How to Buy Shares – Steps to Buy Shares Online in India

Posted by Mehul Kothari | Published on 20 Jun 2019
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How to Buy Shares – Steps to Buy Shares Online in India

How to Buy Shares?

If you are worried about share trading or investing in the share market, let us tell you that you are not the only one. New investors with limited knowledge are scared of losing their entire or part of their portfolio. However, with knowledge and disciplined investment, the risk can be mitigated and share trading can prove to be one of the most profitable investments to build one’s investment portfolio in a healthy manner.


What are stocks then?

Before moving on to answering how to buy shares, it might pay off to understand what are shares and why to buy them. It is one of the ways to invest and grow your capital. If done well, stocks can beat many other investible instruments in returns.

There are quite a few other perks of buying shares apart from attractive returns. For starters, you become a fractional owner of the company, if the company does well, you can receive bonuses in the form of additional shares or dividends and so on. Stocks or shares of a company are a part of their ownership, which gives the shareholders a right to partake in the profit (and loss) of the company and a right to vote in the shareholder meetings.

Before you can buy shares online, a company must be listed on the stock exchanges. Companies first must declare IPO or Initial Public Offering and get listed on the stock exchanges. Then you can buy shares online from either the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). You can then place an order via your broker to buy or sell the shares. The below steps will answer how to buy shares online and at the same time, how to buy shares for beginners.


How to buy and sell shares for beginners?

If you are pondering over how to buy shares, there are two primary ways of doing so.

• You can buy and sell your shares with the help of a broker.
• You can buy and sell your shares with the help of a financial institution, that offers seamless integration with a Demat account. In this case, the bank or the NBFC acts as your broker.


Buy shares in India for beginners

For your question on how to buy shares, here are all the steps involved.

1. Find a broker
Numerous firms are offering you services when it comes to buying and selling of stocks or shares. It is worth spending some time on zeroing down a broker before you start buying or selling stocks. You can consider factors such as SEBI registration (securities and exchange board of India), membership of stock exchanges, brokerage costs, etc. before deciding.

2. PAN Card
The next step in how to buy shares online in India involves your PAN card. You are obliged to provide your PAN card number for all financial transactions. If you do not have a PAN card, it is time that you get one at the earliest. Without a PAN card, you will not be able to invest in the stock market.

3. Open demat and trading account
As long as we are answering how to buy and sell shares, the first and foremost requirement is a demat and a trading account. The demat account is a placeholder where all your stocks and shares will be held electronically. You can think of it as a bank for your shares. Where you can deposit (buy) new shares or withdraw (sell) existing shares.

The two major depositories in the country are NSDL and CSDL. You can open demat and trading accounts with a broker like IndiaNivesh Securities Ltd.

4. Knowing your depository
There are two primary depositories in the country. They act as a bridge between you, the company whose shares you want to buy and other shareholders. The depositories ensure that you have access to seamless paper-less transactions. These depositories transact the shares via agents known as depository participants (DP). And a DP can either be a bank, a broker or a financial institution.

5. Buy or Sell Shares
Your broker acts as the connection between you and the buying or selling of shares. How to buy shares? You let your broker know the number of shares that you want to buy, the price at which you wish to buy them and the number of shares also. They will then purchase the shares on your behalf.

Of course, there is a time limit until which the orders are valid. Post which, the orders are canceled, and you will have to place fresh orders. The same process applies to the selling of shares also.

If you are wondering how to buy shares of a company that you always wanted to, here are some easy steps to do so after the steps mentioned above are fulfilled.
• Keep the money in your savings account that is linked to your demat and trading account.
• Finalize which shares you want to buy, either using an analysis method or recommendation.
• Place an order for buying shares at a specific price point.
• Keep reviewing your positions regularly.

The steps to buy shares in India for beginners remain the same. During the initial days, you can take the recommendations provided by the research team of brokers, before you come up with your method of buying or selling.

