Life of a Day Trader

Life of a Day Trader

Let me explain you the life of a day trader. The Life of a Day Trader is a hactic life. He swings between his job and his routine day trading activity. Let me give you one such example of my friend. My this friend works as a software engineer in some multinational company. He earns lots of money from his company but still he can't focus on his company work because of his day trading activity. I would say it a day trading addiction.

Literally millions of people are addicted with this syndrome. The desire to make instant money is very much high in the day traders and that's why they can't concentrate on their daily work during the trading hours.


My this friend has lost lots of money in the day trading activity. He doesn't believe in long term investing and appreciation of stocks on the fundamental basis. He believes in short term gains.He loves to speculate and not only this but he has spent lots of money behind his broker also for hot tips and advise. But none of such advises have made him rich yet.

When he reaches to the office, he starts his Laptop and open his online trading account. While doing the trading, he starts his routine office work. And because of his trading activity, he can't concentrate much on his job work.

I really can't understand that why people waste both of their time and money behind day trading. It is much more easy to build the wealth by doing a long term investment rather than doing the speculation in the day trading.

Well, I am not saying that trading is not a profitable business. Many Hedge funds have made billions of dollars for their investors by doing trading and taking short positions in the stocks. But well, they are the Hedge funds and they have a team of traders and research analysts and the advanced softwares and the most recent and accurate information about the market.

They can do it with the precise accuracy because they have all the infrromation and they have to do it by a team where the jobs are distributed. Now, you are alone. You have to earn money from your job as well as do the trading and market watch at the same time and you can not do all of these things at one time.

Believe me, in my opinion you should focus on your business or a job and invest your job or investment income in Equity, Bonds, Gold or Real Estate for the long term wealth building rather than speculating in the market daily. Believe me, your life will be much more smooth one you are on the path of long term investing...!!!

How to Earn a Crore Starting Small in Stock Market?

How to Earn a Crore Starting Small in Stock Market?

Many people ask me this question. Now, my question back to you is How Small? Do you want to make a Crore from the stock market by investing just 5000 rupees? Well, It’s possible but than it will take almost half a century. Yes, 50 years. This is because The Compound interest will take a time to multiply your money in stock market.

It really depends on your knowledge of the stock market and various stock market investing strategies such as Call, Put, Options, Futures, Short Selling…etc.. Rakesh Jhunjhunwala started investing in the stock market with just Rs.5000 in 1985 when the Sensex was 200 only. And today he is a Forbes Billionaire means his net worth is well above Rs.5000 Crores (US $ 1 Billion).

He did this in 25 years. So you can also. But well, it won’t happen overnight. You will have to be in the constant touch in the market than and only you can do it in 25 years. Otherwise it will take more than half a century.

So What I advise you is that, Invest in your own Financial Knowledge. Read the books and articles about great investors of this world like Warren Buffet and learn their Investment strategy. I am not saying that you can not make a crore from the stock market with small amount.

I am just saying that it will require a huge Financial Knowledge to do that. So Start increasing your Financial IQ.

How to Identify Multibaggers?

How to Identify Multibaggers?

IF you had bought 100 shares of Wipro at the rate of Rs 100 per share in 1980, they would be worth Rs 200 crore (Rs 2 billion) today.

If you had invested Rs 10,000 in Infosys shares in 1992, you would be richer by Rs 1.5 crore (Rs 15 million) today.

If you had invested Rs 1,000 in Ranbaxy in 1980, you would have got Rs 1.9 crore (Rs 19 million) today!

And, not so far back in time, if you had invested Rs 40,000 in Unitech during the lows of 2004, your bank account would see a whopping Rs 1.1 crore (Rs 11 million) today!

Identifying the Multibagger stocks is an art. And not the everyone on this planet can master this art. The above are the historical examples. But just tell me that if you have bought 100 shares of Wipro in 1980 at Rs.100 per share price than how many of you have still hold the stock after it becomes Rs.700 per share? Most of you would have exit from the stock by booking 7 times profit. However, those patient investors who have hold the stock for 30 long years would have make fortunes today.

