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Share markets are either the most favoured or the most hated entity depending on their status. A rising market is characterized by the build up of a herd mentality. If the index goes up continuously for 15 days, there is a sudden spurt in interest in buying. If the market falls drastically, calls from brokers are avoided.

We are going through a similar phase now. There has been an almost 50% depreciation in the broad index, while the drop in the prices of widely traded software stocks has been far more – in many cases as high as 90%. It is being said that investors have fled the markets, unlikely to return. But can they afford to stay away? NO – and the reasons are not far to seek.

In India, in the absence of worthwhile social security schemes and reliable medical insurance cover, so commonplace in the developed countries, we have to build a nest egg for old age. Savings have to cover daily expenses, long-term family obligations, such as the children’s education or marriage, and medical emergencies. It’s no wonder then that India’s saving rate is as high as 25-27% of the GDP, one of the highest in the world.

What’s more, the interest earned on savings has to be higher than the rate of inflation. If not, savings are being devalued over time. The interest rate curve has been falling rapidly. Over the past few years, the rates of interest earned from banks and various government schemes have dropped substantially.

It is in such a scenario that stock markets come to the rescue. Stocks have consistently provided higher returns than fixed income savings avenues. They provide the power to beat inflation.

However, we hear stories all the time about people losing in the stock markets. Where are the gains? Perhaps, one has to question our attitude towards share investments. Do we perceive shares as investments? Or a form of lottery with a jackpot round the corner?

Any investment proposal needs to be evaluated against the returns it will provide over a specific time frame. However, when shares are bought, investors do not target specific levels of returns nor do they consider the risks.

The share market is not the place to look for a windfall. However, over the long term, share markets have normally provided returns averaging around 15% to 20%. Anything more than this should be considered abnormal. There are times when share prices climb even higher – but the ones who really benefit are those who cash in on their gains. Don’t belittle the 15%- 20% annual gain that shares have been giving. Over time – and with compounding – it makes a huge difference.

Money can be made on the share markets only if targets are set – and a stop loss limit. For example: if an investor wishes to earn a return of 30% annually, the portfolio may be rotated thrice a year, with a 10% target profit each time the investor enters and exits the market. In the same way, if there is a 10% loss, one must exit the share. With such targets, it is difficult to make sizeable losses. One could try this theory out on a mock portfolio. Even if the profits are not targeted, the stop loss must be set, even if the purchases are for delivery. The availability of a Demat facility makes entry and exit extremely easy.

Investors who have speculative tendencies should dabble in the options market, rather then be day traders in the cash market. Options trading helps you to limit your losses since the maximum amount one can lose is the premium on options, and not the entire capital.

The portfolio has to be structured on the basis of how frequently you require the income flows and the capital return. The composition of the portfolio also depends on your age, status in life, other sources of income, risk bearing capacity, etc. It’s wise not to put all your eggs in the share market alone, as it can, at times, be a most risky investment. Persons with fewer social obligations can afford to put more money in the share market, whereas a senior citizen could allocate just 5% of his wealth to shares. Every one needs to spend time to build a portfolio that suits their individual needs.

Lastly, a word of caution about the advice given by brokers. Every one actively seeks advice from brokers. However, unless the broker is a registered portfolio advisor, he will not be tracking your portfolio. He will merely give you a view on the market and on the stocks that are the current favorites. The broker’s view is essentially a short-term view. He is too close to the market and is affected by short-term price movements and changes in sentiment. In the absence of a full-fledged research department, the broker is unable to do in-depth study and provide a long-term view about different stocks.

In such a situation, it would be advisable to track your own stocks. Do not expect your broker to give you the signals. It is your money that is at stake. You must manage it by setting – and sticking to –the buy and sell targets. Even if a share has been bought on a broker’s advice, it is necessary to dispose it when you have achieved your targeted return. Set small goals, because they are not difficult to achieve.

Please remember the advice about profit and stop loss. Most of the money lost in shares markets is due to greed and the fear of taking a loss. We do not sell because we want to wait for the highest price. But few are able to sell at the top – getting the timing exactly right is almost impossible! Similarly, investors are afraid to book a loss that has already occurred. So they let things drag out – and then they sell at a much bigger loss. Sometimes, they wait so long that the shares become worthless. Remember that no complex or sophisticated study is needed to operate prudently and successfully in the stock market. Investors must keep their emotions in check. What’s really needed is a lot of common sense.

