Basics of stockmarket (shares) for Indian babies and children. #stocks #equity #mutualfunds

Category – business

Reading time – 8 minutes

Sorry, for the heading of the blog. This was to get your kind attention.

This blog is about stocks, also known as shares, with particular focus on Indian general masses, who want to enter and explore share market.

It is simplified basic knowledge about share markets.

Babies will not need it. But their dads will need it, to secure their future. Hence in a way this blog is for those babies too; who are going to discover in future, that their daddy knew next to nothing about economics and investing.

As uncertainty, looms in the economy with unpredictable future, you need to have knowledge about all the spheres of the investing.

If you have money, it should grow with time and this can be done by wise investing.

So let’s clear our basic doubts about shares.

First let’s clear biggest confusion according to my analysis. It is terminology which blogs use to explain shares. It is confusing.

We must know that ;

equity = share = stock = security

First you should know this fact that they call shares with so many names. As different sources write different names, it can be daunting. They all are interchangeable.

We will use term share in this blog, to avoid confusion.

“Share is a physical or digital certificate that gives buyer partial ownership of a business.”

Let’s imagine a business is worth 100 rupees. Its owner divides this into 100 shares each worth 1 rupee.

Now, he puts them in stock market ( stock exchange) from where people can buy or sell these shares.

So, if someone buys 40 shares of this company, he becomes 40% owner of the company. Any one who invests 1 rupee, he becomes 1% owner.

So shares help businesses in raising money for their operations.

His investments are now dependent on the performance of the business. If it grows, he earns money and if business falters, he looses money.

He can buy or sell shares anytime on the stock exchanges.

There are two main stock exchanges in India –

1. The Bombay stock exchange ( BSE)

2. The National Stock exchange ( NSE).

Companies are listed on stock exchange. And only listed companies can sell their stock in stock market.

These are regulated by SEBI ( Securities and exchange board of India); which is a statutory body responsible for fair working of the exchanges.

It penalises for wrong practices and frauds and formulates rules and regulations for working of stock exchanges.

Hence, one can invest money in stock market without worrying about frauds or cheating, as far as stock companies are concerned. Whole system runs on trust.

These days stocks are available in digital format and can be easily purchased or sold using apps like zerodha, Angelbroking etc. Whole process is very simple.

You need to make a demat account with regulator and after kyc verification (know your customer) verification; you can purchase and sell from comfort of your home.

How does initial price of a stock is decided?

It is random value in decimels decided by the company promoters. After that performance of the business and demand and supply and perceptions about future decide the price of that stock.

Total number of stocks issued is called total shares outstanding.

If we multiply number of shares issued with the price of one share, we get market capitalisation ( market cap) of the company.

All companies listed on stock exchange are divided into groups based on market cap.

1. Large cap –

Top 100 companies in terms of their market capitalisation. These are safer and successful companies. Examples in India are TCS, HDFC, L and T, wipro etc.

2. Mid cap –

101-250 in list of companies based on market capitalisation. Examples are pfizer, emami, bayer etc.

3. Small cap –

Above 250. These are generally lesser known volatile companies.

Now based on performance of the company, its management, brand value, public sentiments and many external factors like war, disaster, competition, fads;there are fluctuations in the price of stock in the market on day to day basis.

But generally in long term ( 10-15 years ); if business of the company is sound, it results in rise in stock price over time in spite of the short term wide fluctuations. Hence stock market investment is for long term.

If you don’t have 10-20 years of time to let your money grow, it can be less fruitful mode of investment.

What happens when stock prizes rises?

Company can give you part of the profit, that is called dividend.

Or it may hold extra cash for liquidity and expansion.

It may invest gains for further expansion of the business.

Why the people worried about Sensex rising or falling. What is this sensex?

Sensex is a metric using which we can guess overall performance of the economy.

We can’t check each and every stock daily. So we have devised a simple measurement number. It simplifies monitoring.

Sensex and nifty are such numbers. They are stock market indices. They tell the direction of the market, whether towards positive or negative.

Sensex belongs to Bombay stock exchange. It is made up of 31 hand picked companies, which are picked by private firms.

For example, sensex companies are picked by Sand P global. Companies are not fixed. Based on performance new companies enter and go.

Nifty belongs to the national stock exchange. It is made up of 50 stock. Hence, it is called Nifty 50.

