Different Types of Derivatives in India

Posted by Mehul Kothari | Published on 08 May 2019
Image
Different Types of Derivatives in India

People invest money in the financial market with the hope of making good returns. But the investment may turn risky due to volatility in the prices of securities like commodities, currency, equity, etc. During such fluctuations, all the predictions could go either way. This increases the chances of wiping out your entire investments. Thus, the primary concern of the trader is the risk that is associated with the financial market and flow of returns while trading in the market.

There are various instruments available that can protect a trader from the risks and volatility of the financial markets. These instruments not only protect the traders but even guarantees returns to them. Derivatives are such instruments. In fact, you will be surprised to know about just the types of derivatives market that exist. In this article, we will understand the concept and different types of financial derivatives in detail.

Before understanding the types of financial derivatives, let us first learn the meaning of derivatives.


What are Derivatives?

Derivatives are financial contracts that derive their value from an underlying asset. The value of the underlying asset keeps on changing depending on the market conditions. The derivatives can be traded by predicting the future price movement of the underlying asset.

The derivatives contracts are widely used to speculate and make good returns. These are used for various purposes like hedging, access to additional assets, etc.

Let us now learn about the different types of derivatives market in India.


Different Types of Derivatives in India

There are four types of derivatives that can be traded in the Indian stock market. Each type of derivative differs from the other and has different contract conditions, risk factor, etc. The different types of derivatives are as follows:
• Forward Contracts
• Future Contracts
• Options Contracts
• Swap Contracts

Let us now study the different types of financial derivatives in detail.

• Forward Contracts
When two parties enter into an agreement to buy or sell an underlying asset at a specified date and at an agreed price in the future, it is termed as a forward contract. Forward contracts are an agreement between the parties to sell something on a future date. The forward contracts are customised and have high counterparty risk. Since the contract is customised, the size of the contract depends on the term of the contract. Forward contracts are self-regulated and no collateral is required for the same. The forward contract's settlement is done on the maturity date and hence they must be reversed by the expiry period.

• Futures Contracts
Just like the forward contract, a futures contract is an agreement to buy or sell an underlying instrument at a specified price on a future date. In the futures contract, the buyer and seller are not required to meet each other to enter into an agreement. In fact, the agreement between them is done via exchange. Since there is a standardised contract in the futures contract, the counterparty risk is very low. In addition, the clearing house acts as a counterparty to the parties of the contract which further reduces the credit risk. Being a standardised contract, its size is fixed and it is regulated by the stock exchange. Since the future contracts are listed on the stock exchange and being standard in nature, these contracts cannot be modified in any way. To put it in simple words, future contracts have pre-decided format, pre-decided expiry period and pre-decided size. In future contracts, initial margin is required as collateral and settlement is done on a daily basis.

• Option Contracts
Options contracts are the third type of derivatives contract. Options contracts are very different from futures and forwards contracts as there is no compulsion to discharge the contract on a certain date. Options contracts are those contracts that give the right but not the obligation to buy or sell an underlying asset. There are two types of options: call and put. In the call option, the buyer has the right to buy an underlying asset at a price determined while entering the contract. While in the put option, the buyer has the right but not the obligation to sell an underlying asset at a price determined while entering the contract. In both the contracts the buyer has the option to settle the contracts on or before the expiry period. Therefore anyone trading in the options contract has the option of taking any of the 4 positions i.e. long or short in either the put option or the call option. Options are traded at over the counter market and at the stock exchange.

• Swap Contracts
Out of the various types of derivatives contracts, swap contracts are the most complicated. Swap contracts are private agreements between two parties. The parties to the contract agree to exchange their cash flow in the future as per a predetermined formula. The underlying security under swap contracts is interest rate or currency. Since both interest rate and currency are volatile in nature, it makes swap contracts risky. Swap contracts protect the parties from various risks. These contracts are not traded on the exchanges and investment bankers are the middlemen to these contracts.

To conclude, derivatives contracts like forwards, futures and options are one of the best hedging instruments. The traders can predict future price movements and make good profits out of them. For further assistance regarding derivatives contracts trading, you can contact IndiaNivesh who can assist you with trading in derivatives.



