Selecting the right real estate investment

Posted by Mehul Kothari | Published on 03 May 2019
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Selecting the right real estate investment

Scientists and innovators are looking at possible solutions to colonize our neighbouring planet: Mars. But until that becomes a reality, a plot of land here will remain valuable and be a great opportunity for people to invest.

It isn’t that simple though. You can’t simply buy land that you lay your eyes on. Not all plots of land appreciate equally. For instance, a property in Dehradun is likely to appreciate more than a plot of land in a hamlet situated 200 kilometres from Delhi -- at least not yet. A good real estate investment depends on a lot of factors. They all have to come in place for the investment to reap you benefits.
So, here are some tips to help you make the right real estate investment.

1) Do your homework
You need to ask yourself what type of property you wish to buy? Do you want to purchase a building and rent it out or do you want to develop the property and sell it again (flipping for profit)? The answers to these questions can help you make your investment decision easier. Also, it is very important to talk to people. Speak to different real estate agents and locals so that you can get different options to consider. You can also do a bit of online research regarding property prices and rents in a particular area to gain a better understanding.

2) Location, location, location
In one way, real estate investment is quite similar to watching a cricket match. It is all about getting the best seats possible. Any expert in this field cannot stress enough about the importance of location when it comes to real estate investment.
As the investor, you need to find the best possible location for your budget. For instance, if you are investing in a residential property, it should be in an area that is close to all basic amenities like schools, hospitals and transportation.

3) Personally inspect the property
A real estate investment requires you to be a hands-on investor. Since you are going to put down a considerable amount of money, you need to ensure that you are getting a good product. Personally go and inspect the property at the location. Check if the property has any flaws in the design or the structure. You don’t want to end up with unnecessary costs once you buy the property.

4) Understand the market
Warren Buffett says: Buy low, sell high. He may be talking to investments in the stock market but he could as well be referring to real estate investments. Investing in real estate is a bit like investing in the stock market. The best way to maximize your returns is to identify properties at attractive prices. Don’t chase the market when it is performing extremely well. Instead, it is better to pick winners when the real estate market is at lower levels.

5) Find out all the expenses
There can be a lot of expenses when you get down to the actual process of buying a property. This includes: registration fees, utility fees, maintenance deposit and so on. All these charges can get pretty expensive when the numbers add up. That’s why you need to make sure that you include all these different factors into your budget before investing. You don’t want to come to a realisation later on that you cannot afford the property.

Conclusion
Real estate offers investors an exciting opportunity to invest in properties and increase their wealth over time. However, not all investments may be profitable. By following the above guidelines, it is possible to select a property that offers you good returns over a period of time.

 


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

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Mistakes to avoid while investing in stocks

Posted by Mehul Kothari | Published on 02 May 2019

In the medieval times, the early explorers had an extremely difficult time navigating the dangerous seas. The reason is that they were the first ones to do so. But once they identified sea routes and created maps, it became a lot easier for the people who followed. Every investor who starts out in the stock market is an explorer of sorts. He wants to find the best way to make money for himself and his family. But what if he was handed a map to make his life easier? He could avoid some of the common mistakes of his predecessors. In this article, let’s find out some of the common mistakes you should avoid when you invest money in the stock market.1) Assuming that investing is a gateway to quick moneyInvesting in the stock market is a great way to create wealth. However, it is not an easy quick-fix solution to short term money problems. Don’t speculate or try to time the market; especially if you are a novice investor. One wrong decision and you could end up losing a substantial sum of your hard earned money. You need to take your time and make a good investment decision before you put your money in a stock. Have a long term investment approach and invest carefully. 2) Following unsolicited tipsYour friend tells you that the latest summer movie is amazing. He recommends that you should watch it. Would you take his unsolicited tip and watch the movie? Sure. Why not; it is quite a harmless suggestion. But what if he told you that he knew an amazing stock that could triple your investment in one year! Should you heed his advice? Absolutely not! At least not until you have done your own research. A lot of investors pay heed to unsolicited investment tips and end up with poor returns. You should always check out if a stock is worth buying or not. Research is a very important step when it comes to investments in the stock market. 3) Depending too much on past performanceA stock has been giving amazing returns for the past four years. As a result, everyone you know wants to buy it. They expect a great performance this year too. What could go wrong?Well, it is possible that the stock fails due to some other external factors that have nothing to do with past performance.When it comes to stocks, past performance is a good way to analyse a stock’s history. However, it should not be your only indicator. You need to consider the future potential of the stock too. Fundamental analysis can be a great help to identify whether there is value in choosing a particular stock. 4) Not diversifying your portfolioAlright, you have done your analysis and you found that the Information Technology (IT) sector has a lot of potential. You decide to invest all your money in stocks of this sector alone hoping that your returns rise quickly. But in case of a market crash that affects this sector severely, you could end up losing all your money.Never put all your eggs in one basket. Diversification is the key to minimize your risks. Create an investment portfolio that includes stocks from different sectors. This way, you can limit your exposure to market volatility and avoid total loss in case there is extreme price movement in any single sector. 5) Ignoring risk vs. returnWhen it comes to stocks, the single most important formula you need to remember is: buy low, sell high. The second most important one is: higher the return, higher the risk. You may be interested in very high returns. But are you prepared to bear the high risk that comes with the investment? As an investor, it is extremely important to balance your personal equation of risk vs. return. Identify your risk appetite and invest accordingly. Ideally, you shouldn’t try to invest any more than you can afford to lose. To sum upThe stock market offers immense potential for an investor. There are many interesting ways to increase your wealth. The more you learn, the greater your experience. But that said, it is still possible to make mistakes once in a while. But by being aware of the above common mistakes, you can avoid them in your investment journey. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Currency Trading in India