If you are wondering how to buy shares online, there are several brokers or banks with whom you can register and create a demat account. And then you can follow the above steps. There are two major ways in which you can earn money in the stock market.

Firstly, buy a stock at a lower price and sell the same at a higher price. Easier said than done, as you would never know when the price is low or high even with the price-earning ratio calculated. The easier option is to invest in good-quality stocks of healthy companies and hold it for a longer tenure.

Alternatively, if you hold on to shares, companies might pay you dividends. They will first trace who are the shareholders either through NDSL or CSDL and deposit the dividend amount directly to your account.

Consider this example, you buy 100 shares of a company AS Technologies at INR 250 each. If the price of the shares were to reach INR 350, you would make a profit of INR 100 per share i.e. INR 10,000.
If the company is doing well and they declare dividends at INR 10 per share, the company will deposit INR 1,000 for the shares that you hold.

The stock market is vastly operated electronically, thus ensuring that you do not have to worry about how to buy and sell shares or how the share market works. You can simply follow the steps mentioned above and your ‘how to buy shares online’ question will be answered.

Though buying or selling of shares or even the stock market comes with inherent risks, the results in the form of potential returns are quite rewarding. Experts from IndiaNivesh will be able to guide you to understand the best way to invest in the share market systematically while ensuring operational ease. Depending on your risk appetite and financial goal, our experts will aid your share market investments for a healthy portfolio in the long run.

 

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Benefits of Mutual Funds Investment in India

Posted by Mehul Kothari | Published on 20 Jun 2019

Mutual funds have emerged as one of the most popular investment avenues for all kinds of investors. Its popularity can be understood from the fact that most of the investors now wish to participate in the equity market via mutual funds. In fact, the mutual fund returns over the past few years have outperformed most of the other investment avenues. Apart from the consistent returns, there are many other benefits of investing in mutual funds. In this article, we will walk you through the key benefits of mutual funds. What Are The Benefits Of Mutual Funds? • Professional ManagementMutual funds collect money from multiple investors and invest them across various asset classes with the help of professional management. The fund managers of the mutual fund companies are highly qualified and have years of experience in investing money. Another advantage of mutual funds is that the fund manager has a team of experts who extract information from every corner of the market. This kind of expertise generates faith and assurance among the investors that their money is in the safe hands. • DiversificationDiversification is always important to build a good portfolio. Mutual funds invest the funds collected from various investors in different investment avenues. By spreading the money across a wider spectrum, the risk levels decline considerably. The mutual fund unit holders do not have to depend on the growth of a particular sector or stock when the portfolio is diversified. Thus, diversification is another benefit of mutual funds. • Smaller Capital OutlayAnother advantage of mutual funds is that it requires smaller capital outlay. To build a diversified portfolio, a large investment is required in general. But in the case of mutual funds, the money from multiple investors is pooled together and invested in a diversified portfolio. Thus, an individual investor investing in the mutual fund gets the benefit of the