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

PREVIOUS STORY

Step by step guide on how to invest in derivatives

Posted by Mehul Kothari | Published on 07 May 2019

Derivatives. That single word made many young students drop maths as a subject in favour of a totally different educational path. Luckily, derivatives are not limited to the world of mathematics alone. There is a whole financial market that involves trading in derivatives. Remember, this has nothing to do with maths (well, not much anyway).A derivative is a financial contract that derives its value from an underlying asset. This could be stocks, commodities, exchange rates or currencies. Through derivative trading, you can take a measured bet on the future value of an underlying asset. Here are a few steps to guide you in your journey in derivatives.1) Understand how derivatives workIt is often said that knowledge is power. To add to it, knowledge is money too. Trading in derivatives offers great potential for investors to make money. But this is possible only if you are equipped with sound knowledge of how the market functions. Also, be updated with market events. For example, if you are interested in futures trading in the commodities segment, you should keep track of how the prices of metals, oil and other commodities are changing in India and international markets. 2) Find a brokerYou can trade in futures and options through most online brokerages in the market. If you are already trading in stocks, you can get started on your derivatives trading at the same place. If you are a beginner, you need to find a good brokerage firm and open a trading account. Select a broker who offers dedicated support and competitive commission rates. 3) Identify where you wish to tradeAlright, you want to trade in derivatives. But which category are you interested in? There is a huge market open right in front of you. Agriculture, crude oil and metals are some of the categories available in commodities alone. You can also trade in the stock market, forex market and indices. Identify which category interests you to begin trading. 4) Create a trading planOnce you identify a category, you need to do some research to get a better idea about the market. If you already have knowledge about a particular sector, you can start there. For example, if you work in the mining industry, derivative trading in the metals sector is a good idea. After this, you need to create a trading plan to guide you along on your investment journey. Make a list of contracts, time periods and investment goals in a journal. It is quite common for investors to make investment decisions based on emotions once their money is on the line. Instead, what you need is rational thinking. And for this, a trading plan is important. 5) Set up stop loss and profit targetsWhen trading in derivatives, it is always recommended to create a stop loss and profit target. The market can be unpredictable. For example, stock prices may be rising for a certain period of time but all of a sudden, the prices could drop without warning due to some macroeconomic effect. That’s why, even when you are doing well in the market, it is better to create a profit target and exit when you reach the target. Similarly, when the market moves in the opposite direction, good traders identify when to exit the trade and accept losses. By staying in the trade and waiting, you only risk losing a larger sum of money as time passes. 6) Keep track of your positionYour work does not end once you enter into a futures or options contract. You need to keep track of your positions. A single derivatives trade can go on over a period of months. For instance, you may enter a call option to buy a stock at a particular price (say, Rs 50) in the next six months. To go through with the trade, the stock price should be lower or equal to what you expected. If the stock price goes beyond Rs 50, you don’t need to complete the trade. And for that, you need to be aware of how the stock moves regularly. Keep a record of market movements and adjust your positions in a suitable manner.To sum upInvesting in derivatives is not very hard. Anyone can trade in derivatives but to consistently earn good returns is a different matter altogether. You need to know your risk appetite and investment goals and invest accordingly. These steps can help you begin your journey into derivatives. Over time, you can gain more experience and identify your own investment system.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

read more

NEXT STORY

What Is Commodity Trading In India?

