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Investment

Thumb Rules For Investing Every Investor Should Know

Investment is one of the most powerful ways to improve the power of your financial footing. It will help you to gain leverage and have your worth increased. This will also help you to multiply your money. However, without an investment plan, it is difficult for a person to increase their worth. One should know the true motive of investing. It’s important to grow a sound investment mindset. And with this, it is equally important to know about some smart investment techniques. [B-01] Smart investment is the best way to get the most out of your investment without trying much. It is simply an extension of the basic principles of investment to amplify the normal returns to get higher returns. We now have myriads of opportunities to invest in the market. So, it becomes tricky for the investor to find the best investment plan and strategy. Hence, it is imperative to become a smart investor aware of all the returns and risks involved in an investment scheme. Do you want to know about some smart investment techniques to amplify your investment returns? This article will help you know about some of the best investment plans in India. Also, we will explore some points that you should keep in your mind before investing. 7 Thumb rules that an investor should know about Investing in a venture is more than just what it might seem. It is about the right option that has to be chosen, the right strategy that has to opt, and the right mindset to play the odds. Start investing as early as possible: One of the basic and most important investment rules is investing early. Start when you can take out some money from your salary or savings. Devise a portion of that amount as an investment account. This is a very smart investment move. Here, you can get handsome returns regularly and, at the same time, build in a huge corpus over some time. Suppose you start investing under a pension scheme like the National Pension System from the age of 30. Until you have completed 60 years, you would have left with a handsome return and built a huge corpus amount. Show consistency every time you invest: Not that you will get huge returns if you invest a meagre amount of money once a year. You must be consistent throughout the investment journey and invest every month or quarter. This is also a smart investment move, provided that you are aiming for a higher return in the future. You can also improve the chances of getting a better grip on consistent investment by focusing on Systematic Investment Plans or SIPs and Auto-payment options. This will also help you observe your investment pattern and ensure that a specific amount is deducted from your account regularly under your observation. Choose the right investment option: While running for an investment that gives you the highest return in a minimum amount of time, you must also be aware of the risks associated with such an investment scheme. Research says that the best investment scheme involves low risk and a longer tenure. Keep an eye on your investment trends: It is important as it is to keep investing in building a huge corpus. But you must track how your investment is performing in the market. It is crucial to list all the investment schemes and keep track of your money. Another smart investment move is to produce reports on your monthly expenditure to help you save more money and understand the liquidity requirement. Creating a diverse portfolio: Diversification in investment is probably one of the best ways to avoid all investment-related risks. You need to diversify your portfolio to better risk management and avoid financial breakdowns because of market volatility. For example, during COVID-19, the economic background of the country was in tumult and investors who invested in a single stock faced huge losses compared to those who invested in diversified portfolios. Understanding the potential of compound interest: In the words of one of the greatest scientists of all time, Albert Einstein, “compound interest is the eighth wonder of the world.” It will be a smart investment move for an investor if they reinvest the interest earned from the invested amount. Over time, this practice will help them create a robust financial portfolio. Constricting a risk appetite: This is another smart investment strategy that every investor should adopt for better gains. As risk is an inevitable part of the investment, which no one can deny, it is important to build one to sustain in the game. This applies to big companies and investment firms. But it is also essential for any other investor as well. A good risk appetite and a better understanding of the market help an investor make better profits than an investor who lacks one. [B-02] Summing it up: Investment is one of the best ways to gain financial leverage. This is one successful way to ensure future financial safety. Thus, you need to know the thumb rules associated with it. Besides putting money and expecting returns in a small period, you should focus on building up a huge corpus over time. You should use all smart investment techniques to understand the market structure. Besides that, you should choose the investing scheme that suits you best, diversify your portfolio, and be regular with your investments. If you want to know about the best investment plan and various investment schemes, you should visit Piramal Finance.