Author is widely recognized as the Nifty Future Trading specialist and online share trading tips. Investmentz India provides tips on Online commodity trading, online share market and online share trading in India.

Article Source: A Beginner’s Guide to Investing in Shares

There is a general belief among most investors that markets are controlled by operators and it is no place for small investors. It is believed that the operators enriched themselves at the cost of small investors. Two scams of 1992 and 2002 had certain operators at the center of the storm. There were other star players in the market also in the past that had a big role to play in the market movements. Let us examine the validity of the statement that Stock Markets are run by operators.

An operator is a person who is supposed to drive the market price of a particular share that is he decides what should be the pricing of the share and whether it should go up or down. It is also believed that operators in association with the management of the company first acquire certain stocks in the market and subsequently through rumors and such other communication mechanism create a mass interest in the share. Subsequently once the general public starts believing in the company’s prosperity the operators sells the shares and makes handsome profits. Some operators also use circuit mechanism of stock exchanges to hike the price. The circuit mechanism allows the operator to put an order at a price which is 3 to 8% above the previous days closing. Once the share hits upper circuit there are very few sellers in the market since they believe that if the share has hit upper circuit it is likely to go up further. This is the modus operandi of an operator. For an operator to be successful some factors are very
important. Such as connivance with the management, low capital base of the company so that manipulation can be done with very little capital and a mass following.

Is manipulation possible in high volume shares? Let us now look at the trading statistics reported by stock exchanges (data of a particular date). Top 30 scripts i.e. 10 in each group, account for 41% of turnover in NSE and 37% of the turnover in BSE. Both the Exchanges put together this translates in to a value of about 4100 crores on a daily basis. As per the market share reported of brokers by NSE (NSE Bulletin) top 10 trading members account for just 24% of the market share i.e. on an average each broker would have about 2.4% of the market across all company shares traded by the company. Hence, the dominance that a single broker can have on the volumes in the market is minimal in highly traded scrips.

Then we move to low value high volume traded scrips. As per the data is provided by newspapers separately on Quotations page, the aggregate value of shares traded in this category on a particular date was studied. The turnover for BSE in such scrips was Rs.34,03,470 i.e. .01% of total turnover and for NSE is Rs.20,28,050 i.e. 0.003% and in terms of number of shares traded it is 1.5 % in case of BSE and in case of NSE 0.45%. This is one area where low funds can help to move the prices and give a false sense of liquidity. Hence investors are advised to refrain from investing in scrip just because it is low value; the merit of the share should be looked into before making the investments.

The Stock exchanges have a system of guiding the investors on stock selection by way of classifying the companies into various groups. A group stocks are highly liquid and good performing companies. B1 group are again good performing companies with lesser liquidity then A group stocks. B2 are stocks that have low capital bases and less liquid. Companies that do not adhere to Listing agreement are categorized as Z group. These companies do not attend to investor complaints and fail to file various investor related information with the stock exchange such as quarterly working, book closure dates etc. Shares which have concentrated activity and unusual price movements are categorized in T 2 T or trade for trade settlement, ie every sale and purchase must result in delivery and positions cannot be squared off during the day. This classification should be kept in mind while selecting a company for investment. Stock exchanges also verify the news items appearing in leading

newspapers and get companies to clarify on rumours. This information is also of vital importance since operators and company managements at times plant false stories in newspaper to mislead the public.

Special laws have been put in place to act as deterrent to such manipulation. The Insider Trading Regulations and Fraudulent and Unfair Trade Practices regulations are the tools available to SEBI to taken action against those manipulating the markets. The punishment is maximum penalty of Rs. 25 crores and imprisonment. Both these laws have been enacted in early 2000. Hence their effectiveness will be proved only with efflux of time. Till the enactment of these laws the prosecution of persons indulging in market manipulation had to be tried under the general legal system, the delays in the same are not unknown to us.

