Are you interested to gain more Profits from Equities, But confused which type of stock to invest in???

Are you an investor want to gain more profits???
Want to generate more funds than that you earn from Bank Deposits???

Here is a solution for you all which benefits if you are long term investor.

Investment strategy: Prefers companies which generate large profits by employing little cash. Such companies tend to be cash flow positive, and in bad years, the free cash flow turns into dividends.

My investment mantra:

1) Invest in companies that have a return on equity (in excess of 30 per cent) and that pay regular dividend. These two factors are a sign of sound management. Better the sound management, higher the stock prices.

2) Invest in companies with high sales growth: Companies that generate 25-30 per cent sales growth for 5-6 years are unlikely to be loss-making propositions.

3) Never buy into a company which is not a sector leader.

4) Buy companies, which are trading at market price/face value of more than 100.

5) Companies with debt can also be good bets provided the growth in debt is significantly less than growth in sales.

6) Check the macro-economic factors, see which companies will benefit from the governments development initiatives.

Fixed Deposits v Equities

Among some of the best practices followed by top investment managers, tax emerges as an important aspect to be considered. It is common to see advisors in other countries talking about pre-tax returns, and more importantly, post-tax returns. However, in India, we do not talk about post-tax returns when talking about the returns of bank fixed deposits.

As investors it is important for us to ask our financial advisors, bankers or agents about the post-tax returns. The impact of tax on investment decisions cannot be underestimated.

Fixed deposit - pre-tax vs. post-tax returns

Interest earned on fixed deposit (FD) is taxed at the tax slab rate of the individual. If an individual decides to invest Rs 10,00,000 in an FD for a period of 1 year at 9 per cent interest rate(approx), pre-tax interest earned during the year would be Rs. 90000. Tax on the interest earned at 10 per cent tax rate would be Rs 8000, and net amount earned by the investor would be Rs 81000.

This translates into a net return is 8.1 per cent, which is much lower that the presumed return.

Would you decide to invest in an FD, if the net return from it was viewed 8.1 per cent instead of an overall return of 9 per cent?

Fixed income - debt mutual funds

Long-term capital gains on investments in debt mutual funds are taxed either at 10 per cent flat rate on 20 per cent indexed. Average return of short-term debt funds in the last 3 years is 11 per cent. If an individual decides to invest Rs 10,00,000 in a short-term debt mutual fund, pre-tax returns earned for one year would be Rs 1,00,000. At a flat 10 per cent tax, Rs 10,000 would the tax amount. Net capital gain would be Rs 10,000, whereas post-tax interest earned would be 9 per cent.

Equity(Shares & Mutual Funds) - no long-term capital gains

Equity exposure is an important aspect of any portfolio that is built. In India, the government has provided an excellent incentive for long-term investors, by keeping capital gains at 0 per cent. Prudent portfolio building with long-term vision and enough risk weighted exposure to equities can go a long way in building wealth.

Lets say, you dont know in which stock to invest in??? You can switch over to mutual funds, where you can do a one-time investment and wait for a month/year or invest in SIP(Systematic Investment Plan) periodically i.e monthly for a period of 12months or according to your wish. Here you can generate a higher return as compared to other investments. Because in mutual Funds, the highly trained AMCs allocate limited amount in various stocks which will fetch you the best returns. If we see for last 3 years, the average return on all the mutual funds stand at 20% which is much much higher than the other investments, and moreover if you invest for a minimum of period of more than 12months, then there is no capital gain tax even as there is TDS in case of FDs(Fixed Deposits).
Conclusion

'Why should I not invest is FD?' is the most common question asked by many. As explained in the above example, a debt mutual fund could yield more than your FD investment, and equities can give much higher return than Debt funds. This is counter-intuitive and against the popular perception. However, introduction of tax has shown the reality of these decisions.

Stay Smart...Happy investing!!! Maximise Wealth!!!

PS: For investment strategies and for the best stock picks...

mail : kamlesh.konchada@gmail.com

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How to gain maximum by investing in stock market???

There are 3 things you need to know if you want to maximize how much money you make investing in the stock market:

1)  WHAT stocks to buy  2)  WHEN to buy and 3)  WHEN to sell

You must know all three to make the most money.  If you are missing any one of these, then you cannot maximize your returns.  Or worse, you could even lose money.

Of these three, knowing what to buy is by far the easiest.  There are a lot of good stocks out there that will make you solid returns over time.  For example, in the past four years, ten of the thirty stocks in the SENSEX i.e from Bombay Stock Exchange(BSE) Industrial Average have tripled!  That is one-third of the index!  With just a basic understanding of what drives stock prices, an investor can choose more of the stocks that will give this type of return.

The other two — when to buy and sell — that is where most investors get into trouble.  Looking  back, we can see that you could have bought almost any stock in 2009 and have made a profit by 2013.  Many have doubled or tripled or even more than that.  As long as you didn’t pick some deadbeat penny stock, nearly all stocks have gone up since 2009.  But it would have been terrifying to buy back in 2009 after a horrible drop in stock prices in October 2008.  I was in college at the time and was thankful I was not in the markets at the time.  I knew that other people, both amateurs and professionals, were experiencing a freakish hell as the stock market crashed.  However, if you know what to look for, you can make a reasonable estimate and buy somewhere near the bottom for a fine profit.

The hardest of the three is knowing when to sell.  Let’s say you have a nice profit in your stocks.  You don’t want to sell too early if stock prices continue to climb.  On the other hand, you don’t want to lose your profits if the market is headed for another bear market that wipes out 25-50% or more of your profits.  There are ways to know that the bull market is likely going to end soon, and signs that it has very likely already ended.  Like I have said before, a little knowledge goes a long way in the stock market.

So invest safely, trade smartly. Because Making Money Make Sense...