Hence, next time you see a news anchor worried about fall in sensex, you will know that, she is talking about the performance of choosen list of companies on that day. Their performance is averaged based on their size and sector.

Few more terms that you hear everyday.

Bull market – when the market is on the rise like horns of a bull.

Bear market – when market is on fall like a crouching bear.

Blue chip companies- companies which are reliable performers.

What is initial public offering?

IPO – Initial public offering –

Each company starts as a small privately owned company. With Time it grows and it needs more money to expand. It then lists itself on Stock exchange, so that anyone in public can buy its shares as IPO. It raises a lot of money for the company.

A board of governors is appointed to oversee working of the company. Its data and performance are public. It is responsible to its shareholders for maintaining good performance.

Hence, IPO is the initial offering stock by a private company, which enlists itself on the stock exchange so that its stock can be bought and sold by general public.

This blog is aimed to provide introduction to the share market to Indian readers.

Inspiration – many financial books.

Get money for living in your house – reverse mortgage loan #personalfinance #happyretirement #reversemortgage

Category – business and money

Reading time – 5 minutes

Many of us are not financial experts. We don’t know what to do with our excess money.

We fail to save for the future.

We don’t know, what will we need when we grow older. We put too much faith in our kids.

We presume that they will take care; like we did. But world doesn’t work that way. It is always better to be self reliant especially in old years.

Things change with time. People also change.

Sometimes it is very tough to bear our senescence. We may still have to work to put food on the kitchen table.

If you have a house, which you own; then there is a way to earn regular income from it.

Thus can help you to enjoy your old age, without worrying about bills.

This remedy is called reverse mortgage loan.

To get it you must be above 60 years of age.

You ought to be living in the house with your spouse. No body touches your house; till either of you is alive.

You get regular income from bank for an amount which is equal to 60% of the current value of your property.

Minimum tenure is 10 years and maximum is 20 years.

When both husband and wife who have taken reverse mortgage loan die, then two things can occur.

Bank asks heirs to pay the loan and reclaim the property.

Bank sells it to recover the loan amount and rest is given to your legal heirs.

If you want to reclaim your house while alive, you can repay loan to get it back.

It requires you to live in that house without prolonged absence.

Sounds good. Yes it is a good option for senior citizens who have problems with liquidity.

Inspiration – many financial blogs and videos.

Everything about debt for Indian babies and children. #debt #business #investing

Category – business

Reading time – 6 minutes

Babies don’t need to study economics. They don’t need to know about debt. They don’t need to calculate interest rates and returns on investment.

But their fathers need to know all this. They need to earn money and then grow it slowly to fight inflation and uncertainty.

Babies and children in turn need this knowledge for their daddy or mamma; who are in-charge of money, which babies will own one day.

Don’t you think they want a wiser dad or mom, so that they can get lot more more money, than a passive parent may provide.

So this blog is to understand basics about debt or loan.

Debt is a loan which is to be repaid in fixed time and is given on particular rate of interest ( extra money other than principal amount ).

It is a way to raise money for businesses.

It can be classified into various types like business loan, personal loan, housing loan, car loan etc.

It can be secured or unsecured. secured loans have attached asset like property, machinary or FD; equivalent to the amount of loan, which can be forfeited in case of inability to return the loan.

What are bonds?

Bonds are one type of debt instruments. They are used by businesses to raise money.

Bond is a standard piece of aggrement, that fixes term of the loan like interest rate and tenure.

Company has to pay interest irrespective of the revenues. Hence, for investors bonds are relatively safer option to invest their money. As fixed returns are guaranteed beforehand. But, as risk is reduced in these compared to shares, returns on investment in bonds is also lower.

Government also takes loan from people for building infrastructure and other works.

Bonds are issued by government. This type of loan is called sovereign debt. Govt gives assured retuns on these investments.

Various debt instruments.

1. Bonds which we have discussed above.



2. Debentures – It is a debt instrument that is not secured by collaterals and generally has tenure longer than 10 years. Hence it is given to creditworthy organizations.


3. Corporate deposits –

It is company version of fixed deposit. It is for fixed duration and has fixed interest rate. It is provided by banks and non banking financial institutions.

4. Fixed deposit ( FD) – It is favourite thing of Indian masses. It preserves money with very low returns.

5. Public provident fund ( PPF) –

It provides for reasonable returns and tax and saving benefits. It has limit of 1.5 lakhs. Lately it’s returns have also been curtailed.