We always blame the regulators, brokers and exchanges if scams happen in markets. However the menace of operators will go only if we stop following their leads in the market. Tips given by operators are widely followed, and so long as you make money on these tips we do not blame anyone. However once the operator weakens then there is fall in prices and the blame game starts. Operators are creations of society and the greed inherent in all of us. Easy money by riding the operator’s tips is a strong attraction. Scams bring down the prices of not only the shares which were manipulated by the operators but also all other fundamentally good shares also held by us. Mass following that the operators thrives on would be absent if we refrain from buying those shares that are remotely associated with any operator. Reporting wrongful activities of company managements, dabba traders and other market participants will help the regulator in directing their efforts on the wrong doers. Remember, being a spectator to a wrongdoing and not reporting the same is as bad as committing the crime.

Author is widely recognized as the Online stock trading specialist and Online Securities trading tips. Investmentz India provides tips on online stock brokers india, online share market and online share trading in India.

Article Source: Do Operators run the stock market

Do you wake up every day feeling 100% like you want to feel?
Do you look 100% the way you want to look; with nothing at all you want to change about yourself?
Did you answer yes to any of these questions?
If so, then you are one of the select few that have been impervious to the weight-loss/wellness industry marketing of the last 1000 years. Kudos to you for your fierce resistance to high pressure selling. The weight-loss industry is largely predicated on selling supplements, vitamins, herbs and fitness as well as cooking devices designed to be the proverbial ‘magic weight loss pill.’ That’s right – everybody’s looking for the magic pill. And not just in weight loss…
In pretty much every other endeavor available in life, the magic pill is sought like the Fountain of Youth or the Lost City of Gold. El Dorado. I get a lot of questions from people looking for that magic pill when it comes to raising private money for their real estate investments. Here are the usual magic pills already tried before I hear from someone or before they attend one of my seminars:
-”I posted my deal on an internet forum – and nobody replied.”
-”I talked to a bunch of real estate agents about getting funding for my deal, but they didn’t want to invest.”
-”I asked Grandma to invest some money, but she doesn’t have enough and needs money to live on. -Etc.
The one good thing about these approaches is that they signal the person is taking action, which is always the most important part of success in anything. But, trying to use a ‘magic pill approach’ to private money is a pathway to frustration. Why? Because, to use a retail store analogy, if you want to get 72 customers in your store, there isn’t one way to get 72 customers, you must find 72 ways to get one customer. Let than sink in for a second…. Private investors don’t all congregate in one place. They don’t all read the same things nor respond to the same messages. You won’t meet all of them at one particular networking event. In short, there is no magic private money pill. Sorry to break it to you.
But, there is still good news. In fact, it’s great news if you are truly committed to getting and using other people’s money in your real estate investing business. The good news is… You don’t need a magic pill! In fact, if you used the same approach or went to the same well for private money repeatedly you would come up dry. You wouldn’t get response. People would ignore what you have to say before too long.
So, what are a few of those “72 ways” to get one private investor to come through your doors? Don’t worry, I’m not going to hold out on you. I just want to make sure you have enough of an understanding to put these tools to good use:
* Website – properly targeted
* Non-real estate focused networking events
The internet is going to become even more important for raising private money 6 months from now then it is today. If you don’t have a professional website properly targeted, you’re behind the curve. Most real estate investors only go to their local REIA or other real estate related networking events. This is good. Keep doing this. But, ask yourself: is this where my private investors are going to be? Most likely the answer you will come up with is: no. As soon as a private money pill develops I will be the first one to market it. However, in the mean time, use some proven principles to hit your money raising goals.

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Adam Davis is a real estate investor, author and speaker. He teaches real estate investors how to raise capital. Adam has completed hundreds of deals- from single family house flips to apartment buildings. He has raised millions of dollars from private individuals. For a FREE audio program on how to get private money go to: http://foreclosureswithprivatemoney.com

Article Source: The Magic Private Money Pill

Wallace D. Wattles, in his 1910 book The Science of Getting Rich, details how you can get rich but his reasons for doing so are much more than the simple attainment of money and wealth. Prosperity – however you define it – is a timeless desire. According to Wattles, getting rich has a very important premise: He asserts that the desire for wealth is not specifically or solely centered on money but rather it is a measurable way of expressing our desire for a fuller, better, more meaningful life.

The Right to Be Rich

According to Wattles each of us has the right to be rich. He asserts that it simply isn’t possible to live a really complete or successful life unless one is rich. To develop talent and unfold the soul requires the use of many things which require money to purchase.

