Making it Simple: How not to choose a Mutual Fund?

Making it Simple: How not to choose a Mutual Fund?
by Nutan Gupta 06/08/2017
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Live in the present! And with that as a motto, the millennials today miss out on the very essential of saving for the future. There was a time when parents and grandparents thought about the golden future that they wanted to offer to their children while parents today think about a golden present. Has the concept changed? No, not really. Similarly, our investment plans have changed for our better today and a brighter tomorrow. Earlier investment choices were limited but today we have a plethora of options to fall back on like Mutual Funds, Equity, Tax Saving Schemes so on and so forth.

There was a time when the idea of investment was subjected to our family and friend’s advice and minute scrutiny, opting for services only in the end. Today, mindsets have changed and so do people’s financial goals and approaches. Today no one invests in a mutual fund after looking at its 10-15-year track record. Neither the decision to pick a star fund manager is based on the performance of the fund. Those times are over. Post the recession of 2008 and the ushering of the new young millennials in the HNI bracket, star fund houses and star fund managers both find the current market scenario exciting and tough to work in. They have realised that in volatile time like these they need to rework on their philosophies and strategies to constantly keep up with the ups and downs of S&P and BSE Sensex.

2016 has not been fairly accommodating too in its ways, hence, the ideal way to go forward is to look back at the basics and avoid the bad mutual fund schemes. The Indian mutual funds industry is worth more than 16-trillionRs and it has about 700 debt funds and more than 500 equity funds. So, how do you ensure you pick the cherry and avoid the lemons. We decode it for you with simple logic and reasoning.

Performance is Fleeting & Deceptive:

Funds are not expected to outperform every day. While some outperform their peers in years, others find it excruciatingly difficult to live up to the expectations they began with. The local and global economic policies have a major role to play in the performance of mutual funds and therefore choosing a mutual fund based on the scheme’s past returns is not enough.

Last year demonetization affected the performance of many funds. With no money in the hands of the public there was little that could be done to save the situation. Therefore, the right way to pick a mutual fund is by looking at its rolling returns. This strategy makes appropriate sense in the long term as it allows people to evaluate the fund’s performance accordingly. Funds losing out their sheen due to market linked factors is a temporary slip but if its performance was affected due to a bad decision or mistakes of the fund manager than that fund needs to be completely avoided.

Select A Good Fund Manager:

Loyalty is a thing of the past and therefore fund managers, too keep on shifting from one fund to another. Don’t choose a fund or leave it because of the change in its fund manager. The change brings in suffering but that is only transitory. So, it is better to select a fund that aligns with your goals, policies, fund house and its processes rather than aligning with a fund managers. A change in the above should definitely make you head towards a change but not before that.

Change of Strategy

As we rightly pointed out that fund managers keep on shifting, their working style, strategy and decisions make a difference and bring about a change in its performance. Although the intentions of the new fund managers in doing the new is good but people more often lose on the reasons with which they initially invested in a selected fund due to this change in the management style. Staying invested during these times is not a bad move but if one thinks things are going awry, it just makes the right sense to not go for that fund.

Every investor has its own goals, philosophies and preferences, we advise that your decision to invest is based on a thorough research rather than a quick fleeting glance on the superficial performance. Read and learn more to invest wisely.

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How to become a crorepati by 45?

How to become a crorepati by 45?
by Prashanth Menon 06/08/2017

Dreaming of a penthouse, an Audi car in your personal garage is one thing and working towards achieving that dream is another. If you have begun to question your current financial situation off late, assessing your future with minute scrutiny and hoping to make it to the crorepati club one day, chances are you are not alone. Your dissatisfaction with the current scenario in your life will propel you in the right direction to become a crorepati. However, you need extensive planning of your finances to achieve your goal in x, y or z years as worked out by you.

This article will steer your dream with the right kind of tips in financial planning to achieve your goal by 45 years of age.

Budget: Our entire life could be a never-ending luxury only if we could have a correct budget for ourselves. While the two ideas, luxury and budget seem contrary to one other, they can definitely co-exist in harmony in a better scheme of things if planned correctly. Before you start planning to become a crorepati, it is extremely essential for you to pen down your goals for the future. Bungalow, foreign trip, car, designer clothes and the list could be bizarre but something you have dreamt of over the years. Post writing down you will realize the importance of achieving some in the near future and the rest could be ignored or put on the back burner.

