Fear is your best Companion, Embrace it!!!!!

I was holidaying in Goa in the 1^st week of October 2019. I took my family of 6 to this beautiful place for some fun family time. Indeed, we had a blast. We hired a villa in South Goa which is known for its clean beaches & its serenity. One of the beaches there offered parasailing & before leaving to Goa I had decided that I wanted to parasailing there. It’s not that I was doing it for the first time. I had experienced this adrenaline boosting experience for the first time in Malaysia. I wanted to do it again & may be every time I have an opportunity to do so.

When I first attempted parasailing in Malaysia, there was so much of fear in me & many thoughts came rushing to my mind. I was standing there by the beach seeing many of them going for it, enjoying & landing safely. As I was standing there, I was thinking what if I am the unluckiest one who might just drift away in the sky due to some technical issues, or what if my chute gets punctured & I fall from a great height into the sea or on land. Though the fear was engulfing my mind strongly, a larger force was driving me to DO IT. I faced my fear head on & decided to do it all alone … without a helper (who accompanies you while parasailing).  They instructed me for about 2 mins and let me know how I could land easily on the sand. Then I went up, still with some fear in me.  Once I was in the sky, the beautiful clear sea below me, the beach, the people and landscape from above mesmerized me. But the feeling of accomplishment was greater & NO FEAR. This was the experience of my lifetime. Now, when it was time to land I was told about the process & I don’t know whether I did it right to the T. I landed in the water just a few feet away from the shore.  I got completely wet & my partner was laughing her guts out. It might have been the most embarrassing thing for some but more important was the confidence that I gained through this experience.

Fear exists inside of you & not on the outside. As the great Mike Tyson once said “Fear is like a cotton candy, it melts upon contact”. Well after that experience in Malaysia & my recent one in Goa, I say that “Fear is your Best companion, Embrace it”.

In life, as in trading/investing in the stock market, there are risks you take. Many want to embark on a trading/investing journey, but they don’t because of the fear of losing their capital. Some come to the capital markets with many objectives & their journey stops abruptly because of FEAR. Fear tends to either stop you from excelling or it stops you from starting/moving forward as you over think what is supposed to be a simple process & make it a complicated affair. But, once you have understood the process & learn how to keep it simple, it’s easy.

Trading/Investing needs to be kept simple. It is not at all complicated or a rocket science as many fear. Once you embrace what Trading/Investing is & follow simple processes, you will be on the most memorable journey you have ever experienced.

Now, back to the Goa scenario … After landing, I also wanted my father in law, who is 65 years old, to experience this as I had seen some signs of interest in him as well. I tried persuading him but he just said “It’s ok, maybe next time”. I didn’t stop, I knew that he was interested (he & my dad spent nearly 45 mins watching others parasailing) but it was the fear which was stopping him & may be the same kind of thoughts which I experienced in Malaysia. My persuasion finally worked and I succeeded in getting him into the suit to go parasailing. In Goa, you don’t go alone, there will be another person from the company who will accompany you on this journey. My FIL went & experienced the beauty which I had explained before & he thoroughly thanked me for convincing him to go for it. More importantly what I could see in his face upon landing was the big smile & the confidence he gained through this experience which you cannot explain.

What this person did was simple. He embraced the fear & turned it into his companion. It was not because of me that he went parasailing but because he convinced himself that he could do it.

Embrace FEAR. Make it your ANTHEM!!!!! Start Trading/Investing by learning the process first. It will turn out to be your best companion and you will cherish it throughout your life.

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Will ETail Eat of Retail?

A decade ago buying a commodity like food grains or FMCG would happen at a nearby retail outlet when it was in urgency or in small quantities or at a super markets when it was periodically or monthly along with required household goods.

Then came in all the E-Commerce and E-Groceries like Flipkart, Amazon India and Groffers, BigBasket and so on respectively.  This slowly became a source of convenience and comfort, at the same time with all the payments banks and others who started offering cashback, and goodies led to an era where buying essentials from nearby retail outlets almost started becoming obsolete  or you are not updated. With the influx of smart phones and 4G network things accelerated without a speed breaker.