Of course, there is a science of getting rich and it is an exact science and has nothing to do with your environment or the possession of talent. Getting rich is the result of doing things in a Certain Way that causes success.
There is abundance of opportunity everywhere for the man who will go with the tide; instead of trying to swim against it. Wattles rightly points out that everyone has the potential for success by searching for and embracing the opportunities available to them.

Man has the power of thought to cause the formation of things and cause tangible results. To do things in a Certain Way, you have to acquire the ability to think the way you want to think. In other words, having the right mindset is the first step toward getting rich.

Increasing Life

You are neither destined to be poor nor rich. Life’s purpose is increasing life so we must get rich, so that we can live more. We must become creators rather than competing for what is already created. Supply is unlimited according to Wattles. So never allow yourself think for an instant that all the best building spots will be taken before you’re ready to build your house, unless you hurry!
How riches come to you is if your business transactions operate on the basis of fair exchange i.e. you give the buyer something of greater use value than the cash value you take.
In addition, we must ask largely for what we want, have a clear picture in our mind and claim it as if it were already ours. In other words, we must dream big, see it clearly and behave as if we have already achieved the thing we desire in order for it to be. This is possibly the most powerful concept in the book and is explored in other books such as The Secret by Rhonda Byrne and Think and Grow Rich by Napolean Hill.

A mental attitude of gratitude can be the one thing missing from people who live their lives rightly in all other. This lack of gratitude keeps them in poverty. Gratitude will ensure your thinking is that of supply as unlimited. Faith is born of gratitude. The grateful mind expects good things, and expectation becomes faith. It’s good to cultivate the habit of gratefulness and give thanks continuously. It can be a good idea to keep a gratitude diary on your bedside table and writing 3 things daily that you are grateful for. This will bring you into harmonious relations with the good in everything, and the good in everything will move toward you.

The Science of Getting Rich may be a hundred years old but Wattles’ ideas are as relevant today as they ever were. The science of getting rich is not about following a pre-defined formula for success – first step one, then step two, then step three, then retire on a beach with a margarita in your hand – but rather it is all about THE WAY YOU THINK AND ACT. Read more in ‘The Science of Getting rich – How to Become Rich – Part 2′.

You can sign up right now for Millionaire Mindset Secrets for FREE and get instant access to insider secrets about the Science of Getting Rich – http://www.millionairemindsetsecrets.com

Article Source: The Science of Getting Rich – Can Anyone Get Rich? Part 1

You’ve probably heard that starting a blog is a great way to make extra money. In reality it’s not unless you have thousands of readers visiting your blog everyday. However, if you like to write and don’t want the hassle of designing a blog and promoting it endlessly than you should try writing for Associated Content.

Associated Content is an online article directory that pays users to submit articles on virtually any topic. Associated Content is building an online inventory of articles to helps bring users to their site. They make money off of advertising on your article and in turn will pay the author for submitting the article.

Here’s how it works:

1. You sign up for free at AssociatedContent.com

2. Write an article greater than 400 words and submit it for review. You can write about whatever you want, but they have some tips on their website for the type of articles that they pay the most for. For example, “How-to” articles are very popular. I recently wrote an article about free places to take a date in my city and it has done very well. I have even submitted old school essays and blog posts to Associated Content. I just reformatted them a bit and then watched as my hard work from college began to finally pay off.

3. Wait a couple of days. After submitting your article you have to wait for it to be reviewed and then Associated Content will email you and let you know how much they are willing to pay for your article. You can either accept the cash offer or turn them down and try to sell your article to another company.

4. Check your Paypal account. I’ve always been really impressed by how quickly Associated Content pays. Many times I have the money in my account within 3 days of submitting an article. They will also by my check, if you prefer, but expect it to take longer.

Another great writing site is Helium.com. They have the same format as Associated Content and you can submit your articles to both and then wait for their cash offer before deciding which site to sell your article to.

If you’re interested in learning more about how to <a href="http://thepennyhoarder.blogspot.com" make money online, please feel free to visit our website at thepennyhoarder.blogspot.com

Article Source: You Can Make Money Writing for Others

Subse Bada Rupaiah! The saying could not be truer when it comes to the management of financial commitments towards one’s family. Our working life is very short, that is, from the age of about 25 to 60, which is about 35 years, but average life expectancy is 75 years. For the first 25 years we are the responsibility of our parents and after 60, that is, for the next 15 years, we have to rely on ourselves, or if we are lucky, our children will take care of us. This in congruency between our life’s earnings and life span requires us to do some financial planning. We may earn lots of money in our working years, which may be enough to maintain us when we are not working. Yet earning is not enough, we need to preserve and augment this wealth.

