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( Frequently Asked Questions ) |
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1. What should I do when
I want to open an account with insaf Investments?
^Go To TOP
Ans : You need
to fill and or sign the Client Registraiton Form which consists
of the following documents.
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The KYC “Know Your Client” form,
also attach all the documents
mentioned FAQ 2 below.
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The client agreement, Supplemental agreement,
Pledge agreement
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Terms & Conditions Broking & Products
and Services.
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Power of Attorney for broking & Products
& Services.
-
Schedule of charges.
You may then draw a cheque of Rs. 750 for Offline and or Online
in favour of Aditya Birla Money Ltd. towards the account opening
charges.
Along with the Client Kit you will get the login User ID &
password of trading terminal in a sealed envelope.
In case you need any assistance in filling up the form and understanding
the documents you may contact our branch officials.
After you have submitted all the documents and the cheque these
will be processed at the centralized “ Client Registration
Department ” at our Head office in Chennai. If any documents
or information is missing then you will be contacted by the concerned
Department or by Us.
2. What are the
documents needed to open account with insaf? ^Go
To TOP
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2 Passport size photographs
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Proof of Bank Account ( any one of the following
)
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Proof of Identity : Pan Card
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Proof of Address : ( Any one of the following
may be submitted ).
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Pass port copy
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Voter ID card copy
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Driving Licence copy
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Bank Pass Book copy
For more trading or broking related queries you can visit the
folloing link
http://www.adityabirlamoney.com
( home / Trading / Trading Faq )
3. what are the
key specialities of insaf Investments? ^Go
To TOP
Ans : insaf offers
a single window advantage to its client through a team of experts,
committed to providing high quality research advice and full fledged
investment advisory.
4. What exactly are
investments? ^Go
To TOP
Ans : Investing
is a method of purchasing assets in order to gain profit in the
form of reasonably predictable income (dividends, bonus and capital
appreciation over the long term.
5. When to invest? ^Go
To TOP
Ans : The sooner
the better. By investing into the market right away you allow
your investments more time to grow, whereby the concept of compounding
interest swells your income by accumulating your earnings and
dividends. Considering the unpredictability of the markets, research
and history indicates these three golden rules for all investors
-
Invest early
-
Invest regularly
-
Invest for long term and not short term
6. How much to
invest? ^Go
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Ans : There is
no statutory amount that an investor needs to invest in order
to generate adequate returns from his savings. The amount that
you invest will eventually depend on factors such as:
-
Your risk profile
-
Your Time horizon
-
Savings made
Remember that no amount is too small to make
a beginning. Whatever amount of money you can spare to begin with
is good enough. You can keep increasing the amount you invest over
a period of time as you keep growing in confidence and understanding
of the investment options available and So instead of just dreaming
about those wads of money do something concrete about it and start
investing soon as you can with whatever amount of money you can
spare.
7. What is Trading
VS Investing? ^Go
To TOP
Ans : Many people
confuse trading with investing. They are not the same. The biggest
difference between them is the length of time you hold onto the
assets. An investor is more interested in the long-term appreciation
of his assets, counting on that historical rise in market equity.
He’s not generally concerned about short-term fluctuations
in prices, because he’ll ride them out over the long haul.
An investor relies mostly on Fundamental Analysis, which is the
analytical method of predicting long-term prospects of a particular
asset. Most investors adopt a “buy and hold” approach
to assets, which simply means they buy shares of some company and
hold onto them for a long time. This approach can be dangerous,
even devastating, in an extremely volatile market such as today’s
BSE or NSE Indexs Show.
Let’s consider someone who bought shares of XYZ Company at
their peak value of around Rs.650 per share at the beginning of
the year 2000. Two years later, those shares are worth Rs.100 each.
If that investor had spent Rs. 65,000/-, his net loss would be Rs.55000/-
! I don’t know about you, but losing Fifty Five Thousand Rupees
would be a relatively big loss for me.
Many investors suffer such losses regularly, hoping that in five
or ten or fifteen years the market will rebound, and they’ll
recoup their losses and achieve an overall gain.