The biggest of the super markets also started feeling the heat so did the e-commerce websites as delivery manpower as well as the source destinations were geographically too far.  This problem is leading to bundling of offerings from Super Markets and E-Commerce Websites which some where started when Walmart wanted to enter India few years back and got a push when they bought over Flipkart few years back.

Today with Jio Mart, Reliance is trying to disrupt the E-Tail markets, which is giving rise to new pairing (not just partnerships) like Future Retail joining hands with Amazon to take care of delivery from the nearest warehouse or a store owned by them, but Jio Mart on the other hand is joining hands with most of the retail stores spread across the length and breadth of the country and is expected to pump in loads of money and make it a new way of shopping for consumers.

At the end of the day its consumer who is king and they would get benefited but the question for which no one has answer is who would survive, the big super markets of Future Group, Walmart or Amazon or Flipkart or Jio Mart and the Local Retailers?

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FINANCIAL FREEDOM : Myth OR # Topic of Our Day OR A Simple & Realistic Possibility

What is Financial Freedom? Is it not a state in life we all long for or expect, where money or the medium needed to transact on a daily basis to achieve a certain quality of life, is available to us on demand and more importantly we have control over that medium in our lives based on circumstance, need and desire. A lot of words to express a simple desire we all have which is – TO LIVE LIFE ON OUR TERMS, right! 

The commodity we know as money is a medium that enables the exchange of products & services between the two parties but the key point is that it’s only an instrument of paper where a central authority (the government) acts as the guarantor for the medium of the transaction. True intrinsic/financial value comes from being financially aware, competent and how one applies that awareness to their daily life in order to create income generating life skills/assets that enable the process of achieving financial freedom.

In my experience it comes down to three simple actions – BEING AWARE (ignorance is not an excuse), BEING DISCIPLINED (no deviation from the plan & goals) and BEING CONSISTENT (giving in to the “nice to have’s” is a no-no). The actions are of course to be applied for the duration it takes for you to achieve your goals and what may seem to be pain (giving up on things) at the outset, is the investment one makes towards their financial freedom.

Financial Freedom becomes a myth owing to the fact that a majority of us who are not able to achieve it or get frustrated with the journey, land up blaming it on all the wrong excuses for it not becoming a reality. 

Financial Freedom in some ways has also become only a # topic for the millennial generation which in my opinion is due to the lack of a holistic understanding of the process of money management & discipline i.e. awareness of all financial & investment options available, role of and how the capital markets work, role of and how the banking system works and how do basic macro economic changes impacts one’s daily life. This leads to more paranoia and confusion becoming the norm and that becomes the trending sentiment owing to social media. 

Financial Freedom is and should be every person’s life imperative – A BASIC NECESSITY. Money needs to work for us not the other way around and the first step towards that is to ensure that one has the right mindset when it comes to thinking about money, to truly understand what it is and how it works. In my view, financial literacy and education should be an integral part of any education system across the world, right from grade school in order to prepare the next generation to be financially competent. In conclusion, money is the only true tangible nexus connecting all of us, irrespective of who we are, where we are located, what we purse as a career option or want to achieve in our lives. Given this ubiquity, part of the responsibility lies with each one of us to do what is needed to become financially aware in order to enable that goal of FINANCIAL FREEDOM.

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Are You Sure If You Are A Trader Or An Investor?

It is important to know what you are up to in the stock markets. You know what’s the biggest problem in the stock market……..? Not knowing if you should trade or invest. Let’s make it simple…. Are you a speculator with a short term view on the stock or do you have a long term view?

As an illustrative example: The current price of ITC is Rs.255; one day target is Rs.258; three day target is Rs.260; one week target is Rs.262; one month target is Rs.270; three month target is Rs.275; six month target is Rs.290 and one year target is Rs.300; five year target is Rs.500. What do you want to do?