Posted by Mehul Kothari | Published on 08 May 2019

The stock market has always been a paradise for traders and investors. They invest their savings in the stock market to make good returns and build a huge corpus over time. Another popular avenue for traders is commodity trading. Commodity trading in India has a long history. In fact, India is among the few countries that started trading in commodities since a very long time. Today commodity trading in India has a significant role and importance. In this article, we will walk you through the commodity trading basics and its related concepts in detail.Let us first learn about the meaning of commodity trading.What is Commodity Trading?A commodity is a group of assets that are important to support our lives like metals, food, energy, etc. When such a commodity can be traded on an exchange and has a price change, they can be purchased and sold just like the stocks, this is termed as commodity trading. In India, there are four classified categories of commodities, they are:• Agriculture – Includes items such as Corn, Coriander, Chana, Castor Seed, Wheat, etc.• Energy – Includes items such as Crude Oil, Natural Gas, etc.• Metals – Includes items such as Copper, Gold, Silver and Platinum• Livestock and Meat – Includes items such as Eggs, Pork, Cattle, etc.Commodity trading is a profession for many traders in India. The trader uses the price fluctuation in the above commodity prices to trade and find opportunities to make money. Now that we know what it is, let us learn where you can invest in commodities in India.Where Can You Invest in Commodities in India?Anyone living in India can trade in commodities through the exchanges. There are six commodity exchanges in total where you can trade in India; they are• National Commodity and Derivatives Exchange – NCDEX• National Multi Commodity Exchange – NMCE• Multi Commodity Exchange – MCX• The Universal Commodity Exchange – UCX• Indian Commodity Exchange – ICEX• Ace Derivatives Exchange – ACEKnowing about the commodity markets in India, let us now learn about investing in the commodity market.How to Invest in the Commodity Market?You can trade in the commodity market through a futures contract. In this type of contract, you enter into an agreement to buy or sell a specific quantity of a commodity at a future price. Every commodity is available for trading through the futures market. The traders, depending upon the predicted price movements take their position. Like for example, if the trader expects the price of a commodity to go up, he would purchase a specific quantity of the commodity and go long. Similarly, if the trader expects the price of the commodity to go down, the trader sells a specific quantity of the commodity and goes short.As you are now aware of the ways through which you can invest in the commodities market, let us now know about the commodity trading time in India.Commodity Trading Time in IndiaThe commodity markets in India is open on all days of the week except Saturdays, Sundays and holidays declared by the exchange. The market timings of the Indian commodity market is as follows:• Agri Commodities: 9 a.m. to 9 p.m.• Bullion, Metals, Crude Oil and Internationally linked Agri Commodities: 9 a.m. to 11:55 p.m.In the year 2018, The Securities and Exchange Board of India (SEBI) extended the commodity trade timing to the above timings in order to deepen the commodity markets as well as to increase the participation of stakeholders such as value chain participants, farmers producers organisations, foreign entities having actual exposure to Indian physical markets, etc. There are many benefits of trading in the commodities market. In this section of the article, we will learn the benefits of commodity trading.Benefits of Commodity Trading• HedgingHedging plays an important role in commodity trading. It protects the traders from price fluctuations as they enter into an agreement at a pre-decided price. • SpeculationSince commodity trading is very popular, traders speculate the future price movements and make heavy profits out of it. • ArbitragingThere are instances when the price of a commodity varies in different markets. The traders take advantage of such a situation by arbitraging. They buy a commodity in one market where the price is low and instantly sell it in another market where the price is high. Individuals wanting to trade in the commodities market often find it difficult to select a commodity broker. In the following section of the article, we will look at how the selection of a broker should be done.How to Select a Broker for Commodity Trading?Selecting the right broker is an important part of commodity trading as your whole experience in the commodity market will depend on it. While selecting any broker, you must look at their credibility and service record. Since your trading experience will depend on the services of a broker, check whether the broker provides the facility of commodity trading online. Another important criterion is the brokerage rates charged by the broker. So, the broker selection must be made after considering all these factors. While selecting the broker, you must ask them to provide a demo of the services provided by them on their trading platform. Test the commodity trading online through the desktop or mobile application and understand the working of the platform. Another important factor that must be considered is the customer support team of the broker. Check how proactive and strong the team is to assist you during any problem or query. Understand with the broker the process of depositing the margin money. Last but not least, you must select the broker who is certified. IndiaNivesh is one such broker who is well known to fulfil all the above criteria and provide its clients with a hassle-free experience. After selecting the right broker for commodity trading, you must open the commodity trading account. In this section of the article, we will learn about the process of opening a commodity trading account.Opening Commodity Trading AccountThe primary requirement for trading in the commodities market is to open a trading or demat account. All you need to do is fill an application form and submit documents like your identity proof, source of income, financial statement, etc. The broker then, depending upon the financial details submitted by the individual, approves or rejects the application. This is an important step as brokers want to be sure that the applicant will be able to meet the debt payments and he does not suffer the losses.After opening a trading account, the next big question for a trader is how much minimum investment is required to trade in commodities. So, let us have a look at the minimum amount required for making the investment in the commodity market.Minimum Amount Required For InvestmentAfter opening the commodity account, you have to deposit an initial amount to start trading in commodities. Initially, you have to deposit at least 5% to 10% of the total contract value. Along with the margin money, the trader must pay a maintenance margin amount to the broker so as to cover the losses that may happen in case of adverse market situations. Let us now read about the importance of trading strategies while trading in commodities.Importance of Trading PlanTrading strategies are very important in commodity trading. With the right trading plan, commodity trading can be very profitable. The commodity trading plan must be developed as per the financial objectives and risk-bearing capability. The trading plan of one trader may not be suitable for another trader. Therefore, the commodity trading plan must be prepared after conducting research and other necessary requirements. The most important part of commodity trading strategy is not to overtrade and always put a stop loss. Furthermore, the trader must put various risk management techniques to maximise his returns and minimise the risk in commodity trading. IndiaNivesh is one of the leading broking firms that provide you all the assistance along with risk management techniques to make commodity trading a profitable venture for you.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

read more

Are you Investment ready?

