Wednesday, 5 September 2018

6 Common Mistakes to Avoid While Investing in Mutual Funds

Picture Credits: The Financial Express


If you have not invested in mutual funds to date, you probably aren’t trendy. The monthly SIP book of mutual funds has surged to Rs. 7,300 Crore pointing to the presence of Indian investors in volatile financial markets. The main motivation behind most investments is building of wealth over time.

However, a lot of investors don’t manage to achieve their goals. There are a lot of reasons causing this to happen. Although markets could get really volatile, if you don’t take enough care of your investments your own actions maybe hamper your financial goals. Below is a list of mistakes every mutual fund’s investor must avoid.

1. Ignoring Your Financial Goals

This could easily be one of your biggest mistakes while investing. You are only investing to achieve your goals. They say, “Investing without a goal is similar to traveling without a destination”. Makes sense. You are much more likely to be more productive with your investments when there is a goal that’s already set to achieve, in which case all your investments are all in alignment with that goal.

If you overlook your financial goals, you may end up parking your money in investment vehicles that do not suit your needs. Take your child’s education fee for example. Say you want to accumulate Rs. 1 lakh to pay for your child’s education fee, it would make more sense to invest in a recurring deposit or a fixed deposit which will mature the money for you when you need it. The same is the case for long-term scenarios such as retirement.

You must never invest money in a dividend option of a mutual fund. It does not let the money multiply because investors tend to forget reinvesting dividend income on several occasions. In addition to this, the dividend distribution tax can further reduce your returns.

2. Trying to time market over time

Although SIP’s are gaining increasing amounts of popularity, there are a lot of investors which prefer standing at the other extreme. These investors try to time their investments in a way that they get the maximum returns possible. Others may sell their investments when the markets seem overpriced. This approach doesn’t work for most people, besides, of course, a few lucky ones. On one hand, some people wait for the market to correct whereas others regret selling their stock at the previous high. 

3. Being return oriented

A lot of investors choose MF investment schemes by sorting them based on their historical returns. However, this may not be the ideal way. Say you picked a debt fund in December 2016 based on its previous returns. Your portfolio, in this case, is destined for doom, due to 2 factors:
· Previous returns were a result of falling interest rates.
· Interest rates have risen in 2017 as well as 2018.
One needs to dive deep into the inner workings and factors that affect the mutual fund’s price, not rely on past numbers which are subject to volatility.

4. Putting money in too many schemes

A lot of people make this mistake and their excuse is that they’re “diversifying”. However, that doesn’t really make too much sense because each MF scheme consists of a diversified portfolio of securities. The more the schemes you buy, the more difficult it gets to track them. Ideally, your portfolio should consist of 2 to 3 schemes and you could incrementally add more investments to your portfolio.

5. Ignoring risk profile and asset allocation

This scenario is common in heady markets. The investor gets carried away by the fear of missing out. During a bullish market, investors with medium risk appetite ignore their risk profile and invest in risky vehicles such as equity funds under pressure. This situation may cause huge losses in the case that the market takes a U-turn when investors opt for small and mid-cap oriented mutual funds because sudden dips can nullify gains accumulated over months if not years. Signing up with reputed and trustworthy stock broking companies in Mumbai may help you avoid such mistakes that may cause significant losses.

6. Investing all your money at once

Investing a large amount in mutual funds can prove to be quite tricky. Fear and greed are two emotions that a lot of investors can’t handle and eventually lead to losses. If you sign all checks and forms in one click, you will be exposing yourself to timing risk. It makes more sense to opt for a systematic transfer plan which enables you to invest in specific internals to maximize your returns. You will be able to do this under the guidance of reputed and reliable financial service companies in India.

Tuesday, 28 August 2018

Basics of Commodity Trading Online

Picture credits: Holborn Assets


What is a commodity you ask? Investopedia defines commodity as a “basic good used in commerce that is interchangeable with other commodities of the same type.” Think of commodities as raw materials used in the synthesis of products and services. Although its quality may slightly differ from producer to producer, the difference is almost negligible. For example, a barrel of oil is the same product, regardless of who’s manufactured it. Commodities also include financial products such as foreign currencies and indices.

Commodity Buyers and Producers

Buying and selling of commodities are usually done through futures contracts on exchanges which set standards for the quality as well as the number of commodities being traded. There are 2 types of commodity traders. One is buyers and producers that use futures contracts for hedging purposes. They make or take the delivery of the commodity when the contract expires. Example, the wheat farmer who plants a crop is able to hedge against the risk of loss of money if its price falls before the crop is harvested.

