Comment on investing

Recently there were a lot of comments from other blogs. They all talked about how the investors (??) have lost money lost in the market in the recent past.

These were a sort of advertising comments having links to the respective blogs.The comments were not published not because of this reason, but all along they did talk about traders as investors.

If one does trading and calls it an investing, its like calling an engineer ..a doctor...!!. If someone is buying and selling stocks just for a price increase/ decrease that he expects in a short term ( period of one day to a couple of years), he is a trader.

The best way to create wealth is to stay invested in the market for a longer time horizon. Mutuals funds are the best way as most of us are not experts in picking up stocks.

1) Never get swayed by any articles/comments which calls trading as investing.

2) Believe in long term investing in equity through SIP route in proven diversified MF.

Lotus India Banking Fund -NFO

News-
Fund category -Equity - Diversified
Scheme plan-Growth, Dividend
Scheme type-Open Ended
Launch date-May 19, 2008
Fund manager-Mr. Tridib Pathak
Initial Price-Rs 10
Min investment-Rs 5,000
Entry load-2.25 % Exit load-1

Objective-The investment objective of the Scheme is to generate long-term capital growth from a portfolio of equity and equity-related securities of companies engaged in the business of banking and financial services.

Views-

Investors can look into proven funds available around the same theme. Banking is a high risk return sector as there are a lot of uncertainties at this point of time.

Reliance Banking ETF (Exchange Traded Fund).

News:-The fund will track the CNX Bank Index, which has 12 liquid and large Indian banking stocks.The scheme's asset allocation will be 90 per cent in the equities of its Index and rest 10 per cent in other equities or debt instruments.

Scheme Details:Issue Opening Date : May 12, 2008Issue Closing Date : May 30, 2008Fund Category : Exchange Traded Fund Fund Type : Open-end, Exchange traded Benchmark : CNX Bank Index Cost : The fund has 2.25per cent entry load during NFO. Investors will incur brokerage on sale and purchase after listing of the ETF.Minimum Investment : Rs 5000(During the NFO)

Views :-

Sectoral fund. New investors can avoid. Existing investors who want to add banking flavour to their portfolio can considering investing a small portion of their portfolio. Comparable ETF's that exist are Benchmark BEES, PSU bank BEES and Kotak Bank ETF.

Being rich and looking rich

There are two kinds of people. The first type are ones-- who look rich i.e those who have a flaunting lifestyle. The other one's are rich but you cant gauge the richness from their lifestyle.

There are a lot of salaried middle class class people who belong to the first category. They flaunt a rich life style ( Thanks to the high salaries and EMI facilities !!).Nothing wrong in enjoying one's money. But one shouldn't end up eating out all his current income and future income. You should also save and invest for your future.

If you do not save even for contingencies, you may face a disaster when some unforeseen event happens. In this fast moving world, all things including permanency of employment, longevity of work life, etc have changed drastically. We should really work towards financial independence. i.e making money work for us , so that it can take care of all our future needs. So, being rich is more important than looking rich when you are working towards financial independence.

Returns that beat inflation and taxes

I was going through an interesting statistic in Times of India today- 6th may 2008. The article says

If you has invested Rs 10,000 a year ago in any of the following today it will be worth

1) Nifty -12595 ( ideasmoney comments--- this is roughly 26%. It manages to beat current inflation rate . effective return 26%-7.5%= 18.5%, no tax as long term capital gains rate for equity is 0%. , dividends that you would have got are a bonus!!)

2) Sensex -12502 ( ideasmoney comments--- this is roughly 25%. It manages to beat current inflation rate . effective return 25%-7.5%= 17.5%, no tax as long term capital gains rate for equity is 0%. , dividends that you would have got are a bonus!!)

3) Gold -12430 ( ideasmoney comments--- this is roughly 24%. It manages to beat current inflation rate . effective return 24%-7.5%= 16.5%, Applicable taxes would also shove off your returns and bring it down from 16.5%)

4) Silver -11802 ( ideasmoney comments--- this is roughly 12%. It manages to beat current inflation rate . effective return 12%-7.5%= 4.5%, Applicable taxes would also shove off your returns and bring it down from 4.5%)

4) Post office ( or other FD) -10850 ( erroneously given as 10625 in TOI???) ( ideasmoney comments--- this is roughly 8.5%. It manages to beat current inflation rate by a small margin. effective return 8.5%-7.5%= 1%, Applicable taxes would also shove off your returns and bring it down from 1%. If you are in highest income tax bracket your return would be effectively 0.7%!!)

So, when you plan to invest plan to beat inflation and taxes. For this reason, don't put all your eggs in one basket!!.

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Buying gold on Akshaya tritiya

Remember our article published last akshaya tritiya ?? -http://ideasmoney.blogspot.com/2007/04/akshaya-tritya-and-gold.html

if you had invested in gold ETF during last akshaya tritiya, you would have made a neat 25% (approx.) by this akshaya tritiya.

You would have got similar increase even if you had bought ornaments, but the cost of storage, resale value , etc brings down the ROI .

What are you waiting for??? Start your Gold ETF purchase this akshaya tritiya!!

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