*All fields are mandatory

related stories view all

  • Value Investing - What is Value Investing & its Fundamentals
    Posted by Mehul Kothari | Published on 15 Jan 2020

    Value investing is the dark horse of stock markets. And this dark horse has created huge wealth for none other than Warren Buffet. Read on to know what value investing is, and what are the critical factors in this strategy. All that glitters is not gold and all that is gold does not always glitter. This holds true for investment decisions as well and forms the core principle of value investing. What is Value Investing? The value investment strategy was popularised by Benjamin Graham along with David Dodd after successfully surviving the period of the great depression. It involves proactively identifying stocks which are trading at a significantly lower value than their intrinsic value. Intrinsic Value refers to the true value of a stock. The two factors behind value investing are market price and value. Price is the amount you pay, and the value is what you get in return. Value investing believes that the stock market does not always remain in an efficient or balanced state. It sometimes overreacts to events such as political announcements, organisational restructuring, economic conditions and results in stock price fluctuations which do not correspond to the company’s actual worth or long-term fundamentals. Hence, there is a good probability that there are undervalued or overvalued stocks in the market. Value Investing and Behavioral Finance Value Investing and Behavioral Finance are two sides of the same coin. Value investing aims to exploit irrational or impulsive behaviour of investors. Emotions heavily influence investment-related decisions. Greed, fear, peer-pressure lead to poor investment decisions. This creates a huge potential for dispassionate or objective investors. Value investors do not get carried away by market sentiments or herd mentality, instead, they look at the real value of a stock in the long run. They also do not fall into a “growth trap” without actually understanding the history or behaviour of stocks. Fundamentals of Value Investing1. Find the intrinsic value Investors who follow value investing strategy are more interested in a stock’s intrinsic value and not just the current market price. There are multiple ways and valuation methods that are used to identify the intrinsic or true value of a stock. Such as discounted cash flow analysis, dividend discount model, Earning per Share valuation, etc. There is also a formula coined by Benjamin Graham to arrive at the true value of a stock. It is:  Intrinsic Value = Earnings Per Share (EPS) multiplied by (8.5+ Twice the growth rate of the company in the coming 7-10 years).  This formula has been now tweaked to reflect the current market conditions correctly. It is now:  Intrinsic Value = [Earnings Per Share (EPS) multiplied by (8.5+ Twice the growth rate of the company in the coming 7-10 years) multiplied by 4.4] divided by current corporate bond (AAA) yield.  4.4 in the above formula referred to the minimum rate of return in the USA in the year 1962. For the purpose of valuation of Indian stocks, 4.4 should be replaced by the corporate bond yield in the same year in India. When the stock’s market value goes below the calculated intrinsic value, investors purchase those stocks. Then they sit back and relax till the time the market corrects itself and the stock price reaches its actual value.  2. Margin of Safety Margin of Safety enables value investors to manage risks and avoid losses. It is also the key element which distinguishes value investing from mere speculation. It refers to the difference between the stock’s current market price and its intrinsic value. Higher the gap, greater is the safety margin. By investing in a stock with an adequate security margin, investors know that any negative event or volatility will not adversely impact the value of the investment. 3. Don’t follow the crowd Value investing is not for those who like to follow the herd. Value investors focus on stocks which are overlooked or avoided by others because of their low valuations but are inherently solid stocks.   Are there risks in Value Investing? Yes. Just like all the other things in our life, there are risks involved in Value Investing as well. One of the biggest risks is falling into Value Traps. All cheap stocks do not translate into good investment decisions. Value traps are stocks which seem to cheap due to low PE multiple or cash flows, but never go up in value. It is important to do full due- diligence before investing. This includes not just financial metrics, but also qualitative aspects such as quality of management, stability, competition, etc. Final Words Value investing is a proven strategy for wealth appreciation in the long run. But it can be an intimidating way of investing without the right support. A partner like IndiaNivesh can make the process smooth and more fruitful for investors. IndiaNivesh is a reputable financial service provider which offers a wide range of services related to Broking, Institutional equities, strategic investments, wealth management, investment banking and corporate finance. With their in-depth understanding of the Indian markets, the organisational experience of three centuries and cutting-edge technological tools, they help investors make well-informed and profitable decisions.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

    read more
  • Online Trading – 5 Essential Tips for Trading Online in 2020
    Posted by Mehul Kothari | Published on 14 Jan 2020