Achieving the Crore: It is true there is no shortcut to success and becoming a multi-millionaire overnight is a feat achievable only in films. With two core ideas very clearly engraved in our system, the task of attaining the first crore becomes more practical, realistic and achievable. In a lay man’s language, the crore club is possible by following three simple rules

  • Increase your income

  • Cut down on your unnecessary expenses

  • Start your financial planning wisely with long term investments

Growing Your Money: Saving and budget are the last two words that hits us when we first receive our salary. Our growing expenses and increasing credit card usage has made our generation an excessively consumption based society. Our hunger for products refuse to end and that weak spot is exploited favorably by companies. It’s time we give our future planning and earning a crore a serious thought. And what better and safe way to do so than putting your hard-earned money safe in a long-term investment that will allow it to grow. The following is a suggestion for investing your money to become a crorepati.

Investment in Mutual Funds: Investing in large cap, mid-cap or blue chip funds will allow you to attain a diversified yet balanced portfolio. Sector based investment in mutual funds if you have the right knowledge will definitely boost your earning in a short term.

Investment in Start-ups or go for IPOs: The current market scenario is brimming with opportunity with startup companies floating every day. If there is a good startup company with a great idea, then investing in it is a sure formula to achieve your goal sooner. Investing in good IPOs always bring good returns.

Investment in Stocks: While stocks do require a risk-taking appetite, it also reaps in huge profits in a short period. However, do take note of the fact that investment in stocks and attaining short terms gains on them also levies tax.

  1. While it is great to earn more money, the addition of the extra revenue also brings us under an increased tax scanner. We list few ways by which you can invest as well as save on your tax.

  2. Investing in Public Provident Fund PPF not only gives you a high interest rate of 8.7 but also allows you to save tax under the sec 80C.

  3. Go for ELSS to attain 12% to 15% returns while saving on your tax too.

  4. NPS brings in tax benefit up to an income of Rs 50,000 and gives annualized returns of 14% to 15%.

  5. The Voluntary Provident Fund is the safest way to invest to enjoy the dual benefits of extra revenue earning and tax benefit.

We advise you to thoroughly research the different investment options and take the help of a financial planner and plan your investments according to your goals and your risk appetite. The reviewal of your investment plans at different stages is a must to ensure its successful execution. Minor tweaks and changes required can be also looked into the long run situation and we suggest you be prepared for it.

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9 Tips for Investors when Stock Markets hit all-time high

9 Tips for Investors when Stock Markets hit all-time high
by Nutan Gupta 06/08/2017
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The market moves are not independent but dependent on global economic and political scenarios. A political move on the national front can create ripples on the economic front. The Modi Government has ushered in an era of stock market boom. With the stock markets hovering around at an all-time high, should investors and daily traders be wary of a robust market, as markets have the tendency to surpass all predictions.

While the stock market and the political decisions of the Centre are the talk of the town, retailers and traders are making spectacular efforts to throw all excel based valuations out of the window. Investors are lapping up on subscriptions, anything and everything that seems to be showing positive growth.

On the other hand there are some investors cautious of the timings of the market given the global scenario. Are the bulls and bears fighting the fight too fast or they are overheated and will calm down soon?

Some mutual fund managers argue that these are the times to get a new set of investors to jump in while others believe that price correction might be the right time to sell but it is not the right opportunity to invest in anything new. Whatever the opinion of the experts, none of them can prove anything in a meltdown scenario like this.

Simply speaking, stock prices shoot up when companies grow and their growth has a direct impact on the market. Attaining heights in the stock market is a natural event as stocks are expected to grow beyond a period.

Well in a situation like this investors turn to financial experts for tips. We give you 9 tips to help you calm down and take an informed decision about investments.# Tackle your Fears

Investors tend to be of two kinds, one who are easily gullible and fall prey to the fear of missing out and others are those who have a risk appetite and fearless of the ups and downs of the stock markets. The former investors in a situation of market hitting a high are easy suspects of smart marketers who lure them into investing in new things with the fear of missing out on a once in a life-time opportunity. Therefore the investor ends up buying something that he did not need or was not of any need to him at the present moment.

*Beware! You might either end up buying the best stocks in your fear of losing out or end up with something you never wanted to waste your money on.