Here are few easy steps to identify Multibagger stocks.

- Go for a company which gives regular dividend. Dividend paying stocks mostly lie in A group category.
- Preferably go for a Mid cap stock which in future can become a large cap. Mid cap stock have a greater chance to move upwards and that to fast. Preferable a stock whose market cap is less than 1000 Crores.
- Go for a stock in a particular sector which is in boom.
- Look out for the companies financial. In this check out the companies profit f last 4-5 years and check it out that it is increasing every year. One can also check out EPS of the company.
- Check out whats running these days, Say for example there is a invention of a new technology which will be in demand in a near future. An excellent example is invention of 3G. Even TATA Nano can be taken in consideration as it is only one of its kind being the cheapest car in the world.
- Check out for a companies order value. There are various companies which have a good amount of orders for future which are of great importance to a company.
- One can also look out for a company which has good amount of land / property. Unitech had a lot of lad which can in the eyesight by end of 2005. An investment of Rs 40,000 then would be worth over 1 crore by the end of 2007.
Last and not the least be confident in your stock.

Few don’t s in selecting a multibagger stock.

- Don’t select a Penny Stock.
- Don’t loose hope in your company.
- Don’t depent on others , do your own research.

Get Rich Penny Stocks

Get Rich Penny Stocks

Every day I receive some kind of hot tip in my junk mail box about some Penny Stock of USA. A Penny Stock is something which is trading on the DowJones at few cents per share. These shares promise you to give 100% profits in just 2 weeks or even less in time.

Definition of Penny Stocks -

Penny stocks are defined as shares that trade at a price at or below $2.00. The Security and Exchange Commission (SEC) considers anything up to $5.00 as a “penny stock,”

These are known as Get Rich Penny Stocks. And you should stay away from these penny stocks.

Internet Marketers claim you the following thing.

“If done right, trading in penny stocks can be an affordable option for those who want to get into the stock market. The profits from trading in penny stocks can become an income supplement rather quickly. For just a few hundred dollars, you can make thousands in returns if you jump on the right stock at the right time. In addition, many investors like the idea of being able to own a large amount of a good company’s shares for a relatively low cost. Trading penny stocks is also a great way to learn about the stock market without investing a large amount of money.”

But well, this is not true. The Truth is that, you should stay away from the Penny stocks.

The only way to make money from the Penny Stocks is that – You Sell them and not buy them.

Yes, if you want to make fortune from the penny stocks than promote your own company and make it listed in the stock exchange. But well, I won’t recommend this to anyone because promoting a company only for the purpose of selling shares if illegal according to SEC. and I never promote illegal things.

What I want to tell you that, making fortunes from the Penny stocks is just like selling a dream. There is nothing like get rich quick from the Investments in the world. You will have to invest money wisely and with discipline. Than and only it is possible to make fortunes from the Stock Market.

Investing for Dividends

Investing for Dividends

Investing for Dividends is known as Investing for cashflow. Here you invest in the stock market for cashflow rather than the capital gains. Most of the people lose money in the stock market because they invest for the capital gains while smart investors are those who invest for the cashflow.

In fact, there are several people around the world who have worked hard for 10 years day and night and build the portfolio of Dividend paying stocks and today they are enjoying their early retirement while travelling the world.

The main advantage of dividend income is that, it is a tax free income. Because the company has to pay Dividend Distribution Tax (DDT) which is very low in comparison with Income tax. Thus, building your own Dividend paying stocks portfolio is a wise financial decision if you want to retire early.

Now, the only key of building the successful Dividend Portfolio is – Start Early.

Yes, This is the 95% advise that anyone needs. You will find a list of dividend paying stocks on any website on the internet but to make it a winning portfolio on which you can live for the rest of your life, you need to Start Early because than and only the compound interest will work on your portfolio more to make you rich.

