Prajna Capital - An Investment Guide

A well-known fact about equity investments is that it doesn't rob you of your returns in the long run. In fact, equity has always been kind to those who have showed patience and the perseverance to be invested during tough times. While such a strategy is gainful in the long run, it also needs a careful selection of funds. Diversification of risk among different schemes is an unwritten rule for a perfect investment strategy. In addition, one has to follow a few tips for building a good equity portfolio. Diversify according to risk appetite While diversification is a prerequisite, divide your portfolio according to your risk appetite and investment horizon for the portfolio. For instance, splitting the corpus among five diversified funds will be meaningless as all funds will have similar investment strategies. Hence, diversification has to be according to your needs. One of the smarter options could be to divide the portfolio into short-term and long-term, and then choose funds accor...

Mutual Funds growth schemes may have provided higher returns than their dividend counterparts during the bull run. But not any more! Dividends paid in the past five years have not only saved investors from the market tsunami, but also ensured higher returns Mutual fund ( MF ) houses and their distributors often use dividends as a carrot to lure investors to their schemes. Dividend, in common parlance, is understood to be a share in the profits of the company in which the investor has a stake (shareholding). However, in case of an MF scheme, dividend is nothing but a part of the capital appreciation of the investment returned back to the investor in piecemeal. It is for this reason that the net asset value ( NAV ) of a scheme stands reduced to the extent of dividend declared by the MF scheme. Dividend and growth are the two basic options that an investor can choose from while investing in an MF scheme. Unlike the dividend option, growth invests any appreciation of initial investment ...

This article outlines different degrees of risk tolerance investors have, and suitable investment options Investors often hear of the maxim, 'greater the risk, greater the reward' . Risk tolerance is the level of comfort with which a person takes risk. What exactly is this risk and how does it effect an investor's decision? Risk appetite can be defined as the willingness of an investor to bear risk. Investors despise uncertainty. Risk appetite, risk aversion and risk premium is often used in place of the other. However, there are some finer nuances that distinguish one from the other. A) Risk appetite - Some people take higher risks . In other words, they are willing to lose more until they get the expected returns. A person who can stand all his money getting eroded has a greater risk appetite. B) Risk-averse - Reluctance to accept. Risk-averse persons exhibit reluctance to accept a bargain with an uncertain payoff. He would instead be content with a deal that is...

These days, the stock markets are quite volatile in nature with a bearish bias. Rallies do not last long in the markets and peaks of market rallies are reducing. The markets are hitting fresh lows in every fall. Many blue chip stocks are trading 50 percent lower than their high levels. Many stocks are currently trading at their year's low prices or all-time low prices. Many investors have lost their hard-earned money and many others are stuck with stocks that have corrected heavily in the last few weeks. Here are some tips for investors already invested in the stock markets: 1) Hold fundamentally strong options The domestic macroeconomic fundamentals are strong. The GDP growth rate is expected to slow down slightly from the nine percent last year to around 7 - 7.5 percent this year. This is still quite good and encouraging in comparison to other developed countries. The current market crash can be attributed largely to foreign institutional investors' ( FIIs ) outflows but...

The stock market has been staying below its 200-day moving average and forming lower tops and lower bottoms, confirming that it has tanked out THE debate on whether we are in a bear market or not should be over, as it now feels and seems like a bear market, says brokerage house Morgan Stanley, in its India strategy report titled ‘How Long Will This Bear Market Last?’. A key indicator has been the market staying below its 200-day moving average ( DMA ), and forming successive lower tops and lower bottoms. In the three bear markets of the last 20 peak, Indian benchmarks have already fallen close to 40% from their record highs seen in January this year. But the moot question here, according to Morgan Stanley, is how long this bear phase will last, and not how much further prices are going to fall. This bear market has averaged 1.3% in the 25 weeks that it has fallen since its January top—slightly higher than the average of 1.1% in the first 25 weeks of the previous three bear markets. Mor...

The First Major Axiom: ON RISK Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough. The Second Major Axiom: ON GREED Always take your profit too soon The Third Major Axiom: ON HOPE When the ship starts to sink, don't pray.Jump. The Fourth Major Axiom: ON FORECASTS Human behavior cannot be predicted. Distrust anyone who claims to know the future, however dimly. The Fifth Major Axiom: ON PATTERNS Chaos is not dangerous until it begins to look orderly . The Sixth Major Axiom: ON MOBILITY Avoid putting down roots. They impede motion. The Seventh Major Axiom: ON INTUITION A hunch can be trusted if it can be explained. The Eighth Major Axiom: ON RELIGION AND THE OCCULT It is unlikely that God's plan for the universe includes making you rich. The Ninth Major Axiom: ON OPTIMISM AND PESSIMISM Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic. ...

The market has fallen, leading investors to think of safer havens to invest. But here’s why you may still bet on the equity market. Here we bring some of the strategies. WONDERING whether to stay put in your stocks that may have been hit in the recent market crash or to liquidate and shift investments in other asset classes. Here are 10 reasons why it still makes sense to remain invested. Markets have come down from their recent highs in the past few weeks. While some of us might be thinking of cutting losses and putting money in safer havens, there are more than one reason still favoring the equity markets. Let’s check them out: a) Long-term plan, lest we forget: The basic principle that often gets buried in a bull market situation is that one should make investments with a long-term perspective. Any serious investor should remain invested in stocks, no matter what the current market situation is, for a couple of years but if the idea is to make quick bucks, probably he should sell an...