08-11-2023

Cards

All You Need To Know About Working Of EMI On Credit Card Scheme

A credit card is a financial boon in times of need. It is also the most popularly used financial instrument all around the globe. However, you can not get away from paying EMI On Credit Card Scheme. The working of the EMI On Credit Card Scheme is no more rocket science to understand. Read on to learn more about this scheme and what it offers. [B-01] What exactly is a Credit Card? A credit card is a revolving credit offered by banks and other lending institutions. A borrower can use funds from the credit card within the pre-approved credit limit. The lender fixes the credit limit before issuing the credit card. With the credit amount, the borrower can make cashless transactions for both goods and services. The amount fixed for a credit card is based on the person’s eligibility. The lender will charge interest for the amount that you borrowed. In other words, a credit card is like a short-term loan. You first borrow and pay later. What is an EMI? EMI stands for Equated Monthly Installments. As the name indicates, it is the monthly payment made by a borrower to banks and other lending institutions. When you pay an EMI, the interest and also the principal amount for the outstanding loan will be deducted. An EMI should be paid on a pre-informed date by the lender. Basics of Credit Card EMI You can make use of a credit card scheme in two ways. Firstly, you can borrow the entire amount needed to finance and then pay EMI for it. For example, if you are buying an electronic gadget worth Rs. 1 lakh, you can opt a credit card EMI scheme. So you will pay in EMIs. The other way is, if you have overspent the actual credit card limit, you will start paying EMI for the same. Nowadays, you can even pay your monthly bills using your credit card scheme. What is the working of EMI on the Credit Card Scheme? Credit card EMIs make credit cards too popular and flexible for use. Generally speaking, all credit cards do not have the same fixed criteria for charging EMI. Instead, the EMI depends on several factors. They include the interest rate charged by the bank, the total repayment period you choose, the down payment, etc. You will also be offered an interest-free credit card from some lenders. However, they are rare in practice. Above all, you must make sure that you have enough credit limit to be eligible for buying a credit card. It is always advised to have enough balance that is more than the minimum to stop the rejection of your credit card EMI request. Because when you opt for credit card EMI, the lenders will temporarily reduce your credit limit. Once you start paying your EMI, the lenders will increase the credit limit gradually. Whenever you fail to make payments under the credit card scheme, your CIBIL score will see a downfall. So be careful to have an eye on the date of the EMI payment. How long will it take to get approved for a Credit Card?You can apply for a credit card either online or offline.The actual process of filling out the application takes time. But when you are done with this step, the formal approval (online) takes less than 5 minutes.However, the time required to get a credit card in your hand may take a few days to weeks. This completely depends on the lender and your individual credit history.During that period, the creditors (lenders) will check for eligibility from their side.Applying for credit cards online will be quicker than the above-mentioned offline process. This is because the time for standing in queues, elaborate paperwork, and other related work will be eliminated.Note: It is better to check your eligibility before applying for a credit card from your lenders. This will make the process of approval a bit quicker. What are the benefits of having a Credit Card? Wide Acceptance: This is one of the most practical benefits that you can get from credit cards. Credit cards are widely accepted on a global scale. You can make use of your credit cards irrespective of location. Rewards and Offers: The best credit card lenders in the market will provide you with some rewards and offers on your credit cards. This includes discounts on shopping, travel, booking tickets, etc. At times, you will also get exciting offers on your travel insurance and even cash back. Some lenders will give you lifetime reward points that can be used later. Flexible Usage: Unlike vehicle loans, educational loans, and other specific loans, credit cards are flexible in their usage. This is because the credit limit assigned to you can be used for any purpose. This might be your festive day or even an emergency situation. Cashless Transactions: Carrying cash may bother you for theft and related reasons. But when you have a credit card, you no need to worry much. Just take your card and go cashless. The payments are also made hassle-free and with ease. Improves Credit (CIBIL) Score: A credit card is very much important for improving your credit score. Your CIBIL Score increases when you repay the amount without delay. [B-02] The Bottom Line By now you must have understood the working of the credit card scheme. To know more about credit cards, and their offers visit Piramal Finance. Piramal Finance is also a trustworthy institution that works with a team of financial experts who will help you get through the entire process. They have many articles and blogs to help you with your doubts on finance matters.

08-11-2023

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What is SWP in Mutual Funds?