If you want to retire early or retire with financial freedom than Investing for Dividend is a sound financial strategy. Rather than investing for only capital gains, you should go for this way. This is because in this strategy, even if the stock prices fluctuates, you will still receive a Dividend Income from your Investment which you don’t receive if you invest only in Growth Stocks only for Capital Gains.

So Invest for the Cashflow (Dividends) Stocks and enjoy the steady passive income.

Investing in the Stock Market

Investing in the Stock Market

It really surprises me when people say that they are afraid of investing in the stock market. They argue that, I prefer to invest safe and that’s why I invest in the bank fixed deposits, bonds and debt instruments. Because I want to play it safe.

But well, let me tell you that, the Bank Savings Accounts, CDs & Fixed Deposits are also not the 100% safe because here also the risk of inflation eroding the purchasing power of your money over the time. The main problem is that, people can’t see the inflation and that’s why they assume that it doesn’t exists. But the thing that you can’t see doesn’t means that it doesn’t exists.

Inflation & Tax both are the silent killers of your money. Both of them will slowly erode the purchasing power of your money but Stock market Investments don’t attract any long term capital gains tax if hold for more than 1 year period as well as they beat the inflation very well in the long run.

In the United States, the inflation is 2-3% per Annum and the Stock market returns in the past 20 years is 11% annually on and average & that is 8-9% actual annual return from the stock market in the long run. Now, this is amazing. No other Asset class in the USA has given this much return in the long run after beating the inflation.

And that’s why I advise people to invest in the stock market. Now, by investing in the stock market doesn’t mean trading in the stock. Investment means pure long term investments based on the fundamentals of the companies.

Mutual Funds Versus Direct Stock Investing -

In the United States, most of the people don’t have any time to manage their own investments and that’s why the concept of mutual funds came into exists. Mutual Funds pool the money from several small investors like you and me and collect the large amount of capital. It has it’s own fund manager and the team of research analysts.

The Fund manager invest your money on behalf of you and make a portfolio for you. However, the Index mutual funds have given much more return than the actively managed funds in the long run because the index mutual funds are associated with very low fund management charges.

Vanguard Index Mutual funds are the best long term investment vehicles in the USA.

The earlier you start investing in the stock market, the more compound interest will work in your favour and make you rich over the time. And that’s why i advise people to start investing in the stock market as early as possible means NOW.

Remember,

The Best Time of Investing in the Stock Market was 20 years Before &
The Second Best Time is NOW…So Start investing in the Stock Market NOW…!!!

Shariah Compliant Stocks

Shariah Compliant Stocks Guidelines

The complexity of the share market and the involved Islamic issues prompted to take the concerning matters in the Ninth Seminar of the Islamic Fiqh Academic (IFA), which provided the following guidelines in this regard.