#Introspect Your Portfolio and Base Your Decision on Retrospect

When the market hits a high, investors are flooded with offers to bring about a change in the structure of their investment portfolio. Don’t push for any investment in your portfolio unnecessarily. However, if you are missing out on a financial component, this could be the right time to add it to your portfolio. Whatever addition and subtraction that you do should be based on your risk appetite and time horizon. Any allocation of assets that has gone way beyond, now is the right time to rebalance your portfolio.

*Don’t jump in at once. Enquire, research and then go for restructuring of your portfolio.

#NO investment need means NO investment need

Investors are susceptible to the lure of profits and are easily made to make an investment which is definitely not needed for their portfolio. Stocks are profitable but they are not the easy way to fulfill all investment and financial goals. If you lack the appetite for risk or are comfortable in achieving your financial goals in the long run with safe bets, then be it.

*A NO is good at times and if you are at the age of retiring than NO definitely means NO in the financial market.

#Cash Reserves

Liquid money is desirable for achieving short-term goals. Investors who have saved their money for a goal over a period and find a decent return should collect the money out and invest it in a safe asset. For short term goals, capital preservation should be a bigger priority than capital growth.

#Numbers Do Lie

Stock market is unreliable and unpredictable. Do not base any of your investment decision on the past returns of some assets. Every asset in a good market appears to be a piece of gold. However, that’s not the case. Do your research; scrutinize the minutest details of the asset before investing your money in a particular scheme.

#The Question "WHY" Never Fails

Why did you this? Why did you do that? Find answers to all your financial decisions to be sure of the investment you are making as well as you have made. Any unsatisfactory reply to any of your why should make you reconsider the investment you are making or have made.

#Know your Portfolio

Get a quick run through done of your portfolio with the positive and the negatives both being highlighted. Take the information in your stride to mark out your future plans in a better way.

#Part Investment is Better

Investing a large sum in a volatile market is not feasible. Hence, invest it in instalments. Part investments will allow you to buy and sell during price corrections and get great deals. The GST set to be rolled out by the government is sure to create temporary fluctuations in the market and create a situation of correction. This would be a good time for selling and buying and if investors are unsure of their ability to stagger investments, they should invest in products that carry less risk.

#Absolute Numbers can be Deceiving

Investors should avoid the mistake of going by absolute numbers as projected by Nifty, Sensex or any stock for that matter. The value of rupee has depreciated over the years and an x amount 10 years back would not have the same purchasing power at present. Stocks should be valued and compared with their earning potential.

The high and lows of stock markets are here to stay. These tips will guide you through the times of turmoil and help you take the right decision. Get ready to roll!

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21 Facts about Mutual Funds that You Must Know Before Investing

21 Facts about Mutual Funds that You Must Know Before Investing
by Nutan Gupta 06/08/2017
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It’s time to move over from Public Provident Fund (PPF), Fixed Deposits (FD), Gold and other safe investment options. The market is hitting a new high and financial gurus are predicting a more than satisfying returns from investments. This should be enough to get you out of the safe investment mode and develop an appetite for risk and an interest in mutual funds and equities as an investment option. But before you take the big investment plunge, get your facts correct and make a sound investment choice.

We will help you in learning the ropes of the financial investment asset mutual fund. We are sure with information in your stride; chances of your making a mistake will be minimal.

Here’s laid out before you 21 important and interesting facts about mutual funds.

The Basics:

Mutual Funds are operated under a 3 tier structure in India. The three tier structure is formed by a Sponsor, Trust and the Asset Management Company. We define the 3 tier structure simply for you.

A Sponsor is the person responsible for the operations of the mutual fund.

The sponsor who operates the responsibilities and duties of a mutual fund creates the Trust. The Trust is governed by the law of Indian Trusts Act, 1882. The money of the investors is held under the Trust.

The collective decision of the Sponsor and the Trust results in the appointment of an Asset Management Company (AMC). The AMC manages the money of all the investors or shareholders under the supervision of the Trust.

Types of Investing:

An investor can opt for two variants of investment type when it comes to Mutual Fund investing; one is Actively Managed Funds and the other Passively Managed Fund.

The actively managed funds generate higher returns for its investors by trying to beat the index benchmark of Sensex and Nifty. However, the lieu of higher returns also brings in the additional cost of research and an active fund management team to ensure investors remain satisfied and aligned with the fund.