SWP is an abbreviation that stands for “systematic withdrawal plan.” Similarly to how you can automate your mutual fund investments, you can also automate withdrawals. You can get a certain amount of money every month at a set time. The sum can be either fixed or variable. SWP is most commonly used after retirement. SWP allows investors to withdraw monthly, semi-annually, quarterly, or annually. If you want to invest in a mutual fund but want a steady flow of income, SWP is for you. You can use a systematic withdrawal plan to create a varied portfolio. This will assist you in achieving various financial goals. You can choose to invest across multiple asset classes or in a single fund with a focus on a specific asset class. [B-01] Let’s learn about SWP in Mutual Funds, what it offers, how it works, and so on. What is SWP in Mutual Funds? SWP in Mutual Fund allows investors to withdraw fixed sums from their current assets at regular intervals. A systematic withdrawal plan is the opposite of a SIP. It will enable you to create a plan to get a fixed amount from your mutual funds on a given date and at regular intervals. It lets you withdraw money in instalments instead of all at once. With SIP, your monthly funds are invested in a mutual fund. On the other hand, when you select an SWP plan, you direct the money to your savings bank account rather than the mutual fund scheme. You can tailor your cash flow to your preferences and needs. This can be done by creating withdrawal plans on a monthly or quarterly basis. Investors can withdraw a certain amount of capital gains from their mutual fund investment. You can reinvest that money or use it in its current cash form without making any changes. Let’s look at an example to help us understand better: Let’s say you put Rs 100,000 into a mutual fund for a year and decided to take Rs 5,000 every single month from the MF. This means that Rs 5,000 will be deducted from your investment every month and returned to you. The amount of money still invested after each month has passed will continue to bring in profits from the investment. Why is SWP (Systematic Withdrawal Plan) Necessary? The ups and downs of the market have a direct effect on mutual funds. Especially when the date of maturity is getting close, the changes may hurt the NAV. The market is uncertain, and most mutual funds’ values change based on how the market is doing. So, if you want to get your money back in stages, the SWP plan is a good choice. When you are in a position where you require cash or have other needs, you can rest easy knowing that you will have access to the money. An SWP in a Mutual Fund is a good way to have a second source of income. Except for your monthly payment, it is also a good way to save money. It provides you with a steady flow of income, whether monthly, quarterly, or annually. You can choose this duration based on your choice and the method you use to take the money. How Does an SWP Work? When you, as an investor, decide to use a system called an SWP plan (Systematic Withdrawal Plan), this decision will also impact the mutual fund account. It is essential to remember that opening an SWP account differs from opening an FD account, from which you will typically receive monthly interest. When you withdraw from an FD, the interest you get is deducted from your balance, but the principal remains unaffected. On the other hand, when you use SWP in mutual funds, the fund’s value goes down by the number of units you take out. Benefits of Using SWP The following is a list of benefits that come with using the Systematic Withdrawal Plan: Regular Income SWP plan is designed to generate steady passive income for investors. Therefore, SWP is a cool option for people who need a steady income stream. This can help satisfy the ongoing financial needs of day-to-day activities. It gives you the added benefit of using cash to cover your money needs. Flexibility SWP brings flexibility to mutual funds. It allows you to choose the amount, timing, and frequency of the payments to meet your financial needs. You have the choice to pull out of a mutual fund investment at any time. You can also add more money to your holdings in the fund. You are free to withdraw any asset according to your specific choices, wants, and needs. No TDS In contrast to capital gains, the SWP does not involve any TDS, which is the finest feature of this plan. Capital Appreciation In most cases, the rate at which one can withdraw money from the SWP is lower than the rate at which one can earn money on those funds. It also gives you a chance to see your money grow over time. Who Can Use SWP? A Good Source of Income It provides investors with a steady means of earning income. SWP can become your second source of income. This will be beneficial to you anytime you encounter a difficult financial situation. It can assist you in covering other expenses, such as living costs. Investing in a long-term mutual fund scheme and taking a fixed amount out each month as an SWP is a great way to get a steady flow of income. Individuals That Fall Into the Highest Tax Bracket Because there is no TDS on capital gains, SWP can be beneficial to those in a high tax bracket. At the same time, equity-focused mutual funds have a more manageable capital gains tax rate. Having the Desire to Establish Their Pension Plan SWP plan is also ideal for investors who wish to establish their pensions by placing investments in the corpus mutual fund plan according to the level of risk they are comfortable with. It allows them to earn a consistent income that they can put toward the formation of their pension plan. [B-02] Conclusion A mutual fund investor who takes the time to learn about the SWP plan will realise that it’s an intelligent way to ensure a steady cash flow. It is also possible to configure an SWP to allow withdrawals of only the fraction attributable to the accumulation of capital gains. The returns are tax efficient, and there is no TDS on profits, which significantly differs from most traditional investment options. To learn more about mutual funds and other investment options, visit Piramal Finance. They have many blogs and articles to improve your finance skills.

08-11-2023

Investment

What are the different benefits of investing in gold?