6. National savings certificate ( NSC) –

These are issued by government of India as small savings instruments. It is provided by India post.

7. Debt mutual funds

These are mutual funds that invest primarily in bonds. Hence they have lower returns as compared to shares but are safer.

Main aim of all these is capital protection.

Capital gains is secondary.

As you age, it is better to invest more in bonds and debt instruments.

As you near your retirement or big expanse, you can take out money from equity and park it into a debt instrument for capital protection.

Inspiration – many personal finance books.

Few things about home loan.

It is given by bank or non banking financial company.

Down payment is initial payment for the home. It is generally 20% of the home value.

Before construction you have to give pre EMI. In first year 99% loan is disbursed.

After registration of the property remaining 10% is disbursed and registration documents lie with bank as collateral.

After, registration EMI starts.

Tenure is time period in which loan is to be repaid.

EMi is decided based on rate of interest and tenure.

There are other charges like processing fee, notarization, conversion charges etc.

Overdraft facility –

It is a way to reduce tenure and EMI of your loan.

Bank creates a savings account linked to your home loan account. It is called overdraft account.

Any additional amount of money in this account; over and above your EMI is taken as pre payment towards the loan. This reduces loan principal and hence reduces EMI.

Added advantage is that you can withdraw money from this account anytime.

For example; if you took 25 lakh loan with overdraft account. And you added 5 lakhs to this account. Interest rate of your loan will be calculated on 25-5 = 20 lakhs in place of 25 lakhs. Hence you get reduced EMI.

Why is it so.

Because interest rate of such loan is higher by 0.25-5% as compared to routine loan.

But inspite of this it is a useful way to save money.

You will be happy that you know it.

Inspiration – Mistakes in personal finance, that I have made.

Difference between attitude and approach. #personalgrowth #attitude #psycholgy

Reading time – one minute
Category – psychology

Attitude is the way of thinking about someone or something.

Approach is the way of dealing with a situation or a challenge.

Let’s see the difference by reading a short event about real life.

Ramesh and suresh both are friends. They have final exams. Ramesh misses last question due to shortage of time. He is sad and full of remorse.

Suresh misses the exam as alarm didn’t ring. He is happy that he will be better prepared in repeat exam and thankful that no body has died due to this omission.

They both have different Attitude towards circumstances.

.

Now Suresh and Ramesh join jobs.

They both need to prepare presentation before weekend.

Ramesh is stressed, about to bite any one distracting him and cancels planned birthday party of his friend.

Suresh gets in touch with his senior and gets his presentation on same themes presented last year. He quickly modifies it for current year. He stays late in party and enjoys the bash.

Boss finds no difference in their presentation and also they were not related to critical aspect of the business.

This shows difference in their approach.

Inspiration – Ashwin Sanghi’s nonfiction works.

Things that mentally strong people do. #motivation #selfdevelopment #business

Category – Business

Reading time – 1 minute

1. They avoid self pity. It solves nothing and clouds consciousness. Instead strong people practice graditute.

2. They don’t give key of their happiness to external source. They avoid people pleasing or expecting things from people. They observe and avoid judging .

3. They take calculated risks. They do rational rule breaking. They try to cross little beyond their comfort zones, where progress usually begins.

4. They don’t fear change. They know change is rule of the life. They try to embrace it with open heart and mind.

5. They don’t dwell in the past. They learn from it and move on.

6. They try to never repeat the same mistake twice.

7. They know that it cannot always stay good and smooth. They accept and face difficulties.

8. They take full responsibility of their life and actions.

9. They see long term and have broad perspective.

10. They know that journey makes 99% of any endeavour and they try to savour it.

11. They know no defeat is final and no win is eternal.

12. They see problem in the situation, not in people.

13. They stick to their paths, even if everything falls apart. Grit is rare talent that mentally strong people posses and it is their most formidable tool.

Inspiration – Many books

18 lessons for your personal finance! #money #business #psycology

Category – Business. Reading time – 5 minutes

Personal finance is such a sticky thing. After you grow out if childhood, you come to know about this money thing. Now your dad stops fulfilling your unreasonable demands and starts to expect, that you are going to earn some money now.

Eighteen years of pizza, burgers and your TV recharges needs to be billed to you from that moment.

You were sent to school to learn how to earn. And you scratch your head that school completely forgot to teach you, how to earn money.

You wonder how will arithmetic and algebra and mediveal history, will get food on your plate.

You see towards your friends and they too are under axe of their parents, to earn their living.

