Make quick money with short term investments…

Have an appetite for risk and ready for some quick investments? With rising interest rates, investors with surplus money have a plethora of opportunities to invest for short periods. Here’s a look at some of them.

  

Debt Instruments

The return of capital is certain in debt instruments, making them a good option to invest in. Low risk investors can always avoid the volatility in the stock market and park money here. Currently, such schemes provide up to 10.5 percent returns before tax deduction.

Mutual Funds

 Generally, all the funds have an investment horizon of more than a year with few exceptions. Entry and exit loads act as barriers. Certain MFs which invest in securities have a maturity of one day to three months. Over the past financial year, these liquid MFs have given an annualized return of 8–10 percent.

Fixed Maturity Plans      

As compared to fixed deposits, only a dividend distribution tax is applicable on these. They are predominantly close-ended products (investment in debt instruments).

Fixed Deposits

This well known option of investment is offered by public and private sector banks with 9.5–10 percent rates (for senior citizens) on FDs with different tenures.

Equities/Derivatives/Commodities

High risk investors with some financial acumen will be able to earn handsome returns in a short time. Almost all the segments like blue chip, textile, and infrastructure have been doing well with a booming economy. Derivatives and commodity trading have also become features of short term investments as deals can be squared soon.

All the above options are on the table keeping in mind a short investment cycle (6 months–1 year). Do not forget that the majority of short-term investments like equities have short-term capital gains tax associated with them.

Source :ET

Food for thought for every aspiring Entrepreneur!

Recently the economic times newspaper had launched an interesting platform named “Power of Ideas” which gave an opportunity to all those ambitious investors, entrepreneurs seeking to bring their most innovative ideas to business space that they wish to be in.

All these start up entrepreneurs were assigned Mentors to guide them throughout the process, and the learning’s of the one’s who lead the way were quite impressive and very useful.

What learning did most entrepreneurs receive from their mentors?

Understanding the strategy well: A detailed knowledge about your strategy, financial planning and market identity based on core consumers is one of the most important aspects.
Scalability option: The entrepreneur should have a focus on the future of business that would allow him to be scalable in the long term there by achieving long term goals.
Risk measurement: Understanding the market & financial risks and behavioral patterns of the market from the investing point of view is very crucial as it would decided how you are going to go about altering your strategy.
Creating good eco- system: Every entrepreneur should bear one thing in mind that India is growing rapidly and therefore creating an eco-system to stimulate start-ups in India, including the setting up of a network of industry, academia and entrepreneurs becomes very essential going forward.


Source: Economic Times

5 thumb rules to become a great investor

Generally savvy investors have certain traits in common which makes them a pro at handling markets in all their variety, here’s what you need to know to be a great investor:

Understanding the Risk:
Understanding risk is essential to developing an investment strategy that works and produces repeatable performance over time. As individuals, we need to be aware of the times we are irrational in our thinking about investing.
By clearly understanding the potential for loss, investors can allocate their funds among long-term, mid-term, and short-term investments.

Understanding how emotions influence investing decisions:
A good investor has a plan, which is disciplined, which does not get caught up in unnecessary assumptions. Good investors do not allow their decisions to be ruled by emotions. The field of behavioral finance gives us some good insights into the most common mistakes people make and how to avoid them.

Diversification across asset classes and industry sectors:
A well-diversified portfolio includes large-company, mid-size, and small-company stocks. Both value and growth styles are reflected, as well as domestic and foreign stocks. Generally, you will overweight large cap investments, as they tend to have lower-risks than do mid- or small-cap stocks.
Research shows quite clearly that an equal weighting between value and growth styles of investing produces better returns over a longer period than does each style alone.

Timely re-balancing your portfolio:
Once you have your diversification model set up, it is important to stay the course. There will be times when you will feel you've erred as one style (value or growth), or one asset class (large cap or small cap) outshines the other.
The temptation is to add funds to the outperforming investment, or at the very least to let your winners run and sell your losers. Rather than doing either of these, the strategy that produces the best returns is to rebalance your portfolio yearly.

The importance of staying invested:
Besides rebalancing, you'll want to stay invested.
It's difficult, if not impossible, to time the market. So whatever portion you decide to put into equities should stay unless something changes in your personal situation requiring that you have less volatility and more income

Source : Rediff

11 IPO’s to hit the market, are you ready to take a leap?

People planning to invest money in primary market would have a number of choices to book their savings this month, as about a dozen of companies are expected to bring out their IPOs in September.

If you are planning to take a leap into the IPO market, here are some important things which you would have to keep in mind.
1. The promoter’s background: This is by far the most important element. However good the product, technology or market, it is the promoters who run the company. Find out about their track record, their other interests, and performance of other group companies in order to keep yourself well informed.

2. The company's balance sheet: If you want to be an investor, it's time to start reading and understanding a balance sheet. Pay attention to the topline and the bottomline, major variances; but most importantly, consider carefully the extraordinary items and notes to accounts.

3. Risk factors: Though risk factors are not very clearly spelt out, a careful reading would still give enough information of the downsides. Try to do an impact analysis of the critical risk factors.

4. Shareholding pattern: It is important to know who the major shareholders of the company are and what their shareholding pattern will be after the issue.

5. Value, not price or par: An offering at the face value of Rs 10 is not necessarily cheap. The 'par value' system often gives you the impression that no premium is being charged.

6. Compliance record and litigations: Find out whether group companies have been diligent in filing their returns to various bodies such as the stock exchanges and registrar of companies.
 The prospectus will disclose all major litigation cases filed against the company's directors and promoters, as well as against group companies. Avoid companies that are deeply mired in litigations.

7. Underwriters and investment bankers: Underwriters add to the issue's strength. An underwritten issue today does not denote weakness requiring an underwriting support, it shows that there are intermediaries who after assessing the risks have decided to back the issue.
 Also, before investing in an issue, look at the names of its investment bankers and check out their past track record.

Source : Rediff

Word of the Day: Treasury bill (T-Bill)

Treasury Bill is basically a short-term debt instrument of the Government of India.
This security bears no DEFAULT RISK and has a high degree of LIQUIDITY and low INTEREST RATE RISK in view of its short term. The instrument is negotiable and is issued at a discount from the FACE VALUE.
At MATURITY, the investor receives the face value and hence the increment constitutes the interest earned.

Two types of T-Bills were issued in India, by the Reserve Bank of India (RBI), on behalf of the government:

Ad-hoc T-Bills (or Ad-hocs) of 91 days maturity (which were non-marketable) to the RBI to replenish the Central Government's cash balance.
Ordinary T-Bills "on tap" that are taken up mainly by banks, for short-term investment or to comply with statutory requirements.