Skip to main content

Mistakes Smart Investors avoid

Tax Saving Mutual Funds Online

Current open Infra Bond Application form

 

Stay the course in a bear market and think long-term to gain from stock play


   Stock market was not a great place to be in last year. A host of issues like the euro zone crisis, slowdown in the domestic economy and the policy paralysis spooked investors in 2011.


While the broad-based Nifty lost 21% during the year, the CNX Mid Cap lost 32%. Some sectoral indices like the CNX Infrastructure and Bank Nifty were down 39% and 32%, respectively. And things don't look rosy for 2012. Most investment experts believe the stock market is likely to remain subdued this year too.

 

However, these don't mean you (or investors) should stay away from the market, as the market can always spring a surprise. For example, not many people were bullish on the market in 2009, but it gained over 80% that year. That is why it is important that you tread cautiously in the market so that you can reap the most from any upside.

Don't Buy A Stock Because It Is 'Cheap'

Since we were in a bear market for the major part of 2011, several stocks were beaten down badly. Especially, most of the stocks in the infrastructure as well as real estate sectors were badly mauled. Many investors feel that since these stocks — badly bruised and available at attractive valuations — are great value picks. One must, however, realise that price does not matter when picking stocks. The valuation of a business determines how much the stock is worth and not the price at which it is traded.


Before buying a stock one should research well. Consider how well the company is likely to do in the current macro-environment, how much it depends on government policies, does the management have a proven track record and so on before deciding to buy a stock. Buy after you do a proper research. Also, keep in mind that penny stocks are an easy target for traders to manipulate since there is low ownership, low market capitalisation and they can put in large buy or sell orders. At any opportune moment such operators will dump the stock, leaving retail investors stranded.

Don't Panic And Sell If The Market Goes Down

The stock market is likely to be volatile this year too. Obviously, many investors get nervous when there is a sharp fall in the market. More so, when several blue chips lose heavily. For example, many blue chips like L&T, State Bank of India, Reliance Industries have recently touched their yearly lows.


However, experts advise investors against taking hasty decisions on the basis of short-term market conditions. There is no need to panic and sell as valuations are low for several blue chips which indicate we are close to the bottom. From lower levels the bounce back could be pretty sharp. As seen in March 2009, when the Sensex touched the levels of 8500, it bounced back pretty fast, and by November 2009, it was close to 16,000. Moreover, the fundamentals of the Indian economy are sound and there is no such need to panic. GDP growth is expected to be robust at 6.5%. Even on the global front, recent data on jobless claims and new home sales from the US is positive, though some uncertainty still remains on the euro zone. The market could be volatile on bouts of global uncertainty, but that phase is expected to be temporary.


The time to buy is when the markets are falling. So if you have the cash and are convinced about the fundamentals of blue-chip companies, this could be a good time to buy. Definitely this is not the time to sell.

Don't Behave Like A Trader

Many investors are ready to hold a stock for as long as three years when they buy it. They do fundamental research and after they are convinced with the business and valuations, they invest.


However, once the investment is done, they need the flimsiest of excuses to lose patience and hit the sell button. They start checking stock prices virtually on a minute to minute basis. Not to forget the so-called experts holding forth on the prospects of the stock in the next two days to next month.


The biggest mistake people make is not differentiating between longer-term investing and shorter-term trading, which we call speculation. The rules are totally different for the two.

Don't Stop Your Equity Sips

Systematic investment plans (SIPs) are a common tool used by many investors to invest in equity mutual funds, individual stocks as well as exchange traded funds (ETFs). Typically, since you invest a fixed amount every month, it eliminates the risks associated with timing the market. Now with the outlook for the stock market having turned negative, many voices are wondering aloud whether it makes sense to continue with SIPs.


It is virtually impossible for any investor to buy at the bottom and sell at the top. Hence if you stop your SIP in bearish markets it would defeat the very purpose of investing in this manner.


Since the markets are bearish you can get a higher number of units at lower prices over the next few months. Besides this, many of us do equity SIPs to meet various goals in life such as children's education, wedding, or a foreign trip. Cancelling your equity SIP in between or skipping a few installments would make it difficult for you to meet those goals. While equities can be volatile in the short-term, in the long-term they offer higher returns as compared to other asset classes.

Don't Stray From Your Asset Allocation

One thing which most financial planners suggest is sticking to your asset allocation. Asset allocation is diversifying your money across different asset classes such as equity, debt and gold. The objective of this exercise is to minimise risk and maximise returns. So if you have 50% of your assets in equity, 40% in debt and 10% in gold, maintain it.


Many a time, while chasing high returns, investors end up changing their asset allocation. Just because gold did well in 2011, does not mean that you increase allocation to gold in your portfolio.

 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

 

Submit filled up application    Collection canter near you

Popular posts from this blog

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now