The passively managed funds have the sole aim of replicating the returns of the index benchmark to any possible extent. However, these funds never make an attempt to create new benchmark returns records or anything similar.

*All index funds are passively managed.

Value of the Mutual Fund:

The value of a mutual fund can be determined by its net asset value or NAV. The net asset value in a mutual fund is determined for each unit number and this the total NAV of the fund is calculated by taking into account the value of all the investments made by the fund minus all the expenses made by it.

Equity or Debt?

It is to be noted that the returns on the mutual funds attract tax and based on this mutual funds are divided into a broader classification of equity or debt.

A fund investing more than 65% of its portfolio in equity and equity related assets is classified as an Equity mutual fund while investment of less than 65%, is considered as debt mutual fund. The tax laws are applicable on the returns on the basis of this broad classification of funds.

Tax Benefits

Equity Fund: Since the above broad categories is based on tax, now get to know the nitty gritty of the tax rules applicable on Equity mutual funds. These are subject to capital gains and also enjoy related tax benefits. There is no long-term capital gains tax levied on an investor on the equity fund if he remains invested in the fund for more than 1 year. A Lower short-term capital gains tax of 15% is charged if the investor sells his equity mutual fund within a year. Dividend Distribution tax is not applicable to equity funds.

Debt Fund: A short-term capital gains tax is levied for selling the debt fund within a short period of three years. This tax is levied at the marginal income tax rate. The long-term capital gains tax is applicable if the investor sells his shares in the fund post the maturity of three years. The tax rate for the long-term capitals gain is charged at 20% with indexation. On declaration of dividend a debt fund is obliged to pay the dividend distribution tax at the rate of 25% + surcharges (effectively 28.84%). However, the relief for the investor is that the dividend he receives is already post the tax applied and therefore he does not have to bother with the tax post the returns.

Balanced Funds: Also known as hybrid funds, a balanced fund achieves a perfect harmony of investments by investing money in both debt as well as equity funds. Interestingly, it is not necessary for a hybrid fund to invest an equal share or a 50:50 in equity and debt. Some of them have 65% or more exposure to equity and they enjoy the tax benefits under the ambit of equity funds.

Wealth Tax:

Wealth tax isn’t calculated on mutual funds and therefore they do not classify as wealth.

Investment Rules:

It is important to understand that the entire amount invested in a mutual fund is never invested in assets. Each mutual fund has a mandate as decided upon by its fund manager and his team. While some of the money invested could be diverted to buy assets some could be retained in liquid/cash, so as to provide for redemptions / withdrawals or meeting short term expenses. Lack of good investment opportunities could also result in funds holding the money in hand.

Sectoral Funds:

Funds specific about investing in certain sectors do exist. Some funds will invest only in specific sectors like auto, ancillary, banking, cement, pharma, etc. A sectoral fund can face the challenge of a limited universe of stocks to invest in and can be forced in the future to invest in opportunities just to complete the mandate because of the lack of good options available to invest in.

Investment Style: There are three ways of investment in Mutual Funds ,

Growth: Invests in high growth companies

Value: Invests in companies at a price less than their value

Hybrid: A healthy mix of both investments in Growth and Value.

Portfolio Turnover:

Do you need to be worried for an overhaul in the portfolio done by your fund manager? Yes and no.

If a mutual fund consistently goes for a portfolio turnover, it would result in high brokerage costs as well as it depicts an unsteady investment style. However, this may not be the case always. Sometimes major changes are done in the portfolio by the fund manager as a part of a new investment strategy. This temporarily could cause a spike in turnover ratio. Portfolio turnover is high when fund managers invest in very short period instruments for liquid funds and are constantly into buying and selling.

International Funds:

Certain fund managers follow the mandate of investing in international stocks or stocks of other countries to add a layer of diversification to the portfolio. However, there are two risks involved with investment in an international fund- one is exposure to the international markets and the other the constant change in the rate of currency.

Monthly Income Plan:

A Monthly Income Plan (MIP) does not offer a monthly income as the name suggests. It is a debt oriented hybrid mutual fund where the larger portion of investments is in debt mutual fund and a lesser portion of investment is in equity mutual fund. The equity component of this mutual fund typically does not exceed 30% investments of the total portfolio. MIPs are taxed as debt funds.

Fixed Maturity Plan:

A Fixed Maturity Plan or FMP is similar to a fixed deposit only that the investment here takes place through a mutual fund. The Fixed Maturity Plan sees an investment for a fixed time period and a fixed interest rate.