The decision you take here would decide your attitude with the stock; either you are going to marry (long term happiness/benefit) or would like to have an affair (short term happiness, perhaps). The prospect of an affair is exciting no doubt, that’s why perhaps there are more speculators in the market than investors!!

I always have wondered those who have been trading or speculating in stocks like Infosys, MRF Ltd. Wipro, Reliance Inds, Maruti, Asian Paints and the likes in the last 20 years have they made as much money as investors who had purchased then and left it for it to grow. I am sure an investor would have made more money than a trader. The problem is most of them fail to realize whom to marry and with whom to have an affair with!! They do ulta and cry foul.

There is no problem with trading, it has immense potential if one knows how to manage a trading portfolio, but I suggest that parallelly one should also build an investment portfolio. I have a friend who works for a media company who has been speculating in Maruti Suzuki stock since the price of the stock was in the range of Rs.3000. He has bought and sold this stock umpteen number of times; for profits of Rs.5 to Rs.25 per share he has been buying and selling; of course, he has made losses also en-route on a few occasions, he has never owned that stock but loves the price spread it provides to speculate. In the last four years (from 2013 onward) the stock has gone up by almost 300% and I am sure his balance sheet after accounting for profits and losses would not be as much. That’s what I said about not knowing whom to marry and with whom to have an affair with!!

Trading is full time job that requires strategies and continuous watching technical analysis charts because the price movements are fast and swift. Decisions have to be taken on booking profits and also cutting the losses; positions have to be taken in more than one stock to hedge the possibilities. It all requires time, effort and also concentration besides pumping money for margins.

Investing may not require so much attention and follow-up; if you are following some companies whose products/services are consumed or has a good consumption possibilities then you should buy them in small quantities. Choose at least 10 important sectors from the stock market and buy at least one stock per sector and keep adding to the quantity as when the stock corrects/falls. For example, if you think L&T is a good stock under the infra/engg space then buy it at every possible opportunity.

Learn on the way…….

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Is Your Portfolio A True Winner?

When we get ourselves to think about a balanced life what do we visualise?

We see ourselves as positive individuals taking care of ourselves, investing in our strengths, maintaining a bold mental attitude to tide over the life’s tough moments. It’s a wonderful picture of our life…the feeling of security is heart-warming. How about the investments that we make, giving us the same kind of fulfilment and security? A well balanced and powerful portfolio gives us the financial security and satisfaction. That is the beauty of Portfolio management.

About Portfolio Management:

A portfolio is a bouquet of different investment options like stocks, shares, mutual funds. Managing and making them work for us is an art. Portfolio Management thus is the blend of   art and science of making prudent decisions on investments.

We aspire to build a portfolio which compounds our hard earned money.

Portfolio management seen in another way is smart selection, and nurturing, of the bonds, shares and mutual funds, and giving them continued attention to grow and prosper.

Significance of Portfolio Management:

Portfolio management sets a direction for the best investment strategy based on age, income and risk appetite of the individual. The key focus of Portfolio Management is risk minimisation, and customisation, based on the individual’s needs and choices.

Elements of portfolio management

The key elements of portfolio management are asset allocation, diversification and rebalancing.

1. Asset allocation: The long term mix of assets of stable and volatile investments seeks to optimise the risk/return profile of an investor.
2. Diversification: It is the spreading of risks and rewards within an asset class, and seeks to capture the returns of all sectors over time, with reduced volatility.
3. Rebalancing: It is used to return the portfolio to its original target allocation at periodic intervals.

Objectives of Portfolio management:

The objectives of Portfolio management is to invest in securities to maximise returns, and minimise risks. A good portfolio has multiple objectives, and aims at achieving a balance among them.

1. Stable current returns: After all the investments are in place, the portfolio should yield a steady current income closely matching the opportunity costs of the funds of investors.

2. Marketability: The sign of a good portfolio is its liquidity, or easy marketability. It is profitable to invest in companies which are listed on major stock exchanges.