diversified portfolio even with a smaller capital outlay. • Economies of ScaleMutual funds purchase and sell securities in large volumes. This makes the transaction cost much lower than what a normal retail investor would pay if he purchases or sells it through the stock broker. • Easy to InvestThe biggest benefit of mutual funds in India is that it is easy to invest in them. You can start investing in mutual funds once you know your investment objective. Investment in mutual funds can be made depending on the schemes that suit your need and time duration. There are many types of mutual funds in the market and you can invest easily in any of them. Moreover, after investing you are not required to pay any further charges. • Liquid in NatureOne of the benefits of mutual funds is that they are liquid in nature. The open-ended funds can be redeemed at any time. In liquid funds and debt funds, the redemption money is transferred into your bank account in T+1 days. In the case of equity funds, the redemption money is transferred into your bank account in maximum T+3 days. This makes mutual funds very popular because you have the funds available at your disposal whenever you need them. • Invest as Per Your NeedsThere are various types of mutual funds available in the market and you can invest in any of them based on your needs. Select the mutual fund that suits your risk appetite and financial goals. Various products of mutual funds have different advantages and you must analyse each one of them to select the best for yourself. Also, you can make an investment in the mutual fund of any amount you like by way of an SIP or lump sum. The amount of SIP can be as low as Rs. 500 per month. • Disciplined InvestingThe main benefit of investing in mutual funds is that it makes you a disciplined investor. With SIP in mutual funds, you invest in every phase of the market and avoid taking the wrong decisions during panic situations in the market. Systematic Investment Plans help the investors in achieving their long term financial goals successfully. If a disciplined investing approach is not followed then you might end up spending on things that do not hold much utility. In addition, SIP is the best way to cut expenses and eradicate emotions from the investment process. • Various Modes of Investment and WithdrawalAnother benefit of mutual funds is that there are various modes to invest and withdraw the money. Investment in mutual fund schemes can be made in a lump sum or Systematic Investment Plan, systematic transfer plan of transferring money from one mutual fund scheme to another, etc. There are also many ways to withdraw money from mutual funds like lump sum withdrawal, systematic withdrawal plans, etc. Therefore, the choices available to invest and withdraw money is a big benefit of investing in mutual funds in India. • Helps You Save TaxesOne of the benefits of mutual funds in India is that they help you save a considerable amount of tax. Equity-Linked Savings Schemes (ELSS) are diversified equity mutual funds that qualify for tax benefit up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act. Moreover, long-term capital gains made below Rs. 1 lakh in a single financial year are also tax-exempt. The above mentioned are a few of the benefits of mutual funds. As a beginner or a seasoned investor, one must aim to invest in the mutual funds for the long term. Mutual funds have rewarded the long term investors handsomely. With the increasing popularity of mutual funds, expect many more types of mutual funds to hit the market. If you need any assistance for investing in the mutual fund market, you may contact IndiaNivesh Ltd. We suggest the right mutual fund for you after understanding your financial goals and tenure of investment.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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What is Forex? – Forex Trading in India