What most investors need to remember is this: investing is not about
weathering storms with your “beloved” company –
it’s about making money.
Traders, on the other hand, are attempting to profit on just those
short-term price fluctuations. The amount of time an active trader
holds onto an asset is very short: in many cases minutes, or sometimes
seconds. If you can catch just two index points on an average day,
you can make a comfortable living as an Trader.
To help make their decisions, Traders rely on Technical Analysis,
a form of marketing analysis that attempts to predict short-term
price fluctuations.
8. What is Saving
Vs Investing? ^Go
To TOP
Ans : Traditionally,
saving has been viewed as quite different from investing. In most
savings alternatives, the initial amount of capital or cash remains
constant, earning guaranteed rates of interest.
The capital value of investments can go up or down. Returns are
not guaranteed. However, creation of money market funds and deregulation
of the banking industry have resulted in a variety of savings
options that earn variable rates of return.
Savings provide funds for emergencies and for making specific
purchases in the relatively near future (generally within two
years). The primary goal is to store funds and keep them safe.
This is why savings are generally placed in interest-bearing accounts
that are safe (such as those insured or guaranteed by the federal
government) and liquid (those in the form of cash or easily changed
into cash on short notice with minimal or no loss). However, these
generally have low yields. Because of the opportunities for earning
a higher return with a relatively small pool of funds, some financial
experts suggest that savers consider slightly higher risk (but
liquid) alternatives for at least part of their savings.
Saved money is insurance. It is insurance against risk, against
losing your job, against having a major unexpected repair bill
or medical expense in the family. It is the backbone of you and
your family’s financial well-being. Saved money grants you
financial security. And the more you save, the more financial
secure and independent you will be.
The goal of investing is generally to increase net worth and work
toward long-term goals. Investing involves risk. Risk of your
stocks losing money, or even going bankrupt (Enron, MCI, the airlines,
etc. etc.). Risk of interest rates rising, and bond prices falling.
Risks of your broker swindled you, or coerced you though his sales
pitch to buy speculative investments. Risks of the economy. Risks
of a particular industry. Risk of losing your principal. Risk
of losing it all, and then some (such as with margin calls).
9. What is a
share? ^Go
To TOP
Ans : In finance
a share is a unit of account for various financial instruments
including stocks, mutual funds, limited partnerships, and REIT's.
In British English, the usage of the word share alone to refer
solely to stocks is so common that it almost replaces the word
stock itself.
In simple Words, a share or stock is a document issued by a company,
which entitles its holder to be one of the owners of the company.
A share is issued by a company or can be purchased from the stock
market.
By owning a share you can earn a portion and selling shares you
get capital gain. So, your return is the dividend plus the capital
gain. However, you also run a risk of making a capital loss if
you have sold the share at a price below your buying price.
A company's stock price reflects what investors think about the
stock, not necessarily what the company is "worth."
For example, companies that are growing quickly often trade at
a higher price than the company might currently be "worth."
Stock prices are also affected by all forms of company and market
news. Publicly traded companies are required to report quarterly
on their financial status and earnings. Market forces and general
investor opinions can also affect share price.
Quick Facts on Stocks and Shares
-
Owning a stock or a share means you are
a partial owner of the company, and you get voting rights in
certain company issues
-
Over the long run, stocks have historically
averaged about 10% annual returns However, stocks offer no
guarantee of any returns and can lose value, even in the long
run
-
Investments in stocks can generate returns
through dividends, even if the price
How does one trade in shares ?
Every transaction in the stock exchange is carried out through licensed
members called brokers.
To trade in shares, you have to approach a broker However, since
most stock exchange brokers deal in very high volumes, they generally
do not entertain small investors. These brokers have a network of
sub-brokers who provide them with orders.
The general investors should identify a sub-broker for regular trading
in shares and palce his order for purchase and sale through the
sub-broker. The sub/broker will transmit the order to his broker
who will then execute it
10. What is Demat
Account? ^Go
To TOP
Ans : Though the
company is under obligation to offer the securities in both physical
and demat mode, you have the choice to receive the securities in
either mode.