FMPs are available generally for an investment period of 3, 6, 12 or 24 months. FMPs offer higher returns than a Bank FD. Ultra-short term funds could also be an alternative to Bank FDs for those who plan to invest their money for a short time frame of more than a year.

Interest vs Value:

The relationship between interest rates the value of debt funds is inversely proportional. A rise in the interest rates affects the value of debt funds bringing in a fall and vice versa.

Tracking Error:

A tracking error is the margin by which the fund trails the index. This is tracked to identify a good index fund for an investment. The tracking error is a result of the transaction costs incurred to adjust the fund to the index.

Gold ETF:

Gold ETF is a great financial asset for investment with no storage costs, no insurance premiums, no risk of theft and high liquidity benefits. While physical gold remains the premium choice for investments, it is to be noted that anything apart from the personal jewellery is subject to wealth tax. Gold ETFs are exempted from wealth tax and it can be easily bought through a trading account for as low as half a gram.

Growth vs Dividend:

An investment in mutual funds offers the following two options: Growth & Dividend. The Growth option allows investments to grow and this is clearly reflected with an increase in NAV. With Dividend option, the fund allows you to receive dividends at regular intervals which an investor chooses to receive or reinvest in the same fund. The reinvestment of dividend causes an increase in units and for those looking for tax relief from high tax bracket category, should invest the money in debt funds and select the dividend option to save on taxes.

Regular vs Direct Plan:

Regular plans are sold by distributors and they offer commission payouts from the investment.

There are no commission payouts in the direct plans and therefore there is more money on the table and indirectly higher returns for the investor.


Systematic Investment Plan or SIP is often mistaken for a fund but ideally it is a monthly plan which allows the investor to invest regularly at installments in a selected mutual fund of the investor’s choice. The Systematic Transfer Plan or STP is another method to invest money. Systematic Withdrawal Plan allows withdrawing of money in installments.

With the knowledge of these 21 facts about mutual funds, get set roaring to make investments with a solid foundation on mutual funds.

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10 Things You Must Know about Debt Mutual Funds

10 Things You Must Know about Debt Mutual Funds
by Priyanka Sharma 06/08/2017

"Mutual Funds are subject to market risks. Please read the offer documents carefully before investing"

Did you pay heed to these cautionary lines blasted at you in all the different modes of advertisements for mutual funds? The answer perhaps for most of us is NO. These statements are generally not paid heed to while reading, watching or hearing an advertisement nor during buying a bond. This article will guide you through the nuts and bolts of the debt mutual fund subject, helping you to understand the market risks and buying funds post a thorough knowledge.

People are generally more inclined to invest in the traditional investment options like FDs, NSC or Time deposits. One of the very important aspect of investment easily sidelined is – DEBT MUTUAL FUNDS.

Deft funds are mutual funds that are invested in fixed income securities like bonds, treasury bills, government securities and money market instruments. Debt mutual funds are short termed low risk and with good returns.

Let’s learn its 10 salient features which makes debt funds a good investment opportunity for investors.


Debt funds are the most reliable investment option for investors with a low risk appetite. Investors who invest in debt funds are assured of no loss. The returns on the debt funds are not high as equity funds and the risk factor is relatively very low. The only possibility of risk is when the interest rates are hiked and that is a remote possibility. There is an inverse relation between the bond prices and interest rates and debt funds are affected by it which is reflected in their prices.


Dividend received from a debt fund is tax free in the hands of the investor. Debt funds held for more than 3 years are considered as long term and taxed at 20% after indexation. Indexation takes inflation into account and reduces the tax on capital gains. TDS isn’t deducted on gains.


Debt funds are classified into 2 categories based on the duration and time of their sell and purchase. They are viz. OPEN ENDED FUNDS and CLOSED ENDED FUNDS

Open-Ended Funds - Like equity, there are open-ended schemes where one can sell or repurchase units in a fund throughout the year. Short Term Funds, Income funds, Gilt Funds, MIPs all are part of this category.

Closed-Ended Funds - Some of the debt schemes are closed-ended where one can invest only during the NFO of the product post which the scheme is closed for investment. The scheme matures after a specified period and the liquidity to exit is low. The only exit option available to the investor is selling it in the stock exchange where these funds get listed. Fixed Maturity Plans, Capital Protection Funds are a part of this category.