Gold as an investment will never break your expectations. In India, gold is considered a stable investment option apart from ornamentation. Gold trade and investment range from physical gold to virtual one. However, every form of gold is valued. This article will guide you through the top reasons that you should consider investing in gold. [B-01] Why is Gold so valuable for Investing? For centuries, gold is highly regarded on a global scale due to its worth and rich history. Gold as a metal will never lose its quality. It is lustrous and will not corrode. This makes gold a precious tool for investment too. The other reason for its value is the scarcity and the high demand. With these, you can now explore the top benefits of investing in gold. What are the benefits of investing in Gold? Higher Liquidity Liquidity refers to the degree to which something can be converted easily into ready cash. In terms of liquidity, nothing can beat gold. Gold can be converted to ready cash, unlike currency. For example, the Indian rupee can be used easily in India. But when you go to other nations, you must approach a forex market or other dealers. However, this is not the case when it comes to gold. Gold can be converted easily on a global scale. Shelter from Recession Throughout history, the recession has never affected gold. A recession is a period of low economic activity and negative economic growth. When you invest in gold, you will easily overcome the burden of recession. This is because gold will never lose its value. Security against Inflation Investment in gold is not affected by inflation. Inflation refers to the general rise in prices. It is also the time when money loses its value. In other words, the purchasing power of money will decrease. If you look at the price rise of gold, throughout the past, you will invest in gold without a doubt. The gold price has doubled in the past five years and quadrupled (increased four times) in the past ten years. Physical Asset (Tangible Asset) Gold is a physical and tangible asset. You can happily feel it and touch it. Investing in gold is not like a stock or virtual money or bitcoin. No one will hack or steal your gold digitally. This is the best benefit of investing in gold. Easy Purchase Unlike stock and other investments, purchasing gold is easier. There will be no lengthy formalities and requirements. Even when you buy some tangible assets like land or other property, formalities will be more. This makes investing in gold a better option. Investing in Gold is not a Rocket Science If you are planning to invest in a stock or mutual fund, you need specialised knowledge of the market, government policies, etc. But this is not the case in gold investment. All you need is just go, buy and store them. You don’t want to track any market conditions. No need for a Bulk Amount to Invest at a time When you start investing in gold, you can start by taking baby steps. You can save very small amounts and buy accordingly. You will not end up with a lump amount of money as you do in real estate or stocks, or bonds. Risk-Reduction As said earlier, investing in gold reduces the risk of liquidity, inflation, and others. It may be a geopolitical tension, a natural disaster, law and order, or any phenomenon. Gold is always gold! You can liquify it anywhere. Less Maintenance This is the best advantage you could reap from investing in gold. Gold requires less maintenance. Unlike a real estate property, you don’t want to visit it often, clear the weeds, clean the surroundings, etc. But you can never ignore the cost of a box or a bank locker! Perfect Legacy for your Generations Investing in gold is the best legacy you can gift to your future generations. It is also very easy to pass on to the next generation. You don’t want to write a will, look for a property bond, etc. Loan against Gold Investing in gold will also help you in times of emergency. You can pledge your gold as collateral to a lender or any trustworthy institution like Piramal Finance. You can get your amount and pay the interest till the period. After paying the lender will return your gold. Gold Investment Options in India Gold is in different forms such as the following Physical Gold: Physical Gold is what you see in jewelry shops. Physical Gold includes ornaments, bars, and coins. Bars and coins are best for investing when compared to gold jewelry with stones. Digital Gold: The world is becoming more digital and so is the gold. Digital gold is what you can not see through your physical eyes. It is also called e-gold which is almost like stocks. You can buy it for as low as one rupee. Gold ETFs: ETFs are Exchange Traded Funds. Here, you will invest in physical gold on the stock exchanges. These are passive investments in gold. Gold Mutual Funds: Gold Mutual Funds are mutual funds. Here you can invest in gold reserves either directly or indirectly. Gold Loan Interest Rate The gold loan interest rate differs generally from lender to lender. But it ranges from 7% to 29%. The gold loan interest rate also depends on the quality of the gold that you have. i.e, the purity of the gold. [B-02] The Bottom Line We hope that you understand the benefits of investing in gold and the investment options available. Then why doubt? Invest in gold, may it be a recession, inflation, law and order, natural calamity, etc. Gold investing is a cushion in any of these unforeseen conditions. You can get the best gold interest rates in Piramal Finance. Piramal Finance also helps you with any of the financial processes with its expert team. Kindly contact Piramal Finance for doubts, if any.

