Prajna Capital - An Investment Guide

IS INVESTING an art or a science — this has long been a topic for debate? For an investor, the argument only adds to the ever prevailing dilemma that one is faced with in the world of savings, investments and returns. Here’s a sample of typical questions that an investor could ask: what is the right way to save money? How much do I need to save? Where do I need to invest? Who can I turn to for investment advice? How do I ensure that I can get my money back when I need it? And if these are not complex enough, things get more complicated when one sees a boom in the stock markets or the property markets — every investor starts to “evaluate” his or her strategy and new doubts begin to appear about what they have been doing. As in every complex problem, the solution lies in the simplicity of the investing process. There is no “one” right way to create an investment strategy and every investor needs to follow the same simple rules for success. An investor needs to focus not on the shor...

In a volatile stock market, choosing a potential scheme is more challenging. Investors need to look beyond short-term returns There has been plenty of talk about the falling returns from mutual funds with most funds posting negative returns for one year duration. In the case of systematic investment plans ( SIP ), the picture is no different, though investor gets to invest over different market periods. However, the negative returns from SIPs can't be blamed as they generally tend to offer handsome returns over the long run. On the other hand, in a booming market environment, even SIPs tend to give excellent returns. Needless to say, many investors were used to such whopping profits from SIPs even over the short term, and hence, the current market environment has been a cause for worry. In the present market scenario, choosing the right mutual fund has become more challenging as no scheme has managed to hold on to its leadership status beyond a few weeks. So, the time has come for...

systematic withdrawal plans (STPs) are for optimal and efficient investing EARLIER in this series, we discussed the investment and redemption strategies of systematic investment plans ( SIPs ) and systematic withdrawal plans ( SWPs ). SIPs let you invest a specified sum of money at specified intervals—generally weekly, fortnightly, monthly or quarterly—irrespective of market conditions. SWPs let you withdraw money systematically from funds, as opposed to lump sum withdrawals. This week, we look at a plan that combines the best of systematic withdrawal and investing—the systematic transfer plan ( STP ). An STP withdraws a pre-specified sum of your money from one scheme, and invests it another within the same fund house, at regular intervals. It thus lets you re-allocate your from a liquid fund (a money market debt fund with low risk, but much higher returns than a bank savings account) to one or more equity schemes of the same fund house. As there is no exit load on a liquid fun...

The domestic investors are increasingly realising that it takes a combination of timing, patience and probably little bit of luck to make money from the stock markets. Those who missed the opportunity of booking profits during the earlier boom run are regretting, and even those who made an entry less than a year ago are not a happy lot. That is sure to make many wonder what it takes to be an investor in the stock markets. Check out if you have these traits. Risk appetite Equity sure lets you earn more money but not all your investments can turn into a goldmine. This is particularly true when you bet on stocks. As a result, an equity investor needs to have the ability to take risks which could be in the form of negative returns. While the prospects of loss of capital are much lower when the investment horizon is long, there are chances that some stocks may not recover even in the long term due to a change in their business prospects. In such cases, 'stop loss' becomes a st...

Most investors want to play safe in turbulent times, yet expect reasonable returns on investments. Below is the list of five themes to help you come out unscathed DARE to bare your wisdom in the current market situation? You better shelve the idea if you have the faintest clue of the factors behind the negative sentiment. In fact, over the last six months, weak global market cues, skyrocketing commodity prices, particularly crude oil, high inflation, suspense over signing of the nuclear deal and political uncertainty have all cast a pall of gloom over the markets and made even the best laid-out investment plans go awry. And if you are a first time investor, this can’t be a more inappropriate time. All, however, is not lost yet. Out five investment themes which may help you to beat the market blues over the next six months. DEFENSIVE POSITIONING No investor likes a range-bound, highly volatile market, marked by spikes and falls at regular intervals. And if you believe industry analysts,...