Liquid Funds – They are very low risk funds. These funds invest in highly liquid money market instruments. They invest in securities with a residual maturity of not more than 91 days. Investors can park their money in them for a few days to few months. These funds offer marginally higher returns than bank deposits.

Ultra Short-Term funds are low risk funds. These funds invest mostly in very short-term debt securities and a small portion in longer-term debt securities. Investors can park their money for a few months to a year in them. The category has offered 8.58 per cent in the last one year.

Fixed Maturity Plans are a good alternative to fixed deposits for investors in the higher tax bracket. These are closed-ended debt mutual funds. These funds invest in debt instruments with less than or equal to the maturity date of the scheme. Securities are redeemed on or before maturity and proceeds are paid to the investors. Returns from them depend on the prevailing rates in the money market.

Short-Term Funds invest mostly in debt securities with an average maturity of one to three years. These funds perform well when short term interest rates are high. These are suitable to invest within a horizon of few years. The category has generated returns of 9.37 per cent in the past year.

Dynamic Bond Funds have an actively-managed portfolio that varies dynamically with the interest rate view of the fund manager. These funds invest across all classes.


The minimum tenure for capital gains have been increased from 1 year to 3 years, which means the investor has to remain invested for 3 years to redeem the low tax benefits over the capital. If redeemed within three years, the gains will be added to the person's income and taxed as per the applicable income tax slab. But if the investor holds the units for more than the tenure, the debt fund will be more tax-efficient than FD.


Even though the debt funds seem to be very lucrative in nature, they do not guarantee assured returns. Debts funds are volatile in nature and this is defined by the maturity profile of the holdings. Funds holding short-term bonds are not very volatile and give returns roughly equivalent to the prevailing interest rate.

Funds that invest in long-term bonds are more sensitive to changes in interest rates. If the rates decline, the values of bonds in their portfolio shoot up leading to capital gains for the investor.


Investors with a large sum to invest should opt for debt fund through the systematic investment plan (SIP) that allows an investor to invest in funds of their choice. Every month a fixed amount from the investor’s account is transferred to equity scheme.

For those nearing the retirement age should consider investing in a debt fund to enjoy a monthly gain. The monthly capital gain on the debt fund can be attained through the systematic withdrawal plan.


In a debt mutual fund, investors enjoy the facility of receiving the exact portfolio with respect to where the money is invested on a monthly basis with a minimum cost. This helps investors in evaluating the choice of investment with regards to the debt fund.


Debt mutual funds give the investors the liberty to choose the dividend, however these aren’t guaranteed.


Debts funds can be easily exited with the amount invested deposited in the investor’s bank account within a day or two of withdrawal. Please note that certain funds impose a penalty on investors for exiting the fund before the minimum period. The exit load can vary from 0.5% to 2%, while the minimum period can range from six months to up to two years. Verify the exit load of the fund before you invest. Even a 1% exit load can shave off a significant portion from your profits.

Still looking to invest in debt mutual funds? Don’t forget to read the terms and conditions carefully and make a smart choice with the information provided.

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Important Points you should see before investing in shares

Important Points you should see before investing in shares
by Nutan Gupta 01/09/2017

An individual invests in a stock in order to earn profit. It is very disheartening when you invest your hard-earned money in a stock which doesn’t give you desired returns. It is really important to do all the research before you choose to invest in a particular stock.

Here are a few things to check before you choose to invest in a stock.

1. Company background

Read about the company that you want to invest in. Find out what their business is. Visit their website, read news articles related to the company.

2. Financial performance of Company

It is important to analyse the past performance to understand how the company has grown over the years. Read the balance sheets to see how their balance sheets have grown in the past.

3. Stock value

There are ways to find out whether a stock is over or undervalued. Some basic methods would include Price to Earning ratio (P/E ratio), Price to Sales Ratio that helps one understand if the market value of the stock is in line with the growth trends of the company.

4. Industry outlook

Read about the competitors and peers of the company. Finds out what competitive edge your company has over the others. Find out if the advantage is sustainable. Find out about the market share, and overall performance of the industry that they operate in. Look for regulatory, political factors that may impact the industry.

5. Promoter check

Always read about the people who are running the company. Find out their background and how long they have spent with the company. Frequent changes in the top management, inexperienced top managers may be poor indicators while picking the right stock.