Plan Your Retirement By Investing In Stocks

Nutan Gupta

02 Aug 2017

Retirement is considered as the phase wherein individuals can finally put a halt to their work and enjoy the little things in life. Unfortunately, with the growing fast paced city life, one requires a steady flow of capital income to enjoy this. This is where planning in advance for your retirement helps.

Take an example of two good friends - Rajan and Puri. Rajan and Puri earned a decent living when they were young. Puri was a shortsighted person; with no regard for long term goals. Rajan, on the other hand, was quite the opposite and always suggested Puri to think of the future. Some years after their retirement, Puri was rendered debt-ridden. He was drained of all his savings. But Rajan stepped in to help out his friend. He could do this for he thought of the future. He invested in stocks.

Why Buy Stocks?
Rajan had been wiser to learn about the importance of stocks and stock market-based trading. Let’s look at a few reasons why people like Rajan felt the need to buy stocks:
1) Buying a stock of company basically enables you to an ownership stake. The more you buy, the greater is your ownership of a company.
2) Beating all other kinds of investment, returns obtained from stocks are exceptionally high. This high rate of growth is what makes stocks an interesting asset in the first place.
3) The profit that comes in after selling of shares would be tax-free if you hold the stock for more than 12 months. Hence, long term gains policy helps you keep all of what's yours to yourself.
4) Dividends that flow in periodically ensures that one doesn't have to sell their stocks and can treat it as an income. For a retired person, this is almost like a saviour, making them quite independent. 

How Do You Buy Stocks?
Buying stocks is a relatively easy process.
1) Identify a stock broker. It could be an online brokerage firm or you could meet them in-person.
2) One would need to open a Demat account to carry out stock holding related transactions.
3) Take a call. Decide what to buy and convey the order to the broker. 
4) All orders taken are settled on a T+2 time period basis. Here, T stands for the day trading of stocks took place, while T+2 indicates 2 business days after which the order will be settled.

The Bottom Line

Buying stocks is certainly not a difficult task. All it requires is patience and one’s awareness. Apart from savings, stocks certainly diversify and helps boost one’s portfolio.
There is a risk, no doubt. But surely there wasn’t a time when mangoes grew closer to the ground.
With greater growth rate, retired men can utilize the higher dividend as their supplementary income. This, in turn, further enables self-belief and encourages one to try and grasp for more. Certainly, investment in stocks paves way for a smoother retired life.

 


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Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Plan Your Retirement By Investing In Stocks

Nutan Gupta

02 Aug 2017

Retirement is considered as the phase wherein individuals can finally put a halt to their work and enjoy the little things in life. Unfortunately, with the growing fast paced city life, one requires a steady flow of capital income to enjoy this. This is where planning in advance for your retirement helps.

Take an example of two good friends - Rajan and Puri. Rajan and Puri earned a decent living when they were young. Puri was a shortsighted person; with no regard for long term goals. Rajan, on the other hand, was quite the opposite and always suggested Puri to think of the future. Some years after their retirement, Puri was rendered debt-ridden. He was drained of all his savings. But Rajan stepped in to help out his friend. He could do this for he thought of the future. He invested in stocks.

Why Buy Stocks?
Rajan had been wiser to learn about the importance of stocks and stock market-based trading. Let’s look at a few reasons why people like Rajan felt the need to buy stocks:
1) Buying a stock of company basically enables you to an ownership stake. The more you buy, the greater is your ownership of a company.
2) Beating all other kinds of investment, returns obtained from stocks are exceptionally high. This high rate of growth is what makes stocks an interesting asset in the first place.
3) The profit that comes in after selling of shares would be tax-free if you hold the stock for more than 12 months. Hence, long term gains policy helps you keep all of what's yours to yourself.
4) Dividends that flow in periodically ensures that one doesn't have to sell their stocks and can treat it as an income. For a retired person, this is almost like a saviour, making them quite independent. 

How Do You Buy Stocks?
Buying stocks is a relatively easy process.
1) Identify a stock broker. It could be an online brokerage firm or you could meet them in-person.
2) One would need to open a Demat account to carry out stock holding related transactions.
3) Take a call. Decide what to buy and convey the order to the broker. 
4) All orders taken are settled on a T+2 time period basis. Here, T stands for the day trading of stocks took place, while T+2 indicates 2 business days after which the order will be settled.

The Bottom Line

Buying stocks is certainly not a difficult task. All it requires is patience and one’s awareness. Apart from savings, stocks certainly diversify and helps boost one’s portfolio.
There is a risk, no doubt. But surely there wasn’t a time when mangoes grew closer to the ground.
With greater growth rate, retired men can utilize the higher dividend as their supplementary income. This, in turn, further enables self-belief and encourages one to try and grasp for more. Certainly, investment in stocks paves way for a smoother retired life.

 


Have Referral Code?