Things Your Mother Can Teach You About Share Market Trading
Mothers are the first and the most important source of learning in any child’s life. As a child, you might have learned a whole lot of things from your mother. Parenting not only involves teaching your child out of textbooks but also teaching them the nuances of day-to-day life.
Similarly, a very crucial thing that mothers can teach their children is how to manage their finances. Knowing how to manage your finances right from the early years helps lay a good foundation for the future. Understanding the basics of financing such as spending, saving, and investing will ensure a well-managed and a financially secure future for your kids.
Hence, if are looking forward to being a pro with your finances, then here are a few things that your mother would have taught you.
Be Patient: Unlike the previous one, the current generation is a little short on patience. Patience is one of the most important virtues that mothers can teach their children. Patience will help you keep calm while trading/investing such that you do not take any rash decisions during stressful market behavior. This will not only help you remain focused but will also save you from unnecessary panic and from the losses that are a consequence of the panic and loss of focus.
Value Money: One thing which the older generations practiced was valuing money. This is a helpful trait when it comes to trading as well; valuing money will save you from overtrading. It will also keep you from splurging on non-essential requirements, thus contributing to more savings, which could help you scale your investments.
Have Clarity: Clarity of thought is another essential quality you can learn from your mother. Clarity of thought, when setting a goal or choosing targets, is an important trait to have. It will help you set clear and realistic goals, in turn, helping you remain focused and get due returns in a set timeline.
Do Not Get Overwhelmed: Profits can be overwhelming and at such times, you need to keep calm and not indulge in overtrading. At the same time, losses could be dooming too, but you should not let that affect your trading pattern and regimen. The trait of striking the right balance between emotions and maintaining a steady pace is a must-have from your mother. Applying this trait to trading would be very beneficial for you in the longer term.
Keep a Safety Cushion: Ensure a safety cushion in the form of emergency funds, something which your mother has always been maintaining. Learning the same and maintaining emergency funds could save you in tough times or when a trade hits a rough patch.
Calculate Your Risks: Taking calculative risks can help you avert big losses while trading, and this is what most mothers want to teach their children. Consider all the pros and cons along with your risk appetite and the effect it has on your budget. This will help you reduce the impact in case the market hits a low.
Though they might seem outdated or old on the surface, your mother’s tips carry the weight of their experience over the years. Hence, it may be a good idea to discuss your financial habits with her as well.
How you can save time by not timing the market?
The concept of “timing the market” is as old as the stock exchange itself. There are tales of investors who move in before a “big leap” and get out before a crash. Prima facie it looks a time-efficient option, but research and experts say otherwise. “Forbes”says, if saving time is your priority, then it’s better to put “time in” the market rather than “timing the market”.
What is timing the market?
Market timing is the art of buying and selling stocks or switching between asset classes by trying to predict future market price movements.
The Why and the How
The proponents of market timing argue that it is the purest form of market trading. “Timers” are those that try and “time” their entry and exit to gain maximum benefits as opposed to holding shares for a longer period. They believe that a predictive analysis of the market can help get the “best days” of a year and earn maximum profit. Similarly, they try to predict a major crash and offload their shares just in time.
Proprietary software is available to help investors “time the market”. These use predictive algorithms, incorporating several indices, to give out signals marking good and bad periods.
Some popular products are: -
- Extreme Hurst
- Price Memory
- Smart Channel
- Price Wizard
Indifferent results - a waste of time!
Whatever the “timers” say, history and math refute.
Stock market graphs are similar to those produced by a random number generator. It takes a very thorough study of market dynamics, the nature of individual asset types, company performance and global dynamics to even get a hint of how the market is going to respond the next day.
A Wall Street Journal study says, that a group of PhD economists analysing the market on a daily basis perform as well as a group of monkeys throwing darts in stock selection.
Timing the market also costs you in other ways.
5 Best Investment Options for Newly Employed Individuals
The phase of being newly employed brings with it joy and a sense of freedom. It feels good to have your own money in hand. While the urge to splurge may be overwhelming, one should think about investment too. Being employed also brings in the responsibilities with it, which would mean you need to work on the long-term financial security. For a newly employed professional, being in your 20’s, investment is something you would not take so seriously. You’d rather put it on the back-burner till you wake up alarmingly. The initial years fly by, and you get caught up in a multitude of stuff till retirement approaches. It’s rather easy to gift yourself financial security if you follow these simple investment options:-
Loan Against Assets - Financial Instruments against which you can take a Loan
Investments are meant to be made for long-term. However, these investments can be used to take short-term loans when need arises. Personal loan is the most widely known loan people resort to when in need. Little do they realise that one can take loan against some financial instruments too.
Loan against Gold
As the name suggests, one can take loan against physical gold. As per the RBI rule, the loan to value (LTV) is maximum 75%. This means that if the value of your gold is Rs. 100, you are eligible for a loan of Rs. 75. The interest rate ranges from 12-17%. During an emergency, one can opt for gold loans, instead of applying for a personal loan with a bank.
Loan against Life Insurance Policy
A person can also take loan against his life insurance policy. An individual is eligible for a maximum loan of 85-90% of the surrender value. The interest rate ranges between 9-10%.
Loan against Fixed Deposit
One can also avail a loan against his fixed deposit. However, the minimum tenure of the loan is the term of fixed deposit. The maximum loan to value (LTV) is 90% of the deposit amount. The interest rate charged by banks is around 2-2.5% higher than interest paid on deposit by banks.
Loan against Residential Property
A loan against residential property can be availed too. The interest rate ranges between 11-15%, while the maximum tenure of the loan is generally 15 years. The loan to value is maximum 75% of the value of the property.
Loan against Shares
An individual can take loan against equity shares. The amount and tenure of the loan depends entirely on the banks. The interest rate for this type of loan ranges between 11-16%. The loan to value is a maximum of 50% of the value of the shares.
Benefits of buying an insurance policy online
There is a growing trend among the younger people of shopping online. It is gaining popularity because of the ease and convenience it offers. But it is not that only items of everyday use can be purchased online. The financial industry has also embraced technology like anything.
These days, it is possible to buy insurance at the click of a button. Even though most people still prefer to purchase their policies through agents, a lot of people are comfortable transacting online and using internet to purchase insurance.agents, a lot of people are comfortable transacting online and using internet to purchase insurance.
The online mode allows one to access detailed information about the plan, its salient features and possible alternatives from other insurers. There are many policy comparison platforms that help a buyer compare all the key factors across a wide range of policies. The benefit of this is that one can make a decision on basis of accurate information. But that is not all. One can even verify the claim settlement records and credibility of the insurers through regulator’s website. Since buying insurance is more for protection of the family, it’s always better to cross-check the credibility of the insurers, so that the family doesn’t have to face any problem in case of exigencies.
Another advantage of buying insurance online is that the premiums are comparatively lower. This is because when the policy is bought online, it is a direct transaction between the buyer and insurer without any agents or intermediaries. So this saves on the commissions and other operational costs, which are then passed on as benefits (lower cost) to the buyer.
There is also no doubt about the convenience that these online policies offer. The entire process of purchasing the policy has been made paper-free. This is one very important factor, as many people these days don’t have the time to meet agents and evaluate all possible options before making the final purchase.
So it’s quite clear that buying insurance online is not only convenient but also one of the cheapest and fastest modes of buying insurance. So going forward, this mode will only find more takers as people realize its benefits.