    Technological advancements and digitalisation have changed the online arena for every business, and the online share trading is no exception to the trend. Over the last few years, online trading has become very popular, especially amongst the millennials and generation Y. Prevalence of smartphones, lower costs, opportunity to earn extra income, low entry barriers, ease of access, etc has had a profound impact on online trading. Even though online stock trading today is huge, and many people are motivated to explore online trading for a rewarding career, by no figment of imagination it should be assumed that it is easy, and they can become financially self-sufficient in a short period. Here are 5 essential online trading tips to help improve your chances of success in your endeavours as a trader-1. Do the research and gain relevant information about the markets The economic conditions are constantly changing and it has a significant impact on the stock markets. To be successful in online share trading you have to do your research, collect relevant information and be updated about matters relating to markets. With information being available at the click of a button, it is easy to get access to information from various sources. Keeping your eyes and ears open about the official announcements being made, reading up market-related articles and financial publications can help you ace the game of online stock trading and avoid making whimsical trade calls.  2. Get acquainted with the trading terminologies and tools Getting yourself familiar with various terminologies and trading tools beforehand is extremely important so that you do not falter when you start trading. Clearing your basics about the important workings, different types of trades, important terms are critical. If you are not clear about the basics, then you may end up placing a wrong order. Once you are trading online, you are investing real capital and you cannot undo the trade. So, it is essential that you must be familiar with the features and the functions of the trading platform which you are going to use. Practice trading on dummy versions to get a hang of the trading interface before you can start with online trading. Once you have enough practice you will not be flustered and confused at the time of real trading. 3. Start with small capital and practice risk management There are infinite opportunities in the trading world and you do not want one experience to be the deciding factor for you. As online trading is risky, you should always make a small start in the beginning and invest little capital. Even the most successful traders do not put their entire investible surplus for trading but use only the capital which they have to spare after they have put aside for their long-term goals such as retirement. So, invest only the capital which you can afford to lose and which will not affect your financial planning. Another important thing to keep in mind at the time of executing trades is that the risk associated with trading is high and hence you should take adequate measures to minimise risk. Setting a stop-loss to your order will automatically stop a trade if the losses hit a particular mark and help minimise your losses. 4. Be patient and disciplined Online trading is a great way to make an income and many have successfully made a career out of it. If the success stories of other traders have motivated you to take the plunge, then, let’s be honest, online trading is risky and not for the light-hearted. Moreover, it is not something you can master overnight or become rich overnight on a single trade. To be successful, you need to have the right mindset and should be disciplined in your approach. Make a trade plan and stick to it. Trading out of impulse or greed will not help you become successful but following a plan and trading when you see opportunities can help you achieve the desired results. 5. Select the right broker and trading platform Last but not least, choosing the right broker and opening the best trading account online is important, and hence you should be careful about your selection. Choose a trading platform that best meets your needs and has a user-friendly interface. You should be comfortable using their software. Your success rate would be greatly affected by the timely execution of your orders. Other aspects to consider are a level of customer service and satisfaction, market reputation and competitive fee structure.   Conclusion With the above essential online trading tips, you can give your income a boost. We at IndiaNivesh have one of the best online trading platforms at the most competitive price and also offer expert advisory and research to meet your investment needs.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

    read more
  • Tips on Investing Money in Mutual Funds
    Posted by Mehul Kothari | Published on 20 Nov 2019