Posted by Mehul Kothari | Published on 20 Jun 2019

What is Forex?In simple terms, Forex is foreign exchange i.e. it is the conversion of the currency of one country into the currency of another. It can also be referred to as FX or currency trading and is a decentralized international market where currency trading of the whole world happens.The Currency of a country is valued as per the principles of supply and demand. There are some factors like tourism, trade, investment, etc. on which the value of a particular currency depends. For instance, when tourists visit our country they will need to pay for the goods. For this, they will exchange their currency for Indian rupees. This refers to the demand factor of our Indian currency. Similarly, there are trade requirements due to which one country will exchange and obtain the currency of another country. These factors pave a platform for foreign exchange and are major contributors to the foreign exchange market.Forex TradingWhat is forex trading? Forex trading is defined as an activity of buying and selling currencies. Forex trading occurs through an online channel where currencies are traded 24X7 for 5 days a week. The global turnover of the forex market is approximated to be more than US$5 trillion and it is one of the world’s largest financial markets. It is the highest traded market in the world as people from all geographies participate in it.Now, let us have a look at the forex trading basics. Since in forex trading, all transactions always involve the simultaneous buying and selling of currencies; they are known as currency pairs. In the currency pair, one is known as the base currency and the other one is called the quote currency. One of the famous global currency pairs is EUR/USD. In this currency pair, the base currency is EUR and it is either bought or sold in exchange for the quote currency i.e. USD in the given pair (In any currency pair first currency will be base currency and second will be quoting currency). The difference in the price between the currencies determines your profit or loss. It shows how much USD needs to be paid to buy 1 EUR.There are some other famous currency pairs as well like the GBP/USD, USD/CHF, and AUD/USD, etc. These popularly used currency pairs of the world's currencies trade comprise a major percentage of the Forex market. So, these currency pairs are known as Majors. Some currency pairs do not include USD and are known as cross currency pairs like the GBP/JPY and JPY/CAD pairs. Furthermore, there is an exotic currency pair which is a combination of one major currency and the currency of an emerging economy like the USD/ZAR. Since USD is the world’s most traded currency, most forex rates are mentioned against USD. Then comes EUR, Japanese Yen, GBP, CAD, etc. The Indian currency, INR is not yet fully convertible. It means, even though Indians can invest in forex and participate in other currency‘s trading and investment, there are a few restrictions when the amount is high and certain regulatory approvals need to be obtained. This is a regulatory requirement of the Government.Once the Indian market matures further and proceeds towards a global economy, INR becoming a fully convertible currency is the only way ahead. However, the pace depends on India’s performance in terms of fiscal consolidation, reducing NPA, inflation control and robust financial infrastructure and increased efficiency in monitoring financial institutions and businesses.To understand Forex Trading, certain terminologies are inevitable. They are:Spread, Pips and Forex chart define the opportunities in forexA spread is defined as the difference between the asking price and the bid price. In simple terms, a spread is the cost of trading.Pip stands for a point-in-price and is defined as the measure of the changes occurring in the currency pair. It is used to measure the movements in prices and currency pair changes. We can also refer to Pip as a percentage in point or price interest point.In a forex transaction, there are mainly 3 types of charts i.e. Candlestick Chart, Bar Chart, and Line Chart. A candlestick chart is most popular among traders because of the wide range of information displayed on it. The high, low, opening and closing prices of the currencies are all well portrayed by a candlestick chart. It has 3 major points i.e. open, close and the wicks. The wicks will