Posted by Mehul Kothari | Published on 07 May 2019

Currency Trading in IndiaIndia is ranked high in the list of fast growing economies in the world. The robust and stable financial environment in India makes it an ideal place for international businesses to carry out their operations with good profitability. Moreover, India is among the top countries of the world that attracts foreign direct investment. This makes India a very exciting place for carrying out currency trading as there are buyers and sellers of the Indian currency from across the globe. In this article, we will learn everything about currency trading and its related concepts.Basic Concept of Currency TradingForeign currency is often known a Forex Trading. You can indulge in currency trading in India through various Indian exchanges like NSE, BSE and MSEI. The RBI guidelines suggest that every Indian individual and financial institution can indulge in forex trading via currency pairs. The different types of currency pairs include EURINR, GBPINR, USDINR and JYPINR. You can trade in any of the currency pairs through a broker who has a membership of any of the Indian Exchange.As you are now aware of the basic concept of currency trading, let us learn the meaning of currency trading.What is Currency Trading?When individual, corporate, banks or financial institutions engage themselves in the act of buying or selling international currencies it is known as currency trading. The aim of this trading is to take the benefit of the fluctuations in the exchange rates of the various currencies. It is similar to equity trading where you can buy or sell the currency pair according to the expected price movements. Let us now learn about the common terms that are used while currency trading.Currency Trading BasicsIf you start trading in the currency, there are certain terms that you must be aware of. Below are the terms with their meaning that every currency trader must know.• Future PriceFuture price is the rate at which future contract trade in the futures market. • Cycle of ContractSEBI recognizes 12 outstanding contracts at any point in time in a year. The contract can be for one month, two months or up to 12 expiry cycle. • Expiry DateThe working future contracts expire on a specific date i.e. prior to two working days from the last business day of the contract month. Two days prior to the final settlement date or value date, shall be the last day of the trading contract. • Spread (tick)Difference between bid and ask price is called spread (tick). In case of currency futures market minimum spread is 0.0025 which fourth part of one paise. • Settlement DateThe last business day of the month is the final settlement date of every contract. • Size of ContractThe contract size of the contract is as follows; JPY/INR it is JPY 100,000; EUR/INR it is EUR 1000; GBP/INR it is GBP 1000 and in case of USD/INR it is USD 1000. • BasisWhen the future price is deducted from the spot price it is termed as a basis. In the future market, the price is more than the spot price. Basis is positive in the normal market. • Initial MarginWhen you trade in currency for the first time through future contracts, you must deposit a margin amount with the broker known as initial margin. • Cost of CarryThe future price and spot price relationship can be termed as the cost of carry. The rate of interest is the carry cost in the derivatives market. The cost of carry measures the storage cost after adding interest paid to finance or carry the asset delivery minus the income earned on the asset. • Marking to MarketDepending upon the closing price in the future’s market, the account of the investor is adjusted according to the profit or loss. This adjustment is known as marking to market.After learning the basic terms related to currency trading in India, let us learn about the meaning of long and short positions.Meaning of Short and Long PositionsShort and long positions are two positions that a trader can take in the futures currency market. When the trader expects the currency price to fall in the futures market, he takes a short position by selling it. When the price declines, the trader covers his positions by purchasing from the market at a lower price. Similarly, when the trader expects the price of the currency to rise in the futures market, he takes a long position by purchasing from the market. On the price rise, the trader sells the long currency contract and books the profit. Such fluctuating prices helps the trader to trade and book profits. As the foreign currency is traded in pairs, the trader can take a short position in one currency and go long in another currency depending on the expected future price movement. Currency has always been an important tool for hedging and arbitraging. In this section of the article, we will learn about both the terms and its significance in currency trading.Currency as Hedging ToolCurrency is used as a hedging tool by firms and individuals to cover themselves against the potential risk of adverse events resulting in fluctuations of exchange rates. Hedging is important especially for exporters and importers who receive and make payments in foreign currencies. Any adverse fluctuation in the currency can impact their profitability. Therefore, currency hedging protects investors who are exposed to currency fluctuations and eliminate the losses that may happen. Hedging is done by entering into a forward agreement with the dealers.Currency as Arbitrage Trading ToolMany times there are price discrepancies between different market instruments across different exchanges or trading platforms. Arbitrage takes the benefit of such difference in the prices in the global markets. Like for example, $1 can have a different value in the Indian trading market and Singapore trading market. Arbitrage takes advantage of such price difference and the trader books profit using these opportunities. Arbitrage is one of the safest and risk-free trading practise. Now let us have a look at the factors that affect the pricing in the foreign exchange market.Factors Affecting Foreign Exchange MarketThere are three main economic variables that affect the foreign exchange market in India: Inflation, Interest Rates and GDP numbers. There are many other indicators like trade deficit, unemployment rate, fiscal deficit, etc. that affect the currency market. Sometimes even the news flow has an impact on the prices of the currency market and decide the direction in which the currency price will go.Let us now learn about some of the currency market facts that are essential for every trader to know.Facts about Currency Market The trading of currency futures is possible only on the exchange like Bombay Stock Exchange, National stock exchange, Metropolitan Stock Exchange Limited. The trading hours for currency is from 9 a.m. to 5:00 p.m. from Monday to Friday. For trading in the currency market, there is no requirement to open a demat account. You can simply open a trading account with the broker and trade in the currency market. There are only two segments in the currency market: future and options segments. When it comes to currency trading, it is advisable to seek the services of leading brokers for fast and hassle free trading experience.IndiaNivesh is one of the leading brokers in India offering affordable brokerage rates. Our currency research team provide clients with regular currency trading tips. We also provide online currency 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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