If you wish to have securities in demat mode, you need to indicate
the name of the depository and also of the depository participant
with whom you have depository account in your application.
It is, however desirable that you hold securities in demat form
as physical securities carry the risk of being fake, forged or
stolen.
Just as you have to open an account with a bank if you want to
save your money, make cheque payments etc, Nowadays, you need
to open a demat account if you want to buy or sell stocks.
So it is just like a bank account where actual money is replaced
by shares. You have to approach the DPs (remember, they are like
bank branches), to open your demat account. Let's say your portfolio
of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of
HLL and 100 of ACC. All these will show in your demat account.
So you don't have to possess any physical certificates showing
that you own these shares. They are all held electronically in
your account. As you buy and sell the shares, they are adjusted
in your account. Just like a bank passbook or statement, the DP
will provide you with periodic statements of holdings and transactions.
11. Is a demat
account a must? ^Go
To TOP
Ans : Nowadays,
practically all trades have to be settled in dematerialised form.
Although the market regulator, the Securities and Exchange Board
of India (SEBI), has allowed trades of upto 500 shares to be settled
in physical form, nobody wants physical shares any more.
So a demat account is a must for trading and investing. Most banks
are also DP participants, as are many brokers. You can choose
your very own DP.
To get a list, visit the NSDL and CDSL websites and see who the
registered DPs are. A broker is separate from a DP. A broker is
a member of the stock exchange, who buys and sells shares on his
behalf and on behalf of his clients. A DP will just give you an
account to hold those shares. You do not have to take the same
DP that your broker takes. You can choose your own.
12. Stock Market
Myths ^Go
To TOP
Ans :
-
You can tell if a Stock is cheap or expensive
by the Price to Earnings Ratio.
False: PE ratios are easy to calculate, that is why they are
listed in newspapers etc. But you cannot compare PE’s
on companies from different industries, as the variables those
companies and industries have are different. Even comparing
within an industry, PE’s don’t tell you about many
financial fundamentals and nothing about a stock’s value.
-
To make Money in the Stock Market, you must
assume High Risks.
False: Tips to Lower your Risk:
• Do not put more than 10% of your money into any one
stock
• Do not own more than 2-3 stocks in any industry
• Buy your stocks over time, not all at once
• Buy stocks with consistent and predictable earnings
growth
• Buy stocks with growth rates greater than the total
of inflation and interest rates
• Use stop-loss orders to limit your risk
-
Buy Stocks on the Way Down and Sell on the
Way Up.
False: People believe that a falling stock is cheap and a rising
stock is too expensive. But on the way down, you have no idea
how much further it may fall. If a stock is rising, especially
if it has broken previous highs, there are no unhappy owners
who want to dump it. If the stock is fairly valued, it should
continue to rise.
-
You can Hedge Inflation with Stocks.
False: When interest rates rise, people start to pull money
out of the market and into bonds, so that pushes prices down.
Plus the cost of business goes up, so corporate earnings go
down, along with the stock prices.
-
Young People can afford to take High Risk.
False: The only thing true about this is that young people have
time on their side if they lose all their money. But young people
have little disposable income to risk losing. If they follow
the tips above, they can make money over many years. Young people
have the time to be patient.
13.
What is Systamatic Investment Plan ( SIP )? ^Go
To TOP
Ans : Systematic
Investment Plan is a feature specifically designed for those who
are interested in investing periodically rather than making a lump
sump investment. It is just like a recurring deposit with the post
office or bank where you put in a small amount every month. The
difference here is that the amount is invested in a mutual fund.
SIP is provided by Mutual Funds to ensure that the investment goal
is reached, and thus to compensate for a potential deficit if the
systematic investment plan is interrupted due to premature death.
It is a service option that allows investors to buy mutual fund
shares on a regular schedule, usually through bank account deductions.
Th nomenclature of this mode of investment can be different with
some mutual fund houses; for example Reliance Mutual Fund calls
it Recurring Investment Plan. Please be clear that a systematic
investment plan is not a tool that helps improve your investment
returns.