Types of Commodities

Commodities are divided into 4 main types:

1. Agricultural: Agricultural commodities include food crops (corn, wheat, etc.), livestock (pork, beef, etc.) and cash crops (wool, cotton, etc.).
2. Energy: This category includes sources of energy such as crude oil, coal, electricity.
3. Metals: Precious metals of very high value such as gold, silver, etc. and base metals such as steel iron ore, etc.
4. Environmental: Carbon emissions, white certificates, etc.

Factors responsible for commodity price movements

Although each commodity is unique in terms of factors affecting its price movements, there are certain factors the are common among most commodities:
1. Emerging Market Demand: With growing economies comes a growing need for raw materials such as crops and livestock to feed people, metals for infrastructure and energy to run cities. Demand from new emerging markets as well as countries’ economies affects prices.

2. Supplies: The scarcity of abundance of commodities could also affect the price movements. Once such number is the size of the annual crop. Other factors include political, economic and labor issues. Inventory levels are said to have a significant impact on price movements as well. If consumers build up inventory levels it may increase supply and reduce prices. Conversely, a dip in inventory levels could skyrocket prices.

3. US Dollar: When the value of the dollar against other currencies drops, it would take more amount of dollars to buy commodities than it would when the price was higher. In a nutshell, commodity sellers get lesser dollars when dollar rates are high and vice-versa.

4. Substitution: The principles of substitution apply to commodities as well. When prices for a certain commodity surge, buyers will automatically resort to cheaper alternatives. Eg. Aluminum is used as a cheaper alternative for copper in certain industries. When it comes to crops, farmers may shuffle between corn, oats, and wheat based on their prices.

5. Weather: Weather conditions such as drought or excessive rainfall can affect the yields (supply) of crops causing prices to fluctuate. For example, in the energy sector, hurricanes, storms or cold weather can hamper drilling as well as refining activity leading to reduced supply and hence an increase in price.

Trading commodities online

Commodities are the fourth biggest investment vehicles when it comes to trading in India after equity, real estate and precious metals like gold and silver.

Even though trading commodities may have its own risks and challenges, you also have the opportunity of making good profits buying and selling commodities online which comes with experience and dedication.

As a trader, you must be aware of the different types of commodities, the different world markets and stay in touch with the economic changes that are responsible for price fluctuations in commodities. Here are some of the steps to follow to start with commodities trading basics:

1. Knowledge about Commodity Trading Exchanges

The first step should be knowing what exchanges facilitate trading of commodities. In India, commodities trading is done on the National Commodity and Derivative Exchange (NCDEX), National Multi Commodity Exchange (NMCE) and the Multi Commodity Exchange (MCX).

2. Choosing your broker

It’s important to choose a suitable and efficient stock broker companies. The broker should be registered and regulated. Choosing your broker is of utmost importance because the stockbrokers are the people who are responsible for holding your account and doing trades.

The brokers also keep traders posted about trends and news that can affect commodity prices in the form of tips as well as making sound buying and selling decisions.

Another important thing to take into consideration is the fee (or brokerage) that is charged by the broker for their services. Some of the fees include:
· Commission
· Platform fee
· Clearing fee

Another factor to consider while choosing a broker is the kind of services the brokerage provides on its platform. Some of the requisites that should be satisfied are charts, historical market data, etc. 

3. Opening your commodity trading accounts

Well, now that you’ve hopefully picked the right broker for you, you will have to open a demat account. You can open a demat account by going to your bank and filling up an application with your broker along with information related to age, income, etc.

The broker analyses the information and approves or rejects the opening of the account based on certain metrics such as risk-appetite, credit rating and experience in trading. This process is important as the broker needs to make sure that the trader is capable of paying his debt in case the market plunges leading to a loss. Once the application is approved, the account is good to go.

4. Making your initial deposit

The trader has to make an initial deposit to begin trading. It usually equates to about 5 to 10% of the contract value. Eg. In the case of gold, the initial margin money is Rs. 3200 which is more or less 10% of one trading unit of gold (10gms).

5. Creating a trading plan

The trading plan must be based on a deep understanding of the market, practicing using market simulations and understanding the trader’s personal style, amount of capital at his disposal and risk appetite.

Trading plans will differ from trader to trader. The broking company provides the trader with fundamental and technical analysis tools and metrics.