depict the high to low region of currency prices. A bar chart represents the opening, closing, high and low points of the currency prices. A bar chart is mostly used by forex traders to find out about the contraction and expansion of the price ranges. Furthermore, a line chart is usually depicted from one closing price to the next closing price and is quite helpful for beginners in forex trading.Two more important terms related to forex trading basics are Long position and Short position. When a trader purchases a currency with an expectation of the value to increase, it is said as a long position and when a trader sells a currency by expecting its value to decrease in the future, it is known as a short position. Exchange rate and its changesThe major concept while making a trade in foreign currencies is the exchange rates. The exchange rates for currencies keep on changing continuously and a forex trader will attempt to earn profit from these changes. With precise knowledge of what is forex trading and forex trading basics, we can now learn about how it works? Suppose, you have been on a trip to Europe in July 2019 and you buy EUR 5000. To do so, if you had bought EUR in May, you would have got better exchange rate than in June, since the EUR/INR rate has gone up from 77.70 to 78.6 in the last 1 month or so. So, the cost of buying 5000 EUR would have risen by a few thousand INR.For example, the EUR/INR rate before the trip was 78.2. So, to buy 5000 EUR, you would have had to spend INR 3,91,000 and for 1000 EUR, your amount spent was INR 78,200.Now, say after the trip, you wish to change the remaining amount of 1000 EUR back to INR and the rate has gone up from 78.2 to 78.7, then the amount you would receive is INR 78,700. Thus, this profit of INR 500 (78,700-78,200) is the profit from forex.With the onset of modern technology in all fields, you can easily practice currency trading by online forex trading. Due to online forex trading, you do not have to commute or leave your place to get involved in forex trading. You can sit at your home, invest in the prices of different currencies and earn profits. Online forex trading has made this forex trading process even more simple and convenient.How to start a Forex transaction?Let us have a look at the process to start Forex trading. o Selection of currency pairIn the first step, you need to select the currency pair which you want to trade and the initial amount which you are interested to invest.o Select your deal sizeThe size of your deal can be expanded up to 400 times by using leverage.o Selection of directionSuppose, you are planning to make trading of foreign currencies, then you will be able to make a profit even when the prices of currencies go down. So, it is important that you select your direction wisely.o Close your deal and profit collectionSuppose the price of the currency pair EUR/USD rose up. Then at that point, you can decide to close your deal and get the profit.Forex Trading in India It is legal to carry out Forex trading in India, but it should be practiced strictly through the forex trading platform. In simple terms, you can only carry out a forex transaction through registered forex brokers in India. There is a prohibition on the forex trade between any two foreign currencies in India. Citizens of India cannot send funds overseas to forex brokers by any direct or indirect means. All this is because of the regulatory norms of India, as already stated before. To carry out forex trading in India, you should know that the regulatory bodies for forex trading in India are the Reserve Bank of India (RBI) and the Securities Exchange Board of India (SEBI). As a first step, you need to open an FX or currency trading account with a forex broker who is registered with SEBI. There can be two types of accounts viz. The Personal Account and The Business or Corporate Account. After the creation of the account, the trader can trade on different currency derivatives. Backed by research, experts from IndiaNivesh are well versed with foreign laws, procedural know how of forex trading in India & key currency movements. Our team can help you to make the right investment decisions for a profitable and legal forex trading in India.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • Share Buyback – Meaning & Upcoming Buyback of Shares
    Posted by Mehul Kothari | Published on 14 Nov 2019