1.1 Equity share in a company is a proof of limited ownership of the shareholder in the company and not a mere indication that he has invested that much amount in it.
1.2 The buying of shares of the companies in their initial stages, which are in the process of collecting their capital, is not buying; rather it is participating or having a share in the company, from the Shariah point of view.
1.3 Generally, the other properties of the company have more value than it''s capital. That''s precisely why it is sound to purchase the shares of a company. Nevertheless, if it is known that the amount to be paid is either less than or equal to the face value of shares, then under these circumstances it would not be correct to buy these shares at a price less than or more than it''s fixed amount.
1.4 The buying and selling of shares of the companies, which indulge in impermissible businesses, like that of liquor, pork or interest-bearing loans are strictly invalid and impermissible.
1.5 It has been observed that the establishment of companies, which would conduct business purely on Islamic lines, is feasible in India. The Seminar urges the Muslim traders and prominent economists to feel their religious responsibilities and strive to set up such business houses, which would work solely on Islamic lines. Nevertheless, since such companies have not been established in India that work strictly on Islamic lines as yet or even if present they are still negligibly small in number, therefore, those Muslims who have capital and are unable to invest in valid and permissible business ventures owing to certain circumstances, can purchase the shares of the companies carrying permissible businesses (for example, manufacturing of engineering instruments or items of general use) even if they have to indulge in interest transactions owing to legal liabilities and constraints.
1.6 Muslims holding shares in such companies, whose prime business is permissible, although they are, incidentally, involved in certain impermissible practices, should try and forbid the company from such impermissible practices in future at the annual general meetings of shareholders. Furthermore, they should convince other shareholders through mutual discussions too in order to garner their support during the meeting.
1.7 In case, interest is a part of the profits earned by the company in a fiscal year and it''s quantity is known, then it should be deducted from the profits earned by the shareholders and should be given away in charity (sadqah) without expecting any recompense for it.
1.8 In case, interest is a part of the profits reaped by the company, thereafter the interest-included income is invested in a business venture, and profits, thus, earned out of it, then the interest shall be excluded from the profit earned proportionately and it should be given away as charity without expecting any recompense.*
1.9 A company is a legal entity, which represents the collective status of the shareholders. The Board of Directors is a group of people elected by the company, which expends on behalf of the company and in this way enjoys the status of an authorised representative of the shareholders. Moreover, it is incumbent upon all the shareholders to share the liabilities of expenditure of the Board of Directors; provided they are in conformity with the rules and regulations, laid down by the company.
1.10 It is quite right to trade in the shares of those companies, which undertake, solely, permissible business.
1.11 The future sale, the prime objective of which is not meant to buy shares rather to neutralise their losses and gains with fluctuating values of shares is actually an interest-bearing business. It is quite invalid in the eyes of Islamic Shariah because it is an explicit and apparent form of gambling.
1.12 The forward sale in which the sale does take place but the actual implementation of the transaction takes place in future, is not a sale rather, is an agreement to sell. The actual sale would take place only after the offer and its acceptance on the scheduled date.
1.13 It would not be valid to sell off the shares before getting the share certificates in a cash/spot sale.
1.14 The shareholder becomes the legal and authorised holder of the shares, once he gets the share certificates. He can sell off his shares even if his name has not been endorsed with the company due to certain official impediments.
1.15 It is obviously proper to act as a broker in those transactions in which the buying or selling of shares is permitted. On the contrary, it is not permissible for a person to act as a broker in the transactions of those companies, which undertake any impermissible business.
1.16 An Islamic financial institution or the Muslims in general can purchase equity shares of such companies, which do purely Halal business.
1.17 Investing in share of such companies that undertake solely Haram business is totally impermissible.

Shariah Compliant Stocks in India

Shariah Compliant Stocks in India

Here are few facts about Islamic Investment Opportunities in India.

There are two ways of getting profit in Islam

(1) which Islam permits (2) which Islam prohibits.

Islam has forbidden earning from interests. And has counted as big sin and among the big sins there is no which forbidden in this manner; that notice a war from Allah and his messenger. Can human being defeat Allah and his messenger?

In India Muslims are second largest population after Indonesia, Indian Muslims population estimated to be around 150, millions. Inspite of this India is routinely ignored in the vast majority of the books articles on the subject of Islamic banking and or investments.

Dow Jones has Islamic index, FTSE of Britain has not only Islamic Index but also a full fledge Islamic bank, but unfortunately there is not a single Islamic Product or an Islamic benchmark in Indian investment environment.

Even more bizarre India is not covered and not included for any of their research work by any Islamic institution or bank .although India is the big market for Islamic investments,and according to me no research work of any research institution could be complete without including India.

Although India has a good Islamic structure which provides opportunity of riba free investment and finance which gives us lots of benefit.

Yes, India is the second largest population of Muslims in the world after Indonesia. It is 150 Million and still we don’t have any Islamic Index. Dow Jones has Islamic Index.

Shariah Compliant Investments.

Here are the Shariah Compliant Investment Criterias.

Common people in our community believe that investment in stocks is prohibited. No it is not true. Indeed there are some kind of stocks, which might be prohibited but not all. So prominent Islamic scholars, and ulemas have defined all market instruments and after that they have permitted with some conditions to have investments in stock market and invest in it.