In this post let’s discuss few basic concepts, that help in managing personal finance in current scenario.

And that’s the time when one needs to learn about personal finance. Earlier you start, better it is for your lazy body.

Let’s get this stuff.

1. Don’t compare with others. Everyone is running different race with different rules and different rewards. Choose your race correctly, that suits your mindset, skills and personality.

2. Nothing is free. Yes, that free voucher, with that costly phone is indirectly to be paid by you. And, you must also understand that your time and attention are also a form of capital that Marketing people are in pursuit.

3. People, beliefs and culture change with time. So don’t keep your ideas rigid. It was risky to board in car of a stranger, but now it’s fashionable due to UBER.

4. Always leave some room for errors, unexpected events and unknown forces. Don’t be a overconfident. Don’t board Titanic without lifeboats.

5. Past cannot predict future. Experts cannot predict future. No one predicted 2008 or 9/11 or covid.

6. Negatively gets more focus and attention. Try to go beyond all those negative vibes floating in sea of social media.

7. Personal finance is a relatively untouched part of the conventional knowledge. So, start learning about it.

8. Set ceiling of your satisfaction. Don’t keep running. Rest, relax and enjoy. Afterall, that’s why you work.

9. Use power of the compounding. And be aware that it takes time. There are millions of articles and videos that explain compounding to you.

10. Getting rich is easier than staying rich. All those sports stars who retired young can easily slip into poverty.

11. You can do average things and fail multiple times, but you can still become rich.

12. Financial freedom is the biggest success possible.

13. Be rich. Don’t focus on looking rich. Be humble and save money.

14. Dollors saved are equal to dollors earned in value.

15. Go for cash flow instead of capital gains. If you can generate positive cashflow other things will take care of themselves.

16. Try to build assets which put money in your pocket, even when you are not working. That elusive thing is called passive income.

17. Whenever you calculate your gains always keep inflation in mind. It reduces purchasing value of your money. This 100 rupee note will be less useful five years from now.

18. Don’t try to be cheap. Try to be useful to others. Don’t die fighting for pennies. Keep your heart big and vision broad. Don’t be 11 th fruit seller in a row on roadside. Enter business with substantial returns for your efforts.

Why employees come before customer? #infinitegame #business#startup

Category – Business

Reading time – 2 minutes

A business owner has one thing in his mind- profits. That is where is eyes are. After Friedman’s theories took deep roots in society, it was ok to work for investors only.

It was easy to forget employees. Afterall unemployment will never end and you could always get new person to take place of the last one.

This finite mindset makes companies to lay off people, on slightest jolts in their business.

But they miss the reality. They don’t see the hidden costs.

1. A employee who loves company is an asset.

2. Customers are also humans like employees. You should be able to keep all humans happy.

3. Trained and old staff keeps customers coming back.

4. Training and retaining new staff is also a money consuming process.

5. If nobody stays for long how will teams form and coalesce.

So love your staff.

So that they love your business.

And due to that customers also love it.

Inspiration – The infinite game by Simon Sinek.

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Illusion that all businesses create! #infinitegame #workstress#newbusiness #simonsinek

Category – Business. Reading time – 5 minutes.

A lot of things are infinite. They continue. Waiting for their end, leads to early obituaries. Eyes dry out, before comprehending corners of these things.

There is no end to a few things. There is no permanent winner or looser. Only finite moments of disturbances followed by a continuous flow of the time. Flow; that is continuous.

Life is such a thing. A little part of infinite flow of time. It ends and no body notices after sometime. Then new biomass loaded with consciousness, wriggles on earth and this flow continues unabated.

Life is part of an infinite stream that continues; come what may. Life ends but game of the life continues. Till last living cell is destroyed, it will continue and even after that; there is always a chance of resurrection of biology.

So why do we want finite durations?

Why we want business quarters?

Why we want annual reports?

We know business continues till owners live , so why is focus on the short term? Long term things should have long term strategy.

So, for a brand to last for decades; we need infinite mindset.

Infinite mindset means – That business is an infinite game; that is to be played with long-term targets in vision.

For example, USA thought Vietnam war was a finite game but after loss of life and big fortune; they realised that it was an infinite game, if they continued to play it.

Microsoft wanted to defeat Apple, which was a finite game mindset. Apple focused on satisfying the customer and recently on the privacy of customers. Hence Apple was clearly playing infinite game right from the start.