3.Tax planning: A good portfolio aims at tax planning, thereby offering the investor a favourable tax shelter, containing income tax and capital gains tax.

4.Appreciation in the value of capital: A good portfolio should appreciate in value in order to protect the investor during inflation. Thus a portfolio must contain certain investments which tend to appreciate in value after adjusting for inflation.

5.Liquidity: The portfolio should ensure that there are enough funds available to take care of investor’s liquidity requirements.

Types of Portfolios:

Here are five types of portfolios based on the investing strategies.

1. Aggressive Portfolio: This includes stocks with a high-risk, high-reward proposition

2. Defensive Portfolio: This is a conservative method of portfolio allocation and management, geared towards minimising the risk of losing capital.

3. The Income portfolio: This portfolio focuses on making money through dividends by generating positive cash flow.

4. The speculative portfolio: This is similar to a gamble as it carries more risk than other portfolios

5. Hybrid Portfolio: This is about venturing into other investments like bonds, real estate and commodities.

SWOT ANALYSIS:

Performing a SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) of an investment avenue helps us to understand and gain insight into workings of the company to help us in investments.

When we wish to invest in one particular company, we would also like to know about its different aspects, to determine whether the investment would be profitable for us .So how would we perform SWOT analysis before we invest? Let us see here-

1. Strengths: It is crucial to understand the strengths of a company such as management, services and customers before investing.

2. Weaknesses: This is also vital as it tells about the potential downfalls of the company. Studying the annual report of the company helps us to gauge the weaknesses while making the decision about investing.

3. Opportunities: Some of the opportunities to be considered are internal and external growth opportunities and social trends.

4. Threats: Every investor has to consider the threats to his investments. Some common threats are litigation, Government legislation. and direct competition.

Building a healthy portfolio, and making it win for us, requires a sound knowledge about the investment strategies. So the reputed Stock Market Institute (SMI) in Bangalore has designed a variety of enriching courses to impart knowledge about trading strategies.

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Careers in Capital Market- Treasure to be explore

Career Choices have never been so exciting and diverse as these days. We see the youth today moving towards offbeat career paths to give shape to their professional dreams and passions.

While exploring the various offbeat career paths, a thought just springs in our mind…  “How about a different career in the finance sector?”

This question definitely sparks the curiosity in many of us…

The financial services Industry in India has been enjoying a robust growth   with the asset management industry  being one of the fastest growing in the world. As of November 2017, 42 asset management companies were operating in the India. At the end of March 2018, assets under management of mutual fund industry stood at Rs 21.36 lakh crore

A window to a new  world:

While giving a thought to careers in the finance sector which can be financially rewarding and intellectually stimulating, we come across the term Capital Market space. Sounds interesting and exciting..Isn’t it?

Let us understand what exactly this Capital Market is all about. In simple terms,   the Capital Markets include all activities associated with the flow of financial capital between investor and borrowers.

The capital market can be divided into:

1.Primary Markets: where  new stocks are sold

2.Secondary markets: where existing securities are traded.

Career opportunities galore:

To gain an insight, positions in the capital market can be in Commercial banking, real estate and Insurance.

Right skill set:

The skills needed for career in Capital Market:

1. Knowledge of Economics to understand what drives economical changes

1. Research and Analytical skills for Market analysis
2. Decision making skills
3. Good communication skills

Certifications:

1. MBA in MBA in International Business & Finance With Professional Diploma in Capital Markets
2. Certified Program in Capital Markets from Stock Market Institute

So armed with the finance degree, right certifications and strong business savvy, the youth aspiring to shape a great career in finance sector can definitely give a serious thought to the capital market space.