    “XYZ company announces a buyback of its shares”. You must have seen or read this headline multiple times in the last couple of years. Especially by companies from the IT or technology industry. According to reports, in the financial year 2018, buyback offers worth Rs. 50,000 crores were made in the Indian markets. Have you wondered what is share buyback and what are the technicalities involved with it? Or if you should give up your shares during buyback offers? Then read on and get all your queries resolved. What is share buyback? Buyback of Shares – Meaning:       A share buyback is a process through which a listed company uses its money and repurchases its own shares from the market. It is the opposite of an IPO (Initial Public Offer). Stock repurchase is also seen as a way for the company to re-invest in itself. Once        the stock buyback is complete, they are absorbed and cease to exist. There are two ways in which stock buyback can take place: Tender Offer: In this buyback channel, the company offers to buy back a certain number of stock at a quoted price. The buyback is done directly from the shareholders. Open Market: The open market buyback takes place through the secondary market (stock exchange). The resolution (special or board) needs to specify the maximum price for the buyback.       2. Buyback of Shares – Regulations:       SEBI has laid down the following guidelines for buyback of shares: It cannot be more than 25% of the total paid-up capital value and free reserves held by the company. It needs to be approved by the shareholders through a special resolution. If the buyback value does not exceed 10% of the total paid-up capital value and free reserves held by the company, it necessitates only a board resolution. Why do companies offer stock buyback schemes?1. Surplus cash but lack of investible projects This is one of the primary reasons behind stock repurchase by companies. Idle cash reserves come with a cost. Matured businesses do not need to invest exorbitantly in research, development or other such aspects. Also, holding on to unused equity funding results in ownership dilution without any good reason. Hence, companies prefer to buy-back their own shares.2. Tax-efficiencies Buybacks usually happen at a premium as compared to the market price. Companies prefer this route to reward shareholders rather than paying our dividends due to the tax implications. Dividends attract 15% DDT (Dividend Distribution Tax) for the companies as well as 10% tax in the hands of shareholders if the dividend income exceeds Rs. 10 Lakhs. Hence, earnings through buyback become more tax efficient for both the parties, even after considering the taxes applicable.3. Enhanced valuations Buybacks are associated with enhanced share valuations as a result of an improved PE multiple. Stock repurchase leads to a reduction in the number of outstanding shares and hence, capital base. This, in turn, improves the value of EPS (Earning per Share) as the same amount of dividend is now divided between lesser shareholders. The ROE (Return on Equity) also goes up as the cash assets on the Balance Sheets come down.4. Signal to the market Stock buybacks are also used to send indicators to the market. It signals that the company has great confidence in itself. Hence it is ready to repurchase its own shares (mostly at a premium) as it feels that the company is undervalued currently in the market. For instance, when the company management is highly optimistic about the future prospects but the stock price still reflects bearish sentiments based on past performance only.  In some cases, promoters can also use the buyback channel to tighten their hold on the company. This is especially true when the shareholding is highly diluted or is in the hands of individuals or investors who do not have the best interest of the company in mind. How to evaluate stock buyback offers? Now you know what is share buyback and the reasons why companies offer them. But the fundamental question remains – what should be your stance in case of buyback offers? Should you hold your stock or give them up? These pointers can help you take the final decision:1. Offer Price and buyback quantum Buybacks are lucrative only when they are offered at a significant premium amount. The offer price must be substantially above the current market price to make it worthwhile for the investor. Also, the quantum of the share repurchase amount should be substantial.  2. Look at the tax implications Till recently, shareholders had to pay capital gains tax on their buyback earnings. However, with the introduction of buyback tax for listed companies, investors are now exempted from the same. Companies will now have to pay 20% buyback tax. This move has been done as the Government observed that more companies were distributing their profits through the buyback channel rather than dividend as the latter attracted DDT (Dividend Distribution Tax). Note: The buyback tax is not applicable to companies who had announced their buyback schemes prior to 5th July 2019.3. Promoter Participation Promoters cannot participate in the buyback process if it is being done through the open market. However, they are allowed in case of tender offer. In case of participation by the promoter, there is usually a positive movement for the stock price in the long-term.    Final Words Buyback can be rewarding for both parties (company as well as investors). As an investor, it is important for you to understand the implications of each buyback offer and decide wisely. You should keep an eye out for the upcoming buyback of shares in 2019 and corporate news around the same. In case you feel that you are not able to decide on your own, you can always reach out to an expert like IndiaNivesh. Indiaivesh has been providing excellent financial solutions to investors since the last 11 years. It offers a wide range of products – broking, distribution, equities, strategic investments, investment banking as well as wealth management. With its “client-first” approach, skilled and experienced team members and state-of-the-art research and technological capabilities, you can be rest assured that your financial interests are in safe hands.  Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • SIP vs. RD - Systematic Investment Plan (SIP) Vs Recurring Deposit (RD)
    Posted by Mehul Kothari | Published on 18 Oct 2019

