Prajna Capital - An Investment Guide

  Putting all your eggs in one basket is a risky decision. Therefore, an important principle of investment is to diversify your portfolio. Spreading investments over multiple, unrelated products reduces the risk of a sudden, unexpected outcome.    In a diversified portfolio, a loss (risk) in one product is offset by gains from another product. As such one can expect to get decent returns, though the returns would not be exceptionally high or exceptionally low. Typically, the higher the risk you take, the higher the returns you can expect. Hence, every investor must think about how much risk he is prepared to take on.    One can invest in equity, debt, gold, real estate etc. Each class has different levels of risk and offers variable levels of returns. By diversifying the portfolio of investments across multiple asset classes, one can generate high returns for a given level of risk. Equity has high risk but also have the highest potential to give high returns over the long term. Eq...

Investing in jewellery and utensils still considered best option THE white metal saw a big rally over the past one week with silver prices breaching the Rs 50 per gm mark in the domestic market and settling at that level. On Tuesday, the white metel scaled Rs 51,150 per kg mark. For those cursing themselves for not having invested in the white metal so far, there is still hope. Financial Chronicle brings you a detailed study on how, where and why to invest in silver. Size of metals in your portfolio: Precious metals like gold and silver should ideally form 5 per cent to 10 per cent of an individual's investment portfolio, according to financial experts. Those who do not have silver as part of their portfolio as yet, could allocate about 5 per cent of their investment, that too in a staggered manner, in silver, experts say. The reason is that though the prices of silver and gold have been witnessing an increase over the past few weeks, the quantum of increase has not been what...

MOSt Shares Nasdaq-100 will allow exposure to global bluechips "THE product will provide Indian investors access to US equities in Indian rupees" Robert J Hughes MD-index services, Global Index Group NOW Indian investors can own a basket of global blue chip stocks comprising Apple, Google or Microsoft in Indian rupee-denominated investments. This follows the launch of an exchange traded fund based on Nasdaq-100 index by Motilal Oswal Asset Management Company. The `MOSt Shares NASDAQ-100' ETF is India's first US equities based ETF and will track Nasdaq-100 index. This is the second global equity index based ETF in India. Last year Benchmark Asset Management had launched an ETF that tracks Hong Kon Stock Exchange's benchmark index Hang Seng index. Nasdaq-100 is one of the most widely traded and held index, it is also the second most liquid index in the world. MOSt Shares Nasdaq-100, an open-ended index ETF will provide Indian investors an exposure to top 100...

The fund targets the same sectoral weights as the BSE 200, subject to the flexibility of selecting stocks within a particular sector to generate longterm capital growth, income generation and distribution of dividend. In its eight-year history, the fund has underperformed only once, in 2003, compared to its benchmark, but it started outperforming its category average only from 2006. This is largely attributed to Mahesh Patil taking over as manager in November 2005. The performance during market upswings has been mixed. The large-cap focus has limited its ability to benefit from rallies led by mid-cap stocks, but its ability to change track quickly in sync with market trends provides a higher salve. In 2009, it delivered 90.45 per cent, when the category average was 80.19 per cent. "We got into good quality stocks at distressed valuations. We also bought into certain stocks when the de-leveraging story began to play out and firms were able to raise money as liquidity eased,...

Insurance companies may like to deal with hospitals and third-party administrators ( TPAs ) more cautiously after going through the latest data on medical inflation. According to data analysed by the Insurance Regulatory and Development Authority (Irda), the claim severity is 83 per cent higher in case of cashless mediclaim than reimbursement in the last two years. Cashless mediclaim allows policyholders to get treatment without paying for it at the hospital. The insurance company settles the bill directly with the hospital. The report said the overall claim severity had increased by 27 per cent for 2009-10 as compared to 2008-09, while circulatory disease had gone up by 56.99 per cent. The intensity of claims varies according to the disease, reflecting the complexities of treatment. Similarly, claim severity increased in all cases, except for endocrine, eye, infections and respiratory diseases, the report said. There were, however, no major variations in the average number o...

You can take advantage of several investment avenues with VLIP    A variable life insurance plan ( VLIP ) combines investment and insurance, just like an unit-linked insurance plan ( ULIP ). Variable life insurance schemes offer flexibility in the proportion of mortality and savings components. These plans also offer more transparency, simplicity, quick liquidity, guaranteed minimum returns, transparent charges and ample risk cover.    This type of life insurance allows you to participate in several investment options simultaneously targeting your premiums to separate accounts. Generally, the optional investment funds include stocks, bonds, money market funds, equity funds, or a combination of them all. Variable Life Insurance allows you to switch from one sub-account to another.    You can also apply the interest earned on these investments toward the premium, reducing the amount you pay. In a departure from the ULIPs, the returns are declared by insurance companies annually and...

Hybrid funds invest in a mix of both equity and debt instruments. These hybrid funds are further classified as equity oriented hybrid funds and debt oriented hybrid funds on the basis of the proportion of its allocation into equity and debt.   Monthly Income Plans ( MIPs ) are debt oriented hybrid funds with a small equity component. They work with the explicit objective of generating regular income for its investors by outperforming pure debt investments with the help of an 'equity push'. MIPs generally invest 0% to 25% of its assets in equities and the balance into debt and money market instruments. Debt instruments provide the safety and stability of regular income from coupon payments, whereas equities provide the chance to earn an extra income through dividends and capital appreciation over a period of time. However, in times of market uncertainty, equities can get very volatile, which may negatively affect the overall portfolio returns.   Of late few MIPs have intro...