(a)The company’s activities should not include liquor, pork, hotel, casino, gambling, cinema, music, interest bearing financial institutions, conventional insurance companies, etc.

(b) The total interest bearing debt of the company at any point in time should remain  below one third of its average market capitalization during the last twelve months.

(c) Its aggregate of account receivables should remain below 45% of total assets.

(d) If company has any interest bearing income it should not be more than 10% in any condition.

While Shariah compliant investment avenues are now becoming available in most countries, India has not seen large-scale development.To gauge the scope of Islamic investment opportunities in the Indian stock market, it is imperative to examine stocks that conform to Islamic Shariah principles "Out of 6,000 BSE listed companies, approximately4,200 are Shariah compliant.

The market capitalization of these stocks accounts for approximately 61% of the total market capitalization of companies listed on BSE.This figure is higher even when compared with a number of
predominantly Islamic countries such as Malaysia, Pakistan and Bahrain. In fact, the growth in the market capitalization of these stocks was more impressive than that of the non-Shariah compliant stocks.

The software, drugs and pharmaceuticals and automobile ancillaries sector were the largest sectors among the Shariah compliant stocks. They constitute about 36% of the total Shariah compliant stocks on NSE. Further on examining the BSE 500 the market capitalization of the 321 Shariah compliant companies hovered between 48% and 50% of the total BSE 500 market capitalization.

Get Rich Stocks

Get Rich Stocks

Let us today discuss about Get Rich Stocks. Well, in real life there is nothing like such kind of stocks but I call them Get Rich Stocks because people are crazy about them. These includes, Penny Stocks, Hot Tip Stocks, TV & Media Popular Stocks…etc..

I call them get rich stocks because people think that by investing in these stocks, they will become rich in very short time. But unfortunately, this is a Myth. You should expect realistic returns from the stock market in the long run.

The US Stock market, which is world’s most matured stock market has give 11% Annual return in the long run (More than 10 Years). So you should expect5 this much return from the stock market. And if you make more return than this than you should consider it as a Bonus. and nothing else.

There are many Examples where people have invested just few thousand dollars 30 years before and today the valuation of their Investments is worth of hundreds of millions. One such Example is Berkshire Hathaway, The Investment Company by Warren Buffet.

However, such kind of Examples are very rare. And you should follow the time tested investment principles in your real life rather than searching for Get Rich Stocks. Many people have made their fortune from the Penny Stocks also. But it doesn’t mean that you will also make a fortune from the Penny Stocks.

When it comes to Investing, you should always stick to the basics. You should not expect unexceptionally higher returns from the stock market. So next time whenever someone tell you the hot tip in the stock market, simply stay away from such kind of hot tips.

Believe me, There is nothing like Get Rich Stocks in the real life. Becoming rich requires years of Patience & Disciplined Investment nothing else…!!!

Start Investing in the Stock Market

Start Investing in the Stock Market

Many of my friends have started earning money. They are right now in the first phase of their earning life means good earning without any liabilities and dependents. They ask me that, What should be the first step for the Financial Freedom?

Well, my answer is – Start Investing in the Stock Market

If you have just started earning than your first step towards financial freedom should be this. Now the question is that, Why to invest in stocks? Well, this is very simple. Because Equity (Stocks) is the only asset class which has given highest returns in the long run than any other asset class and beaten the inflation.

No other Asset class in the world has given as high returns as Equity. In the USA, in past 30 years the Equity has given 11% annual return in the long run. And that is much more than US Treasury bonds and the returns from your savings account or fixed deposits in the bank which hardly give you 3-5% annual return.

And that’s why everyone should start investing in the stock market from the first day of their active learning life. Remember, you should stay invested for the long term. Long term means more than 5 years of span. In the longer run, the risk from equity becomes almost zero and the chances of huge capital gains are very high. This is because of the power of the compound interest.

The more time you stay invested in the stock market (Or in any other Asset class), the compound interest will work more in favour of you and make you rich and financially free. So if you haven’t started investing in the stock market than start investing in the stock market today.