08-11-2023

Know More

Things To Keep In Mind When Investing In The US Stock Market

Well, you do indeed need to save money for the future. But merely saving money is not enough. You need to make your money grow. This will help you beat the impact of inflation and create a corpus for your future needs. There are many investment schemes present in the market. Though one of the most popular options is stock market investment. When you invest in the stock market, you buy equity shares of various enterprises. Investing in the stock market today is very easy. You can do so with the help of your Demat account on a computer or mobile app. Thanks to the latest technology, investing in the US stock market is now viable. Yes, you can buy shares of companies listed on the US stock market. This option allows you to invest in some of the leading companies that you could not access otherwise. But is it easy to make a stock market investment in the US? What things should you keep in mind? Read on to learn more. [B-01] Fractional ownership of shares In India, you can invest at least one share, i.e., no part-ownership. In the US market, the price of one share can go into the hundreds or even thousands of dollars. E.g., Berkshire Hathaway’s share is priced at around $460k, which means around INR 3.75 crores! As an investor from India, it can be hard for you to spare such a huge amount for only one share. Hence, the SEC in the US has made it easy for small investors to own a part of the companies listed on the US stock market. This is known as fractional ownership under stock market investment. Herein, you can own less than one share of a company, and other investors will own other parts of the shares. This way, you can own anywhere from 1% to 100% of a share in the US stock market. Foreign Exchange When you invest in the stock market today in India, you must invest in Indian Rupee. Likewise, you will have to use US dollars if you invest in the US stock market. But this means you first need to convert your money into US dollars. Only then will you be able to invest in the US stock market. However, this is where another issue arises. The exchange rate between the US dollar and the Indian rupee changes every day. Hence, a stock that costs you $100 today might cost you $101 if you invest in it after a couple of days. So, you need to find out about the present exchange rate before you convert your Indian rupees into US dollars. You will also have to pay a markup based on the agent you choose in this process. This is a fee levied by the agent or the bank for currency conversion. This is one more cost that you need to factor in. Tax Impact Like the profits you make from the stock market in India, profits from US stock markets are also subject to the tax laws of India. So, to invest in the US stock market, you must be familiar with these laws. This will help you avoid any errors in the future. You can be subject to types of taxes in India regarding the US stock market investment, capital gain tax and tax on dividends. A common issue that confuses most investors is that of double taxation. As an Indian, you must pay taxes in India. As an investor in the US, you must also pay taxes to the US government. So, will you have to pay the taxes twice? No, there is an agreement between the USA and India known as the DTAA. This treaty deals with the issue of double taxation and how to avoid it. Per the DTAA, Indian citizens who are making an income in the US do not need to pay taxes twice. This means you will only have to pay taxes on your profits in India. Maximum Amount Earlier, it was hard to make a stock market investment from India in the US. There were many rules that you had to follow. Recently, RBI has made it easy for Indians to invest up to a given amount outside India. This amount is given as per the rules of the Liberal Remittance Scheme, or LRS. Per the present rules, you can invest or send up to US$250,000 outside India without approval. After that, you will need to get approval from the government. This money can be used for US stock market investment. Hence, you need to make sure that the total amount of money you want to invest in the US is not more than $250k in one year. If you plan to invest more than this amount, you will have to get permission from India’s government. [B-02] If you want to invest in the US stock market today, all these points must be considered. This will help you make a wise stock market investment. Though you must learn more about this topic before making a decision. Visit Piramal Finance, which has many articles and blogs to help you learn more about the stock market. This will help you learn skills to make wise investment decisions for your future. Their experts always help you find the best financial products to meet your needs.

08-11-2023

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All You Need To Know About The Importance Of Retirement Planning In India

Your life will never be the same after you retire. There is no need to go to the office and work long hours. No need to worry about targets and meetings. But what about money? Yes, once you retire, your regular source of income will no longer be there. You still need to take care of your living costs and other expenses. This is where the need for retirement planning comes to the fore. It is vital to plan for your retired life while you are still active at work. This will allow you to learn how much you are earning and how much you can save for your life after you retire. There are many factors that you need to consider during retirement planning. Read on to learn all about the importance of this exercise and its impact on your future. [B-01] Start Backwards You need to learn how much money you will need to lead a comfortable life after you retire. There are several factors that you need to take into account here, including Age. Income. EMIs. Life Goals. Cost of Living in Your City. Money Needs Every Month. Insurance Plans. You can make an informed decision when you factor in these aspects in your retirement planning. You don’t want to be in a situation where you didn’t consider these factors. Otherwise, you will struggle to make ends meet after you retire from active work. Retirement Pension Plan You must invest in a pension plan. If you are not covered under a pension plan by your employer, whether in the public or private sector, then you are on your own. With inflation, the cost of living will increase in the future. Moreover, your need for medical care will also increase as you get older. Hence, you need a regular source of income that can help you lead a comfortable life. This is where having a retirement pension plan becomes vital. You can choose to invest in the National Pension Scheme, or NPS. You invest a given amount in the NPS every month until 60. In many cases, your employer can also invest in NPS as a part of your pay package. When you turn 60, you will get 60% of the amount as a lump sum, and the remaining 40% will be used to purchase an annuity. This annuity plan will give you a fixed pension every month. You can also subscribe to the Atal Pension Yojana, which will offer you a regular pension after you turn 60. Else, you can get a retirement pension plan from different insurance companies or NBFCs. These companies offer you the benefit of a regular pension after you retire and several other benefits. The best part about a retirement pension plan is that you can also get income tax benefits from it. Invest in Mutual Funds Mutual funds also offer you many benefits and make a good investment option for your retirement. Most experts agree that you can earn excellent returns when you invest in mutual funds with a long-term horizon. Then, you also get the benefit of compounding, wherein your interest income is re-invested, helping you earn even more interest on the money. You can choose from many types of mutual funds, such as equity, hybrid, or debt funds. The best mutual funds for retirement planning are debt or hybrid funds, as they have less risk than equity. You may also keep your money in equity or hybrid funds when you are young. As you cross 50, then you can move that money to debt funds to reduce the risk. After you retire, you may sell your best mutual funds for retirement and invest in a pension plan. Otherwise, you can opt for an SWP, wherein you get a fixed amount every month while the remaining money still earns profits. Risk-Free Options One vital part of retirement planning is reducing future risks. One thing that the pandemic has taught everyone is that life is uncertain, and the need for money can arise at any point in time. Hence, it is vital to have a balanced investment profile. You must have a mix of risk-free and risky investments here. On the one hand, you can invest in shares and mutual funds. On the other hand, you can also explore risk-free options. These options include fixed deposits, PPF, NSC, and other saving schemes. While these schemes offer less return than investing in equity, they do not carry any risk. So, you must also invest a certain monthly sum in these options. Another benefit of these long-term, risk-free options is that they offer tax benefits as well. Not only is the money you invest subject to tax rebates, but the corpus you get after their maturity is also tax-free. [B-02] To keep your medical costs under control, you also need to have a comprehensive mediclaim policy. This will ensure access to quality care without needing to use your savings. If you have a long time horizon, these risk-free options can also give you a lot of freedom after you retire. Retirement planning is a vital part of your life. You need to start planning for it as soon as possible to have a decent corpus by the time you retire. There are many options to choose from. Hence, you need to compare their pros and cons before you make a decision. If you want to learn more about the best mutual funds for retirement or a retirement pension plan, visit Piramal Finance. They have many blogs and articles that cover this topic in detail. Hence, you can make sound financial decisions after you retire.