    Financial planning plays an important role in today’s time. For your money to grow into wealth, it is required that you invest it in good avenues. Many individuals set aside a fixed amount every month for investment purpose. The two most popular investment avenues for investing a fixed sum of money every month are Systematic Investment Program (SIP) in Mutual Funds and Recurring Deposits (RD). In this article, you will learn about the difference between RD and SIP. Let us begin by learning the meaning of the two terms. What is SIP? Systematic Investment Plan or SIP is an investment scheme where you can invest a fixed sum of money on a monthly or quarterly basis. It is a disciplined approach of investing your money because you set aside a fixed amount of money for investment purposes. You can start SIP by selecting a mutual fund scheme. The best part of SIP is that you can start it with an amount as low as Rs. 500. Let us now learn the meaning of recurring deposit. What is Recurring Deposit? Recurring Deposit or RD is a term deposit scheme offered by the banks. In this scheme, you have to select the duration of time and amount of monthly deposit. Upon the start of the plan, you have to deposit a fixed amount of money every month during the tenure of the scheme. In general, the duration of the scheme is minimum 6 months and on completion, 3 months of addition can be made up to maximum tenure of 10 years. Recurring deposit schemes are easy on the pocket because in this scheme you get the option to select the amount and tenure for which you want to continue the scheme. Let us now learn about the SIP vs. RD. Scheme of Investment SIP is about investing in mutual fund plans where you have the option to select between debt or equity funds on the basis of your risk-taking capability. Whereas, RD is a deposit scheme that can give you a fixed rate of returns. If you are looking for more flexibility than you can opt for a flexible recurring deposit scheme.  Frequency of Investment SIP can be started with a small amount. It is your choice to invest in SIP on a weekly, monthly and quarterly basis. In the case of recurring deposits, you can invest a fixed amount on a monthly basis. Choice of Investment SIP gives you the option to invest as per your risk appetite. Based on your risk-taking capability you can invest in different mutual fund schemes like equity, debt, hybrid, etc. On the other hand, a recurring deposit has no investment options. To earn a fixed return, you have to invest a fixed amount of money on a monthly basis. Tenure You can opt for SIP investment for any tenure or duration of time. The minimum period of investment is 6 months. Whereas, in the case of recurring deposits, they have a fixed maturity date. The minimum period of investment is for 6 months and the maximum period up to which you can do a recurring deposit is 10 years. Return The rate of return in SIP is not fixed because their performance is linked to the market. In general, over the past 10 years, the equity mutual funds have given return of 12% to 14% per annum and debt mutual funds have given a return of 8% to 9% per annum. On the other hand, when you start investing in RD, the rate of return is already known to you. Liquidity SIP is highly liquid in nature i.e. they can be withdrawn whenever you want. However, you must remember that you would be charged an exit load on redeeming within 1 year of investment. Just like SIP, RD is also liquid in nature. RD attracts pre-withdrawal charges in case you make a withdrawal before the end of the tenure. Risk Investing in mutual funds is risky because the performance of the fund is dependent on market performance. Poor market performance can even lead to capital erosion. However, in comparison to the equity mutual funds, the debt mutual funds are less risky. On the other hand, RD is a safe investment option. This is because the funds are directly deposited into the bank and they have a fixed rate of return. Hence there is no risk of capital loss in RD. Tax Benefit The SIP investments and returns generated on it are exempt from tax only if the investment is made in Equity Linked Savings Scheme (ELSS) funds. Whereas, an investment made in the form of recurring deposit or interest earned on it is not exempt from tax. Investment Goal SIP acts as a one-stop solution to all types of investment goals. In SIP, depending on the frequency of your investment and funds selected, you can invest for short, medium or long term. On the other hand, RD investment, in general, is done for short term purposes. It cannot generate wealth like SIP. The above mentioned are a few differences between the SIP vs. RD scheme. Now the next important question that would arise in your mind is, SIP or RD which is better? Well, the answer to it is very subjective and will vary from person to person. Both the investment schemes are very different from each other and have their own benefits. Depending upon your risk appetite and tenure of the investment, you can select the right scheme for you. You can also refer to the difference between the two schemes and understand which investment option is ideal for you. The beginners or inexperienced investors often find it difficult to take the investment decisions on their own. To assist them in financial planning, IndiaNivesh Ltd. is always at their assistance. We understand your financial goals and risk appetite before suggesting you any investment plan or scheme. We provide our clients with innovative and customised financial solutions. Our aim is to exceed the expectation of client in all our endeavours. You can even open a demat account with us and trade or invest in the stock market on the basis of our regular research reports.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • Gold Exchange Traded Funds (Gold ETFs) - Overview & how to invest in it
    Posted by Mehul Kothari | Published on 16 Oct 2019