    Mutual Funds are the cynosure of the financial world. And rightly so! These investment havens pool in money from multiple investors and then invest the corpus across asset categories in line with the scheme’s objective. They are a great option for retail investors who would otherwise find it difficult to get exposure to such varied investment opportunities. What makes Mutual Funds a good investment tool? ·         Professional Management The USP of Mutual Funds is that they are managed by a team of experts. They are equipped with the necessary resources and information to continuously monitor the markets, analyze market trends and conduct in-depth research. As a result, the fund managers can devise the best investment strategy for the investors and guide them regarding the best mutual funds to invest in. ·         Financial Discipline One of the common problems faced by investors is that they lack the rigour or discipline to stick to their financial resolutions. Mutual Funds take care of this issue easily. Systematic Investment Plans ensure that investors continue to invest regularly. ·         Flexibility Mutual Funds offer a great deal of flexibility to investors. You can choose the frequency of contribution as well as opt to increase or reduce the investment amount as per cash flows. ·         Affordable Systematic Investment Plan (SIP) facility makes Mutual Funds affordable to everyone. One can start mutual fund investments with just Rs. 500. That is basically the cost of one pizza these days! They are perfect for novice investors who are overwhelmed or scared of equities but still want some exposure. ·         Tax savings ELSS are tax-saving Mutual Funds. Investment in these mutual funds qualifies for tax deductions (till Rs. 1.5 Lakhs) as per Section 80C. Owing to their potential of higher returns and shorter lock-in period, as compared to other tax-saving alternatives, ELSS have become a preferred choice for many investors.   Mutual Fund investment tips Now that you know what makes Mutual Funds a great investment tool, here are some mutual fund investment tips to help you make the most out of your hard-earned money. ·         Set a goal It is rightly said that “Dreams do not come true. Goals do”. The same rationale applies to investments too. Investments bring the best results when they have a purpose. So, the first step in mutual fund investments should be setting an investment goal. You should consider factors like budget, investment horizon, financial ambitions and most importantly your risk appetite.  ·         Select the right fund type When it comes to mutual fund investments, one size does not fit all. Just because your friend is investing in a fund does not mean it will benefit you as well.  Mutual Funds invest across a range of asset classes. Hence deciding which mutual fund to invest in can be slightly tricky. It is important to choose a scheme that is in sync with your needs and risk profile. For instance, if you are an experienced investor and can afford to take risks, you can easily go for equity funds. However, if you are a novice then most mutual fund tips for beginners will suggest going for debt or balanced funds. It is important to understand the risk-return relationship inherent in each asset category before making a decision. Rule of thumb being – higher the risk, higher the return! The asset allocation should be in sync with your risk appetite. Also, ask yourselves why you are investing in mutual funds. Is it to save taxes? Then ELSS Funds are your best bet. If you have a short investment horizon and want a fund type with high liquidity, then you can go with Liquid Funds. ·         AMC Credibility Check The right fund house can not only help you decide which mutual fund to invest in but optimize the potential of your overall portfolio. It is important to look at factors such as the credentials of the fund managers, expense ratio, components of the portfolio and AUM (Assets Under Management) of the Fund House. ·         Diversification is the key You should not put all your eggs in the same basket. Diversification across asset categories and investment styles is important. It helps to lower the risk quotient as it gets spread over different investments. Even if one fund underperforms, the other can compensate for it. The value of the entire portfolio is not at risk. ·         SIPs vs Lump-sum One of the best mutual fund tips for beginners is choose the SIP way. Especially if you are venturing into equity or equity oriented mutual funds. A SIP will allow you to spread out your investments over a longer duration of time. You will invest at different points in the market cycle and hence even out the associated risk. Also, the power of rupee-cost averaging in SIPs helps to generate higher returns in the long-term. ·         KYC KYC has become a necessity these days. Government of India has mandated KYC for most of the financial transactions including mutual fund investments. So, ensure that you have documents such as PAN Card, valid address proof, etc. before you venture into mutual fund investments. ·         Have a long-term view Mutual Funds are like a committed relationship and not a one-night stand. You need to remain invested for a longer duration in order to get the best rewards. Especially in the case of equity funds. This is because markets tend to be volatile in the short run but tend to move up in the long-term. The best combination is to invest in a mix of debt and equity to get best of both the worlds. Debt Funds would help to lower the overall risk of the portfolio and could help meet emergency fund requirements in the short run. While your equity funds work on wealth appreciation in the long run. ·         Ask the Expert Just like KBC, Mutual Funds also come with a helpline – Ask the Expert! There are so many options available in Mutual Funds. It can become rather overwhelming for a new investor to select the right mutual fund to invest in. A professional expert will not only help to select the right funds and schemes but will also constantly monitor the market on your behalf. One such expert is IndiaNivesh. They offer a wide variety of financial solutions related to broking and distribution, strategic investments, institutional equities, corporate advisory, investment banking and private wealth management. The team at IndiaNivesh has a combined experience of more than 300 years. With their cutting-edge technological and research capabilities, competent team and “client-first” approach, you can be rest assured that you are in safe hands.   Final Words Now that the mystery is solved about how you can select the best mutual funds to invest in, what are you waiting for? Especially when you know that you have a guide like IndiaNivesh available at the click of a button.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

    read more