08-11-2023

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Benefits of Forex and Currency Trading in India

Do you want to start trading? Do you want to start selling but don’t know about forex and currency trading in India? Do you know that forex trading helps increase your trading capital? Accessibility, liquidity, and globalisation are among the main reasons why the foreign exchange market is so vital. The FX market trades $5 trillion daily, significantly more than the NYSE. In India, daily transactions are soaring. Previously, only banks and institutional investors had made significant investments in this market. With derivative products, even individual investors can leverage this market. In this blog, you will learn all about forex and currency trading in India. [B-01] Benefits of Forex and Currency Trading in India Here are the advantages of forex trading in India: Global Market There are traders in the forex trading market from all over the world. On average, there are transactions worth over $4 trillion every day. Trading benefits greatly from the market’s sheer size. Massive and International The foreign exchange market is truly global because traders from all over the world take part in it. The fact that more than $4 trillion is traded every day shows how important the foreign exchange market is. Most of the other good things about the market as a place to trade forex trading come from its volume, in addition to its size. Excellent for Beginners Forex trading is a good choice for new traders because it is easy to get started. Brokers in the foreign exchange market often provide practice accounts for forex trading. These give new traders a chance to try out their skills in a simulated version of the forex market before they invest any real money. Constant Trading Hours The foreign exchange market is open 24 hours a day, 7 days a week, as long as there is an open market somewhere in the world. For instance, the New York Stock Exchange (NYSE) opens for business at 5 p.m. on Sunday and stays open until Friday at 5 p.m. Leverage By borrowing money from foreign exchange brokers, retail forex traders can open large positions. Leverage ratios are a common way to talk about how much of the money came from borrowing. For example, if your leverage ratio was 1:30, your market investment would be 30 times bigger. Liquidity The foreign exchange market is widely regarded as the most liquid market in existence because of the high volume of forex trading that occurs there around the clock. The term “liquidity” is used to describe an asset’s capacity to be bought and sold with little loss in value. Liquidity in the foreign exchange market lets you make safe trades. Volatility The market is affected by a wide variety of factors, including geopolitics, economic stability, regulations, natural disasters, and trade agreements. All it takes is a minor improvement in any one of these for the market to move drastically. The term “volatility” describes the degree to which a market reacts to changes. Currency value fluctuations that are favourable due to these factors might provide substantial gains. If the values are impacted negatively, however, forex trading may sustain heavy losses. Trading in Either Direction is Permitted In contrast to the stock market, you can trade in either direction or in a neutral way on the foreign exchange market. You can easily go long or short on a currency based on how you think its value will change. Traders are always buying or selling a currency, depending on how the market is doing. Because currencies are so easy to buy and sell, there aren’t as many transaction fees when trading them as there are when trading stocks. Reduced Fees for Financial Dealings You can get started with online foreign exchange trading with a small amount of money. The spreads are what pay the broker’s fee, which is the same as the cost of the transaction itself. The spread is the difference in percentage between the ask and the bid price. It can be shown either in pips or points. Technology One of the benefits of the foreign exchange market is that its players have readily adopted technology despite its novelty. There is an abundance of desktop and mobile programmes that enable international trade in real-time. Forex Trading Hours Every day of the week, from 9 p.m. on Sunday to 10 p.m. on Friday, the foreign exchange market is open (GMT). Currency transactions happen during these long hours because they are done directly between parties instead of through a central exchange. Also, because forex is a truly global market, you can always take advantage of the different active sessions’ currency trading hours. The hours that the currency market is open will change in March, April, October, and November because different countries change their clocks on different days. High Forex Liquidity The foreign exchange market is the most liquid market in the world. This means that a lot of buyers and sellers want to trade at any given time. People, businesses, and banks exchange more than $5 trillion in cash every day. Since the forex market has a lot of liquidity, transactions can be done quickly and easily, which keeps transaction costs low. This lets traders bet on price changes that are only a few pips big. [B-02] Summing Up Dynamic and inclusive, forex trading has advantages over other markets. A skilled trader can profit from the foreign exchange market. Once a trader enters the currency market, there’s no turning back. Even when the domestic market closes, the world market is open. Millions of traders work hard every day to profit from the decentralised market’s growth. Also visit, Piramal Finance for more in-depth, finance-related articles