    Gold Exchange Traded Funds (or Gold ETFs) combine the two passions of many investors – stock trading and gold investments. They provide a channel through which you can be a part of the bullion (gold) market. The investor’s funds are invested in gold stocks but there is no physical delivery of the yellow metal. They are often referred to as open-ended Mutual Funds that invest the corpus in gold bullion. Key highlights of Gold ETFs: Gold ETFs in India started in the year 2007. Slowly but steadily they have started gaining momentum. Some of the key benefits offered by Gold Exchange Traded Funds are:1. Transparency: Transparent pricing is one of the USPs of Gold ETF. Like stock prices, information about gold prices are easily available to the general public. You can easily determine the value of their portfolio by checking the gold prices for that time or day.2. Ease of trade: Just like shares, Gold ETFs can be easily traded on the stock exchange. You need to buy a minimum of one gram of gold which is equivalent to one unit of Gold ETF. Investors can invest in Gold ETFs from any location in India. Moreover, the difference in price (due to GST) will not be applicable.3. Cost efficiencies: Unlike many investment avenues, there are no entry or exit loads with Gold ETFs. The only cost involved would be the brokerage fees. 4. Risk: Unlike physical gold, there are no storage hassles or theft fears with Gold ETFs. Additionally, gold prices are not prone to frequent fluctuations. This makes Gold ETFs a relatively safer choice. 5. Tax efficiencies: Gold ETFs do not attract any wealth tax or securities exchange tax. Also, if they are held for a period of more than one year, the gains are treated as long-term capital gains. For anyone interested in holding gold, these ETFs provide a tax-efficient alternative. 6. Diversification: Gold ETF investments can help to bring diversity in the investment portfolio. During volatile market conditions, they can help to stabilise or improve the overall returns for you.7. Collateral: Gold ETFs are accepted as security collaterals for loans or capital borrowings by many financial institutions. Why is investing in Gold ETFs better than traditional forms of gold? You do not need to worry about impurities or adulteration in the metal As ETFs are held in electronic form, there are no storage related issues or costs Easy trading on the stock exchanges and hence high liquidity Real-time tracking of investments No mark-ups costs such as making charges, wear and tear involved The price of Gold ETFs remains the same throughout the country. However, the gold prices can vary from one location to another.  How does Gold Exchange Traded Fund work? The investment is converted into unit of gold basis the cost applicable at the allotment time. For instance, the cost of gold (per gram) on a particular day is Rs. 3000. Ms. X wants to invest Rs. 60,000 in Gold ETFs. Her investment amount will get translated into 20 gold units. At the back-end, physical gold acts as security for these ETFs. For example, if you invest in Gold ETFs, the entity at the back-end purchases gold. They act as the custodian for the investment and also guarantee for the purity of the metal. The stock exchanges assign the responsibility of buying and selling gold to authorised members or participants which in turn can be used to issue ETFs. These are usually large companies. As a result, these authorised members ensure that there is parity between the gold cost and ETFs. How to invest in Gold ETFs? Gold ETF investments are a simple affair.1. Choose a broker or fund manager: Many financial institutions (including banks) offer Gold ETF products. Similar to the online share trading, you would need to reach out to a fund manager or a firm which will trade on behalf of you.2. Demat and Trading Account: In order to invest in Gold ETFs, you need to have a demat account and an online trading. You can apply for these accounts online with the broker or such service provider by providing details like PAN, Identity Proof, residential proof, photograph and a cancelled cheque (for bank account linkage).3. Online Order: Once the accounts are in place, you can select the desired Gold ETF and place the order through the broker’s online portal. You can also opt for Mutual Funds which have an underlying Gold ETF.4. Confirmation: The placed orders are then routed to the stock exchange. The purchase orders are matched with the corresponding sell orders and accordingly executed. A confirmation email or message is sent to you. Who all should invest in Gold ETFs? Gold is a relatively safe and stable investment. Its prices do not fluctuate as much as equities. Hence, Gold ETFs can be a good choice for you, if you do not want to take too much risk. Additionally, since these ETFs are tradeable easily on the stock exchange, they are useful if you are looking for an investment opportunity with high liquidity. Hence, it is a good option for you to diversify your portfolio. So, if you meet the requisite objective of investment, Gold ETF is a good option for you as well. Things to keep in mind while investing in Gold Exchange Traded Funds Here are some tips that you could use while investing in Gold ETFs Gold is generally considered as a stable asset. However, you should not forget that the Net Asset Value (NAV) of Gold ETFs can also fluctuate basis market volatility As an investor, you need to bear brokerage fees or commission charges for Gold Exchange Traded Funds. Hence, you should check these costs while deciding on the broker or fund manager However, you should not make the decision on the basis of price alone. Consider the broker/ fund house’s past track record, services provided, type of clients handled etc. before choosing the service provider Do not over-invest in Gold ETFs. It is usually suggested to restrict investment in these ETFs to 10% of the entire portfolio. Final Words A smart investor knows that all that glitters is not gold. A good fund manager or firm helps choose the best Gold ETF products in India. IndiaNivesh, a well-known financial services company can help in this regard. With their rich experience in the Indian market and in-depth understanding of the financial ecosystem, they have helped numerous customers to grow their wealth and fulfill their financial goals.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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