Watch Mr. Balaji Rao speak on Career Opportunities in Capital Market:

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The Power and Promises Of Passive Income

How would we like our ideal future to look like? A relaxed, laidback lifestyle with family and no tension about the income. Sounds fabulous and too good to be true. It is possible if we can plan our life, centred on financial freedom.
“The key to financial freedom and great wealth is a person’s ability or skill to convert earned income into passive income or Portfolio Income”-Robert Kiyosaki. This speaks convincingly about the power of passive income in our life.
Many people dream of a cosy, stress free life where they can just enjoy and explore life and see themselves soaking in the abundance that life has to offer. But what about the financial aspects? Why worry? Passive Income is the solution for this! The path to passive income is not smooth. Agreed… but it is not tough either. The thought of having ample family time, enjoying the pleasures of travelling and other opportunities is unquestionably invigorating and delightful! Harnessing the amazing power of this passive income is a great way to enjoy a lavish lifestyle and peaceful life.

What is Passive Income?

Passive income is the money that is earned regularly without being actively involved in it. We may have to invest a little time, efforts and energy in it during the initial stages but later this income generates itself. The difference between active and passive income is that the active income requires constant input of time to generate income but passive income does not. This is the only income that sets you free from the rat race and which works for you whether you constantly work or not. As long as we can ensure our passive income outpaces our monthly expenses, we have the freedom of spending as you choose. This reduces our stress, anxiety and fear of failure. The anxiety of paying the next bill, and other ‘what if’ scenarios. Passive income helps to alleviate these worries.

The pros and cons of passive income:

Advantages:

1. Generating passive income provides many benefits: We can make money without using too much time. The key is to find the right balance for our existing lifestyle, so that we can make profit without too much being spent. Besides being a steady source of income, it gives also gives us the comfort of having a flexible schedule by not requiring us to work for the particular timings every day.
2. Financial freedom: Passive income helps in reducing financial stress and lets us focus on other important things in life.
3. Good retirement plan: This is a wonderful avenue to help us save more money every month. The retirement journey would be smoother, with passive income by our side
4. Opportunity for generating more passive income: Establishing one stream of income will enable us to think about one more source of passive income.
5. Success unlimited: Unlike traditional jobs, there is no limit for the amount of money that we can gain from passive income.

Disadvantages:

1. Low Income at the beginning: This is one of the disadvantages of passive income as it takes a while for the income to grow and it requires patience. This type of income has exponential growth and the benefits of waiting will outweigh the negative aspect of having a small income at the beginning.
2. Risky at times: Success is a part of this avenue but there are also possibilities of risks being involved, and so the steady income from this source is not guaranteed in some cases.

Creating the Passive Income:There are many avenues for passive income. Let us try to understand them.

1. Real Estate income: This is one of popular ways of generating passive income and occupies a significant place in this income domain. This can be achieved by investing in turnkey rental properties that are ready to be rented out.
2. Business Income: There are numerous businesses which can be turned into a passive income. There are many possibilities-
   • Creating a blog: writing is one of greatest talents and launching our own blogs can generate income eventually.
   • E-commerce: Selling products online can be a good source of income- commerce sites have made it easier to make money by selling online
3. Certificates of Deposits: This is advantageous, as there are no income or net worth minimums to invest. It gives protection to the hard earned capital. With good interest rates, this can be a good source of passive income.

Passive income through stock market:

1. Dividend stocks: This happens to be one of easiest ways of passive income because the investors get paid to own them. Part of the earnings of the company are distributed among the investors as dividend. This money can be reinvested to purchase additional shares.
2. Index Funds:They are mutual funds tied to a particular market index. These are not designed to beat the market. The index funds are passively managed and the securities included in them don’t change unless the composition of the index changes. They are known to perform better than the actively managed funds in the long term
3. Investing in Bonds: They are a great source of passive income as here the investors earn money from the activities of another entity. This stream sometimes pays a greater return than other sources.

Does this avenue of generating sound interesting to you?

Stock Market Institute, in Bangalore, offers many interesting and enriching programs to help you understand the intricacies in trading and guide you on investment strategies .

There are numerous courses to help you gain insight and expertise.

1. One day workshop on trading and investing.
2. Ms Finance program to spread financial literacy among women
3. Certified Program in Capital Markets  to impart knowledge about stock picking and commodity markets
4. Advance Technical program for robust trading strategies.

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