08-11-2023

Investment

Equity or Commodity? Where to invest?

Investing money is one of the best ways to gain financial security. It has become one of the most lucrative job options for millions across the globe. Investing in the right market with the right strategy yields higher returns. Learning about market volatility, the nature of the investment, and the risks involved in it will determine how far the investment journey is going to go. There are various options for you to choose from. Equity investment and commodity investment are the two most popular options. Both equity investment and commodity trading have higher return rates. But they behave differently under different conditions. There are certain differences between them, as they suit different investment goals. Not only that, but in terms of ownership, market structure, and different levels of risk factors, both options differ from each other. Do you want to know which one is a better option, equity or commodity trading? Then read on to learn the difference between equity and commodity investment. [B-01] What is the equity market, and what is the meaning of equity investment? In the equity market, you buy shares of publicly-held companies and gain a part of the ownership. So, in a nutshell, the market where the buying and selling of these stocks happen is known as the equity market. To be able to trade and invest in stocks on the stock market, you need to have a trading and depository account. You have to permit a brokerage firm to continue investing and trading in stocks. The brokerage firm connects with your relevant stocks and carries out the trade on your behalf. Now that you know what an equity market is and its requisites, it is time to learn about the commodity market and commodity investment. What is the commodity market, and what is the meaning of commodity investment? A commodity is a type of resource that you use in your day-to-day life. Though, in commodity trading, all the commodities are tradable and yield returns. There are two broad types of commodities. First, there are the harder ones, like gold or silver, and the softer ones, like agricultural products and livestock. So, that means a commodity trading platform is a place where the buying and selling of similar products happen. This place can either be physical or virtual. The investment can happen in various ways. It includes direct commodity investment and purchasing commodity futures contracts. What are some of the differences between equity investment and commodity investment? There are a number of differences between equity and commodity investment, and they are: Result of Inflation If inflation is used as a guideline, it is bad news for the stock market. Equity markets perform badly during inflation. This is because of the simple fact that the shares of the company can fall. As they fall, their share prices are also going to fall. But in the case of commodity trading, it performs better during inflation and yields a higher rate of return. You can sell the commodities you hold even at a higher price than you had actually planned. However, for an experienced investor, both equity and commodity investment can yield higher profits. Ownership For equity markets, the ownership of the company remains in your hands, up to a certain percentage. You buy shares of a company in your name. Hence, you have the right to influence certain rules, regulations, and decisions of the company. You might have to wait for favourable conditions. Then you can sell it to another company to gain more profits. As a result, the company’s ownership is transferred to another investor. In the case of commodity trading, such things do not happen most of the time. You don’t have an ownership feature, where you can share the ownership with another investor. The reason for this is that you are probably eligible for future contracts in commodity trading. So, with future contracts, you don’t stand a chance of sharing any type of ownership. Volatility From the perspective of market volatility, commodities are way more volatile than stocks. Commodities like gold, silver, or oil have higher volatility trends in comparison to those stocks. The simple reason is that in commodity trading, commodities have low liquidity. They are influenced by factors like geopolitics and the supply-demand chain. Time factor The time horizon for both the equity market and the commodity market is different. Stocks can be held for both short-term and long-term purposes. This depends on the goals of the investor. Stocks can be held for as little as a trading day or for a longer period. This makes them an ideal long-term investment option. In the case of online commodity trading, the commodity market usually trades in contracts. These contracts have a shorter duration. These commodities have an expiration date as well. This makes it vital for the investor to trade them within a period of time. Margin requirement There are different margin requirements for both equities and commodities. The margin in commodity trading and investment is much lower than that in equity trading and investment. [B-02] Wrapping it up When it comes down to choosing the ideal option, there is no clear answer to that. Both equity and commodity investment have their pros and cons. They behave differently in different environments. The key factors that distinguish them for an investor are their risk appetite and their investment goals. If you have a long-term investment goal and are eyeing a big profit, then you can invest in equity, depending on your risk. If you are aiming for a short-term investment goal, then commodity trading and investing are good options for you. If you’ve read this far and want to learn more about equity and commodity investing, you can go to Piramal Finance. They have many articles and blogs to help you learn more about the world of finance.