An investor must be well-prepared and well-aware. A trader should know about risk management strategies and not over trade in order to prevent loss of money. It takes a lot of hard work, dedication, and discipline to make money off of commodity trading.

Monday, 30 April 2018

3 best link building techniques

Links are very important for business websites. The web pages that have established links get top positions in search results. However, in the eyes of the search engines all links are not equal and this aspect leads to a lot of problems and confusions. Google makes use of links while assessing the authority of the content of the website. In the field of SEO, links are still important for ranking of websites. SEO Philadelphia services give more importance to the quality of the links than the quantity.

More time as well as effort is required to build quality links but the net result will be excellent. The experts of Philadelphia SEO services make use of some of the most efficient methods for link building and they also explain the clients how these link building methods are used and how they will improve SEO. Links of good quality are essential to keep the website healthy. Here are the three best link building techniques that are used by the SEO experts in Philadelphia.

1.Building paid links

It is illegitimate to buy links. However, it is a widely accepted method to pay and get links that are relatively legitimate. It is already proved that buying legitimate links is one among the best methods for link building. However, those who build paid links may see to it that the paid links constitute less than 25% of their link profile. The number of organic links should be more than double the number of paid links. The Philadelphia SEO services generate not more than 20 links in a month.

They recommend that maximum two links can be bought. One should ensure to use different keyword-anchored text. When the same anchor text appears in the reviews it becomes obvious that the links are bought. It is very essential to research the target site thoroughly. When one has paid a site for hosting the content which is sponsored, the same should be disclosed. The paid links should be never hidden from the readers. Official sponsorships, guest content with proper disclosure and paid product reviews are the more legitimate links for buying.

2.Social sharing

Almost all SEO Philadelphia services use social sharing as an effective method for link building. Social listening tools are to be used while building links by sharing content on social media. One should concentrate on those platforms that earn the brand mentions. One has to look for likes, shares and comments which are considered as engagement signs. Then similar topics may be used to engage the audience. When one publishes his content and makes it available, the audience will be promoting the same.

3.Build links with videos

Philadelphia SEO services have proved that link building with video is very effective. One can build links with video by way of sharing and promoting the videos which are self-hosted, on the social media platforms. Another method is to reclaim a few links that were earned by YouTube for the content.

Monday, 15 January 2018

Necessity of Brand (Employee) Advocacy: Marketing to Millennials

Baby Boomers couldn’t trust institutions. The “trust” of Gen Xers was broken at the individual level. But when it comes to Millennials, it all boils down to literally not trusting anything and anyone but a few people they know.
That is why it comes as no big surprise that Millennials are influenced by choices, reviews and others’ views on products and services. To market to millennials, it is better to have the employees themselves talk about the products and services that the company has to offer. Simply put, using employee brand advocacy can do the trick for Millennials.
Through staff advocacy, businesses are leveraging the “selling power” of their most valuable and convenient assets: Millennial employee advocates. It’s a win-win. The youngsters gain personal and professional developments while the business enjoys increased credibility, online visibility, and customer engagement.
What Is Employee Brand Advocacy?
Staff advocacy is a business strategy in which employee advocates promote or share company, brand or product updates online (or social media to be precise). Besides improving company culture online and building brand awareness, employee brand advocacy has been known to have a tremendous impact on revenue.
Talking lead generation, staff advocacy is an “always on” channel that can help you effectively market to Millennials. More specifically, employees advocates can help you get 5 times more web traffic and 25% more leads.
Why is Employee Brand Advocacy Effective when Marketing to Millennials?
(1) Ads Have Little to No Influence on Millennials
Several surveys carried out by Forrester and Nielsen shows that standard television, magazine, and newspapers do not influence Millennials. Get this: under 1% of survey Millennials admitted that an ad influences their brand's trust. To them, ads do not seem authentic. That’s a huge a wake-up call for traditional businesses who depend on ads to drive sales and brand awareness.
(2)  99.99% Millennials are on Social Media
Again, conventional marketing channels do not have much influence on Millennials. However, staff advocacy allows employee advocates to reach Millennials where they spend oodles of their time: social media.
(3) Most Millennials look to Social Media and Friends for Buying Advice
What others are saying about your product or brand is 8-10 more crucial to Millennials that your content or ads. That’s why they get their advice from their peers, social media, and blogs.
(4) They are Brand Loyal
The major reason employee advocacy works for Millennials is that they are eager to participate in creating products and they are loyal to brands they think are trustworthy.

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