Message for Investors

The message for investors is on disciplined approach to investment

► Do not fall prey to short term and cheap ideas which pose a risk to your capital instead

►  Go for planned investment approach with proper risk measurement and planning return on surplus funds – arrive at balanced approach while allocating funds to equity for growth , MF for regular income growth and Insurance for life and health risk

► Impulsive and knee jerk reaction on investing MUST be avoided – maintain discipline in creating wealth to enjoy the life objectives

► Equity offers dynamic returns, should you define your risk taking ability and plan investing after measuring it

► Professional counseling for investment decision making is worth investing – Most investors are seen bargaining price with service providers, instead demand most from them on quality services. Pay price to avail quality service to bring growth in capital and peace of mind to your family.

► Think and plan wealth creation for building future of your family and your next generation

We are living in an era where equity investments could create significant wealth given the favorable tax regime. Hence, concentrate on making sound investments, take informed decisions by referring to quality research and counseling.

To generate greater returns with risk management take professional help and make the best of your finances through a disciplined and long term approach.

Investing Jargon II

Curb Trading

The term refers to the trading that occurs outside of general market regulations, commonly through computers or telephones after the official exchanges have closed.

Circuit Breaker

Circuit breaker refers to any of the measures that are used by stock exchanges during large sell-offs to avert panic selling. It is sometimes called a “collar”.

 GARP Investing

The GARP (Growth at reasonable Price) strategy is a combination of both value and growth investing.

Herd Instinct

A mentality characterized by a lack of individuality, causing people to think and act like the general population. Herding instinct is when you tend to follow the group and react in the same manner as they react.

Speculator

A speculator is a fellow who trades bonds, commodities, derivatives, or equities with a higher risk appetite, in return for a substantial profit potential. Speculators anticipate large price movements in either direction.

Top Line

Towline is the slang which refers sales or revenue.

Window Dressing

Window dressing is the strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. In other words, it refers to showing the better position than the actual.

Investing Jargon

Bottom Line    Bottom line is the slang which is used for net income or profit.      

Bottom Up Investing     An investment approach that de-emphasizes the significance of economic and market cycles. This approach focuses on the analysis of individual stock.        

Bull & Bear    A bull refers to an investor who thinks the market, a specific security, or an industry will rise. While, a bear is an investor who thinks the market, a specific security, or an industry will fall.        

Dividends  Dividends refer to the cash payment from profits of the company that is announced by the Company’s Boards of Directors to be distributed among the stockholders.      

Panic Buying    The term refers to high volume buying brought about by sharp price increases. This happens mainly due to some news which is spread in the market.        

Panic Selling    The term refers to high volume selling brought about by sharp price decline. It happens when the market collides.

Tax planning and Conclusion to Mr. Smith Case

In order to plan for his taxes it is important that Mr. Smith should be aware of the tax implications of the various investment avenues. Before discussing the tax implications, itt is important to understand the all pervading standard section of the income tax act, which provides a deduction under that section, upto Rs. 1,00,000/-. The earlier rebate under section 88 has been replaced with section 80C. Mr. Smith should understand the following aspects while planning for his taxes:

►  Tuition fees paid for his child is eligible for a deduction under section 80C

►  Premium paid on insurance policies

►  Contribution towards national savings certificate and public provident funds are also eligible for a deduction

Conclusion

Normally any personal financial planning is a highly comprehensive exercise involving close interaction with the clients. It covers a number of dimensions and involves studying the needs and requirements of the client closely. This case just touched the tip of the ice berg and aimed at bringing light on the basic elements of financial planning when planning for the children’s expenses.