Lego wants game to continue. Hence it has been around for so long.

Even if Apple knew that iPhone will kill the ipod, they went ahead with it.

Similarly gym to gain fitness is an infinite game. If you stop following diet and excercise schedule after few months, you endup regaining all the weight you shed with so much effort.

So take life as an infinite game.

Qurters, annual revenues, flowcharts- all are artificial constructs to keep shirt term goals in perspective, but too much focus on them may jeopardize long term prospects of the business.

Infinite game is positive and inclusive.

It needs reselience and it has a just cause.

It avoids too much focus on the short term results, as long as long term progress is positive.

Hence next time you see an CEO too much submerged in three monthly results, assume that he has got a finite mindset.

Inspiration – The infinite game by Simon Sinek
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How to finish almost everything that you start! #personalgrowth #habits#psychology

Category – Business
Reading time – 5 minutes

Starting is easy. Every year millions of people start things. They take resolutions. They start journaling. They even start evening walks and blogs.

Many more testosterone filled souls start revolutions. But it is both frightening and disheartening that 92% of the revolutions fail. Especially violent revolutions.

Non violence has better chance of succeding, as it stays for longer duration and gets more moral support. So we humans are excellent starters but very poor finishers.

Projects, books, loveletters, charities, homeworks, commitments, most of businesses in long term don’t finish well.

So, finishing a thing is an extremely rare skill, that is must for every restless entrepreneur.

What can you do. Here are few things

1. Don’t aim for perfection.

Nobody was perfect and nobody will be. Do best whatever you can do. And just don’t mess up voluntarily. Accept that you are normal ape, that is not perfect.

2. Divide and rule –

Divide big work into small tasks. It frightens less. It remains manageable. It keeps your brain away from panic and chaos. If you want to write a book try to write a page first.

3. Make things fun –

Attach some reward or pleasurable activity with your work. Listen to music. Go out while drinking your coffee if you should. Watch a cricket match on reaching home.

4. Remove noble hurdles –

They represent part of perfectionism. Things like, ” If I do this, then I will… need to be avoided.

5. Measure progress –

You will get idea about how much have you accomplished.

6. Find your space –

Identify time and place, where you are generally most productive. I know you count bathroom in, and it’s ok, if you are creative there.

These things will help you finish a lot more thing. A half done work is not useful to anybody.

Inspiration – Finish by Jon Scuff
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How to save a talent from wilting away? #personalgrowth #motivation #sucess

Category – Business

Reading time – 5 minutes

Talent is a peculiar thing. It is so abundant sometimes; that you see it everywhere. It is more accurate description of social media personas, we encounter daily.

With acceptability of self boasting as a new normal trend, we see people floating their talents on social media.

Talent has multiplied many folds. With no judge or critic, people produce things ( posts), using their talents and push it down the throats of other similarly talented people, in exchange of ever elusive likes and shares.

It’s like apes scratching each other. If Socrates or epictetus somehow visited instagram pages prevelent in present times, they would be bewildered to see infinite sea of talented people on the planet earth.

They might like to take a wordpress SEO tutorial, for their teachings to beat average blogger followership.

That was the idiotic babble at the start of the article.

Now let’s see few basic concepts, that help in keeping talented person afloat.

1. Practice till your subconscious accepts the skill and you could make an omlette, while doing that work.

2. Find a mentor. Yes that one person who dies lesser number of mistakes as compared to his younger self. And who wants you to be a success.

3. Get inspiration. If not enough steal ideas. But give credit to the original creator.

4. Learn both hard skills like plumbing and softskills like boardskating, writing etc.

5. Don’t try to label yourself as child prodigy, as most of them fail as they grow into the adulthood.

6. Learn from mistake. Don’t burn the toast each time. Also don’t burn the toaster.

7. Increase difficulty level during practice time. On field things will appear easier, if you have done more difficult things.

8. To learn a new move, exaggerate it like the helicopter shot of mahander Singh Dhoni.

9. Take notes and also remember to read them before throwing them into the trash.

10. Practice immediately after the performance. That is the time when muscles are hot and motivation engine is running.

11. Visualise your performance or better watch your performance video.

12. Keep you big hairy audacious goals secret from the world.


Motivationa – The talent code by Daniel Coyle

https://www.amazon.in/dp/0099519852/ref=cm_sw_r_cp_apa_fabc_Z8YNFB3MBA08AYZY0ZC9