The primary objective of a SIP is to enable investors to clearly
define an investment goal, and then to help them reach it through
systematic investment in select equity-oriented mutual fund schemes
that have a track record of consistent good performance.Most of
the mutual funds offer this facility. The real value lies in the
portfolio of the fund. Almost all schemes have the facility of steady
investment plan.
Systematic investment adds value through rupee cost averaging and
the power of compounding. The NAVs (net asset value) of these funds
can vary widely, but, through rupee cost averaging, an SIP can make
this volatility work for you. Many investors tend to think that
monthly income plan and systematic investment plan are one and the
same. The minimum monthly investment for a systematic investment
plan is Rs 1,000. If you are in the 30-40 year age group, you should
probably keep to an allocation of 30-40 per cent to equity investments.
It is managed by a team of investment professionals and other service
providers with advantages of professionals management, portfolio
diversification, reducing risk, reduction of trading cost, convience
and flexibility liquidity, access to information.
In simple words Systematic investment plan, is a simple, time-honored
strategy designed to help investors accumulate wealth in a systematic
manner over the long-term. Systematic Investment Plan is the most
effective way of investing in market especially in a volatile market.
SIP is a way to invest in a regular and disciplined manner while
taking care of volatility. It is yet another investment technique
which helps in mitigation of risk in terms of the entry point in
an equity fund.
For individuals or families just getting started, based upon the
above mentioned investment analysis, proper investment allocation
is determined and asystematic investment plan is established through
one of the many mutual fund families offered by various Mutual Funds
in India - Principal Income Fund, Monthly Income Plan, Child Benefit
Fund , Balanced Fund, Index Fund, Growth Fund, Equity Fund and Tax
Savings Fund.
The best way to enter a mutual fund is through a Systematic Investment
Plan. But to get the benefit of an SIP, think of minimum three-year
time frame when you won't touch your money. Small but regular investments
go a long way in creating wealth over time.
14. What makes the
Indian Middle Class Great? ^Go
To TOP
Ans : Indian Middle
Class comprising of 400 million people is the backbone of it’s
economy , it is a unique mass of humanity not found anywhere else
in the world, representative of typical Indian Values (which transcendent
regions, religions, castes and tribes ,which are by themselves very
diverse in India) and are a marketer’s dream in today’s
consumption driven world economies.
What makes the Middle Class Great?
- It comprises of people who are survivors, though somewhat diffident,
conservative and mostly conformists.
- They believe in God’s grace and want to hold on to what
they have. They are risk averse . More Bank Fixed Deposits than
Stocks and Shares.
- They want secure jobs ( preferably government jobs ) and have
learnt to manage within their means. They have learnt to ‘Cut
their Coat according to their Cloth’
- They are thrifty-Indian saving rate at 28% of GDP is one of
the highest in the world.
- They want to give good education to their children and live
their dreams through their progeny .They talk endlessly of their
U.S and U.K based children while worrying if their children are
eating well and not getting corrupted by the outside influence.
- While justifiably proud of their well-to-do children , they
are uncomfortable with girls going out at night and the present
lesser clad children.
- Their daughters-in-law save time by spending money while the
mothers-in-law have always saved money by spending more time (cook
wholesome food at home rather than order fast- food)
-
They believe in God and are reconciled to
their destiny .While they listen to grand plans of their children,
yet are always apprehensive.
-
They are getting accustomed to modern technology,
but still keep their Fixed Deposit Receipts laminated and safe,
trusting the bank and post office pass-books more than internet
accounting.
-
They are the products of households where
younger children accepted hand- me- downs and always affectionately
wanted to get their father’s coat altered to their size
on growing up. They believe in save and re-use.
Today’s use and throw culture deeply upsets them.
-
They believe in Value-for-Money.
-
They are best represented by the middle middle-class,
who buy branded apparel, but at discount sales ( preferably
winter clothing at the season’s end, at bargain basement
prices) , who go to see movies at the multiplex but in the morning
shows at discounted rates, who comfortably fit in ( a large
family) in a small car ( with a large heart ).
