from rest of the peoples who invest directly in stock market.
  5. Portfolio Diversification- It is well said " Don't put all your eggs in one basket." We all know this but how many of us understand it? I have personally saw portfolio of peoples and I'm surprised that only 1 among 20 peoples has a portfolio of stocks. Rest have 4-5 stocks in their portfolio. But when you invest in SIP as I have already mentioned your money are invested in 50-100 stocks. So your risk will be significantly lower than rest of the crowd.

Disadvantages of SIP:-

  1. Timing of market- Though there are many benefits of SIP still it has some drawbacks. Firstly timing of market. This means assuming everything is constant, if you have started your SIP in bull market that is when market is trading in all time high then there is a chance that your return will be lower than those who have invested in bear markets.
  2. Short Term - SIP is not ideal for short term. In my opinion if you are doing SIP then please keep in mind that you have to give it time. Make sure you continue a SIP for atleast 15-20 years. If you have time like if you are of age below 30 then continue your SIP for 25-30 years. Then only you will be benefited.

 That's all for today. Thank you for your time.

Happy Investing.
Ashish Kumar

Friday, 24 August 2018

Multibagger - Indusind Bank, 81% Return in 20 months


"We will consistently add value to all our stakeholders and emerge as the ‘best-in-class’ in the chosen parameters amongst the comity of banks, by doubling our profits, clients and branches within the next three years." This is the mission statement of Indusind Bank and I'm glad to write that they really mean "doubling our profits, clients and branches. If we take one of the primary objective of business, i.e wealth maximization, then it has double its investor's wealth in a short span of time.

Indusind bank annual report
(Annual Report FY 2017-18)

It's the extract of its annual report for FY 2017-18. We can clearly see the growth which company is achieving. Not only this, it is also showing promise for future. There is no doubt that there is still a long road ahead for this bank. But in this segment we are here to calculate its return which it has rewarded its investors.

Talking about its price, it was traded for 1100 in January 2017. From there it has never faced downtrend in its daily charts or weekly charts. That is obviously a good indicator for any business organization. Just have a look in its technical charts.

indusind bank daily chart

It has already touched ₹2000 that is 81% return in 20months which is a decent profit. It has truly doubled the wealth of investors. It is trading at a P/E of 31.2 which is lower than the industry P/E which is 35.62. That makes it even more attractive. I strongly believe this is just the beginning. Index are trading at record high, so there may come small corrections. But after that its price will again fly high. With strong fundamentals and technical I think this could be a multibagger of next decade.

That's all for this weekend.

Thank you

Happy Investing

Monday, 20 August 2018

Stocks to buy now - TATA MOTORS

Welcome guys to amazing adviser. Today I am  going to share an investment idea for long term wealth creation. This is totally on my research.

So today's stock is TATA MOTORS. The main reason for choosing this stock is its price. It is trading in its 52 week's low which is around ₹243.10 and its current price is around ₹260. You can clearly see it in it's weekly chart.
Around ₹240 it has major support from last five years. So in my opinion it's the perfect time to buy this stock for long term wealth creation. This was the technical reason for buying this stock. Except this I can also tell few fundamental stories to buy this stock.

First, the brand name of TATA. Personally I have always admired Shri Ratan Tata. He is a gem and a true example of how a leader should be. And I don't think TATA MOTORS will shut down in next decade or few decades.

Secondly it's market capital is around ₹75000 Cr. and that's not a small amount. Thirdly company is showing promise in its portfolio and continuously launching new products. I had read its 73rd Annual Report and found that in FY 2017-18 it has launched 50+ commercial vehicles, 2 passenger vehicle and 9 vehicles in JLR segment. It is also expending significant amount in research and development that's showing that it is preparing itself for future.

Lastly the most important thing to check is sustainability of it's business model. According to my guru Warren Buffet "You should understand the business in which you want to invest." We all know TATA MOTORS is the largest commercial vehicle manufacturer in India. I mean whenever I go outside I see 98% of commercial vehicle of TATA MOTORS. So this is a very simple model for a retail investors.

Some experts are showing concern about the future growth potential of this company. They are saying that future will be of electrical vehicles. I totally agree on that but wait a minute. Do you think TATA MOTORS management don't know about this fact. I mean, they are more intelligent, more experienced and they have more resources, more knowledge of auto industry than anybody else. So don't think that they will sit in silent and company's growth will go down.

I am very passionate towards luxury car, never know if I'll ever own them but yes, I'm sure that whenever I'll buy I'll make sure I'll buy Jaguar. Why? Because it's owned by my country's company. I am proud for that. Just because TATA MOTORS posted weak results in JLR segment doesn't mean everything is wrong.

LIC owns 4.4% stake in TATA MOTORS and continue to hold throughout the year and remained top shareholder of this company.

In the end I'll not say go and buy just because I am recommending. One thing which I learnt from my small experience in share market is "Listen to all but do what you feel right." In my opinion it's a good time to buy this share for long term. If you buy then make sure don't buy in single chunk. Whatever you want to invest should not cross 5% of your total portfolio.

You even can accumulate around ₹200 level which is next support for this stock if its goes down which is worst case scenario. I hope you'll find this helpful.

Thank you
Happy Investing.

Ashish Kumar Dash

Disclosure- I personally have this share in my portfolio.

Saturday, 18 August 2018

Multibagger- HEG, 3000% Return in 1.5 Years

Hello guys, my name is Ashish Kumar Dash and I am currently pursuing Chartered Accountancy course. This is my own research and I hope you will find it helpful.

Today we are going to see a chart which I think I'm not going to see with any other stock atleast in this decade in Indian Stock Market.

Yes, I'm talking about the stock HEG or Hindustan Electro Graphites. The company is amongst the leading manufacturer of graphite electrodes. You can search about it's fundamental in its company profile. I am here to show you its charts.

As you can see that the price in this weekly chart of HEG and in first week of 2017 its closing is around 170/-
How much a normal person or an expert person can think of its price without looking at this chart. To be very honest I thought max to max 1200-1400 because I have seen moves like this. But the real price will blow your mind.

Yeah, the price is like shooting star without falling. Today it's price is around 4243/-. It has already touched 4500 level. To be very honest I don't know whether it is a fundamental story or stock manipulation but what I believe, these miracles are only possible in stock markets. In one and half year if you have invested 100000/- in HEG then today its value will be almost 3000000/- that is 30 times of your money. It's insane but one thing again we have to keep in mind that for this type of return you should possess a tremendous amount of patience.

If you have liked it then leave a comment.

"Without learning there is no earning."

Thank you

Ashish Kumar Dash
CA finalist