Identify types of stocks as per financial goals

As an investor one gets confused while investing in stocks considering the huge number of companies listed.

Here are the details of different types of stocks which would help the investors to identify them as per their financial goals.

Growth stocks

These stocks are of the companies which are currently in the growth stage. They are looking at expanding their operations. These companies would be involved in new and upcoming fields. They are well-managed companies and the earnings and dividends are expected to grow faster than inflation and the overall economy. The company would be successful if it is able to create leadership and brand name, beat competition and have exceptional growth momentum through the various economic cycles. Since they require capital for growth, there is usually no, or very little, dividend income from growth stock.

Income stocks

These stocks belong to stable companies. They do not have large capital expenditure. They are in the mature stage. The profits are distributed to the shareholders in the form of a dividend. If you want dividend income and capital appreciation, you should look towards income stocks. Income stocks are sought by conservative investors wanting some exposure to corporate profit growth.

Value stocks

These stocks are currently at lower price than their fundamentals (i.e. dividends, earnings, sales, etc.). They are currently undervalued. These stocks have low P/E ratio and price to book value. The assets have more value than the current price.

Blue chip stocks

These are stocks of companies which are well-established companies and have stable earnings and no extensive liabilities. They can be income or growth stocks. They have a track record of paying regular dividends. They are relative safe and stability.

Source :ET

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

Five quick ways to stay financially fit:

1. Get Paid What You're Worth and Spend Less Than You Earn :

No matter how much or how little you're paid, you'll never get ahead if you spend more than you earn. Often it's easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings.

2. Stick to a Budget: You need to make yourself understand, “This is the budget for a month and I’m going to stick to it no matter what”. It is always advisable to have a budget whether you make thousands or hundreds of thousands of dollars/rupees a year.

3. Keep Good Records: If you don't keep good records, you're probably not claiming all your allowable income tax deductions and credits. Set up a system and keep it handy to use it all year.

4. Pay off Credit Card Debt: Credit card debt is the number one obstacle to getting ahead financially. Despite our good resolves to pay the balance off quickly, the reality is that we often don't, and end up paying far more for things than we would have paid if we had used cash. Constant reality check is required here.

5. Invest! : If you're contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better.

Source : about.com

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