-
They manage to live in rented accommodations
(if possible, government or company provided) and construct
houses against Provident Fund and life Insurance loans. They
DO NOT live on E.M.I s and still pay cash for their shopping.
-
God Forbid, if the bread earner was to lose
the job ( which will mean depression and a feeling of disaster
) the homemaker can mange to keep the kitchen fire still burning
for a few months by dipping into below -the-mattress-money .In
such cases they will profusely offer prayers to the God of their
understanding and ultimately leave everything to the Higher
Power.
-
They do get snubbed for their middle-class
mentality and values by their better-off children and relatives,
who want to upgrade their living standards exponentially.
The giant multinational corporations salivating at this large
target audience sank in huge amounts in standardized shopping
malls, which have attracted foot- falls and eye-balls, but have
seen flat sales, in fast-food chains, which struggled till they
brought the prices down and customized their food offerings.
Ultimately the global consumer goods giants recognized that
the middle-age middle-class person still drinks the cola or
lemon drink from a bottle, will buy a car based on fuel consumption
and will take a cautious and conservative route. Of course the
Corporations are lucky in so far as India has the youngest population
in the world and hence cold drink cans and flat screen TVs have
a chance.
Conclusion
In the global economic meltdown of today, India is relatively
safe due to our conservative and cautious policies and the stoic
middle class values, with deep faith in the Higher Power.
More power to the Middle-Class. May the economically backward
rise to the middle-class level.
15. What is
Day Trading? ^Go
To TOP
Ans : Day Trading
is the act of buying and selling securities intra-day with the
expectation of making fast profits within minutes to hours. Popularized
during the bull market of the late 1990s, day trading is the practice
of buying and selling stocks over a very short period of time,
typically one day. Once the domain of floor traders and investment
banks, the availability of inexpensive computers and fast Internet
access has brought day trading to the masses.
Day traders come in all shapes and forms, using mechanical to
systematic day trading systems, and can place anywhere from one
to thousands of trades per day.
Day trading strategies typically follow one of two approaches:
beating the spread or attempting to catch short term trends. The
spread is the difference between what is being offered for a stock
(the bid) and the price being asked for the stock (the ask). Spread
trading attempts to buy at the bid and sell at the ask, over and
over again. Spread traders may make hundreds or even thousands
of such trades a day. With the advent of spreads as low as one
penny, spread trading has become much less profitable than it
once was.
Counter-trend traders will look for signs that a stock is topping
or bottoming out before they place a trade in the opposite direction.
For example, reversal traders use tools such as the TICK, TICKI,
Put Call Ratio, volume, etc. to anticipate a change in trend.
The term “day trading” is a widely misused and misunderstood
term. Real day trading means not holding on to your stock positions
beyond the current trading day; in other words, not holding any
position overnight. This is really the safest way to do day trading
because you are not exposed to the potential losses that can occur
when the stock market is closed due to news that can affect the
prices of your stocks.
Unfortunately, many people who claim to be “day trading,”
hold stocks overnight because of fear or greed, thus setting themselves
up for the catastrophic elimination of their capital. When day
trading currencies, the term “day trading” changes
slightly. Since currencies can be traded 24-hours-a-day, there
is no such thing as “overnight” trading. Thus, you
can have open positions for longer than a day with active stop
losses that can be activated at any time.
Day trading is an investment tactic that does online daily stock
trading with a relatively short investment. Those who do day trading
usually buy and sell securities during the same market day and,
as a general rule, do not hold stocks overnight. Many day traders
make dozens of trades every market day hoping to capture profits
that arise from small intraday price fluctuations.
You basically watch the stock market all day long, buy and sell
multiple times throughout the day, trying to buy it low and selling
it high and then rebuying it when it drops back down, etc. Very
dangerous, and hard to do. Studies have shown day traders do worse
in the long run than buying stocks and holding onto them for longer
terms. Plus you have to pay commission or fees every time you
buy and sell, and taxes on your capital gains are higher for stocks
held for less than a year.
IF
YOU HAVE ANY QUERIES OUT OF WHICH IS MENTIONED ABOVE PLS DO CONTACT
US.
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