08-11-2023

Know More

All You Need To Know About Features And Advantages Of Maturity Plan

Are you looking to diversify your portfolio? Consider fixed maturity plans. These are a type of mutual funds popular among investors who do not like high-risk investment options. A fixed maturity plan commonly called an “FMP,” is a closed-ended debt mutual fund. It gets paid off at the end of a fixed period. They are a great investment option for investors who are looking for quick profits and do not want to take a risk with their money. Fixed maturity plans provide better returns compared to bank fixed deposits. [B-01] Investments in fixed maturity plans can be made at the time of the rollout of the new fund offer (NFO) itself. These are closed-ended funds. So you can not invest money in them once the NFO period closes. You get both your principal and the interest back upon maturity. As we mentioned before, fixed maturity plans are preferred by risk-averse investors. Remember that they are not risk-free. We will learn more about this in the next section. How does a fixed maturity plan work? At the core, they are mutual funds and work like a mutual fund itself. Each maturity plan has a net asset value or NAV. When you invest money in an FMP, your money is invested by the fund’s portfolio manager into a variety of fixed-income instruments with varying maturity dates. The fixed maturity plan itself has a maturity date. So the fund manager chooses instruments whose maturity dates match those of the FMP. Your money is invested in various fixed-income instruments. So you will be given an indicative return while investing in the FMP. However, remember that this return is indicative only and not fixed. Hence, you can get lower returns but higher ones as well. Fixed maturity plans to invest in debt instruments. So they are affected by economic events, interest rate fluctuations, and other factors that affect the debt market. However, the beauty of FMPs is that they can offer you higher returns than traditional debt instruments. They don’t take unnecessary risks. Who should invest in a fixed maturity plan? These instruments are ideal for individuals with a low-risk profile or looking for secure investment options with lower fluctuations compared to the stock market. If you are a stock market investor, fixed maturity plans can be an effective tool for you to mitigate the risk of your stock market investments. Features of a fixed maturity plan Close-ended A fixed maturity plan comes with a definite completion period. This means that your investment will remain locked in until the time of maturity. The most common lock-in period is 3 years. Returns can be predicted A maturity plan invests in fixed-income instruments. These are corporate bonds, certificates of deposit, commercial papers, highly rated non-convertible debentures, government securities, and different kinds of money market instruments. Each of these has either fixed or tentative maturity dates and yields. Hence, you can get an idea of your approximate returns in advance. This is communicated during the new fund offer stage. Hence, it is possible to more or less predict the returns from an FMP. Diversification of a portfolio Whether you are a high-risk investor or have a low-risk profile, a fixed maturity plan can be a great addition to your portfolio. The overall outlook of this portfolio is to keep the risk profile low. So they can help you with diversification by reducing the overall risk of your portfolio. Benefits of investing in a fixed maturity plan Tax efficient From a taxation perspective, fixed maturity plans are treated similarly to debt mutual funds. If you hold an FMP for less than 3 years, you have to pay taxes on short-term capital gains as per your income tax slab rate. If you hold it for more than three years, you will have to pay long-term capital gains at the rate of 20% on the total returns. Stability Debt market instruments are generally less affected by stock market fluctuations. This benefit flows into maturity plans as well. Your money is locked for a specific duration in an FMP. So the fund manager has more freedom to move the money from one debt instrument to another to maximise returns for you. Limited risk A fixed maturity plan is not risk-free. It has less risk as compared to mutual funds and other forms of investment planning. The main drawback is that your money gets locked in until maturity. But then, that’s the case with all other debt instruments as well. Constraints of fixed maturity plans Lower yields If you compare the yield of fixed-maturity plans with equity mutual funds, the earnings are lower. Moreover, fixed maturity plans do not benefit from cyclical movements of the stock market. However, they do benefit from other factors such as interest rate fluctuations and economic cycles. Lock in period As we mentioned at the beginning itself, your money will be locked in once you invest in a fixed-maturity plan. This can be a hindrance if you need the money in between. You might face a dilemma in your life when you have to decide whether you should invest your money in a fixed maturity plan or a fixed deposit. Well, you are not alone. Thousands of people face the same kind of situation in India. [B-02] The best way to resolve this confusion is to ask yourself whether you are willing to take a little amount of risk to give yourself the chance to earn some additional returns. If yes, this instrument is meant for you. Communication of the expected return at the time of investing itself provides peace of mind. Furthermore, estimating total earnings from the start aids in accurate financial planning. Visit Piramal Finance for further details.

08-11-2023