Wealth depreciates in several ways. Inflation is a monster that can eat into your savings. Without doing anything, the value of money keeps declining year after year. This is known as a fall in the purchasing power of money. You may be able to buy all your household provisions for say, Rs.5000 today, but over a period of time, the same food items and quantities would cost you Rs.6000. Thus, if you are unable to earn that extra Rs.1000, your capital will reduce due to the extra expenditure. The returns on your capital have to be more than the rate of inflation so that the increases in prices do not make you go out of pocket.

The second risk to your capital falling interest rates. The government and banks managed your money for you until now. You could put money in PPF, NSC etc or bank deposits. These deposit schemes are floated by banks and government agencies, which invested in industrial projects on your behalf. These industrial projects are now able to borrow at much cheaper rates of interest from abroad or the stock markets since restrictions on foreign borrowings have weakened. Companies are also performing better and are able to get money at competitive rates. The government borrowed for itself in order to fund the fiscal deficits. As per financial prudence, it is now essential for governments to reduce deficit financing. To look at the overall picture, the reduction in interest rates by banks and the government is an indirect message to the investor: we cannot manage your money any more. Do it yourself.

The biggest danger to your money is the desire to spend. During our working years, the flow of money is so good that we may not think of saving adequately. We are busy enjoying our prosperity, going on shopping sprees, taking our families to the cinema or dining out rather then spending time on financial planning and management. We also want to give our families all the comforts that we didn’t have in childhood. The residual income, after spending, accrues in a bank account and is often parked in Fixed Deposits with the banks themselves. At the most, we may go in for insurance policies if we bump into a persuasive insurance agent. Shares and Mutual Fund units are bought every now and again but there is no conscious attempt at building a portfolio.

Thus, a successful company executive, bureaucrat or businessman suddenly finds that after retirement, his monthly cheque stops and his pension is a lot less than it. The shares that he bought and forgot about are worthless, bank deposits and such other fixed-income investments do not yield enough to take care of monthly outgoings to maintain the lifestyle he had. He does not know the investment options available. The money he got upon retirement and before the income on the same starts coming it is slowly getting used up. The worst scenario is when an unexpected illness stikes. This is indeed a gloomy picture. I am exaggerating a little to shake you up and take a serious look at financial planning.

As we grow in years, we must plan. If you are in your early 20s, the plan would include getting married, buying a house and other symbols of status and comfort, such as a car, television and such other white goods. Planning for a child and donations, if required, to secure school admission, would be the next target. As children grow older, a bigger house may be on the agenda. Foreign vacations are add-ons that need to be thought of. Higher education for your children, settling them professionally, marriages, come next. Once family responsibilities are complete, the next challenge is to maintain your standard of living, have the same number of servants, pay your society maintenance and continue to fulfill your social commitments. This is not to ignore medical emergencies, such as a cataract operation, knee replacement, and prostate or bypass surgery if you have led a stressful life. The outlay list is never ending. Thank God no one thinks of building a Taj Mahal in memory of a loved one.

It’s clear then that at each stage of our life we need a fixed sum of money to meet our financial requirements. Our challenge begins in living within our means and setting aside a certain portion to meet the cash flow requirements. The challenge is also to make the money saved grow at a certain rate so that the shortfall is available and required cash is not there. Based on your targets you can decide where to invest. You have to study the various investment options and the returns they offer and the risk associated with each of them. Understanding the risk of losing money is as important as knowing the likely returns. At the end of the day, the best return option may not meet with your cash flow requirement. You will then have to prune your expectations and settle for less.

Financial Planning is an important means to a contented life. It makes you realize your responsibilities well before they make their presence felt. It makes you aware about the financial instruments that are available and the risk return profile of each of them, apart from taxation laws and their benefits. Investments thus become an important earning member for your family. You are not slogging all the time, but can also enjoy your wealth by letting investments and the return on them share your burden.

Author is widely recognized as the nri online trading account specialist and portfolio management services tips. Investmentz India provides tips on portfolio management services india, online share market and online share trading in India.

Article Source: Why do we need Financial Planning?