Risk and Investment Bussiness
Risk and Investment
1.you have been saying throughput
That you do not understand why any Investor goes to any bank for any investment; when better investment avenues are available with comparable risks. This statement has become more. Meaningful after Fd rates have been reducing over the years
|Risk and Investment Bussiness|
2. One of the other options available were Co-Fd, until came a bolt from the blue.
In terms of the new provisions of the Companies Act2013, all companies are not allowed to borrow funds in excess of its paid-up capital and free reserves. Any excess borrowing had to be returned to the borrower's by 31.03.2015.most important, as per the companies (Acceptance of deposits) Rule 3A,1975, a certain sum has to be kept aside in the form of bank fd s for the purpose of repayment of the outstanding Deposits. Strangely, as per the Rules, the company cannot use these funds to make the payment as required by this diktat. There were many companies that used to borrow funds from retail investors through their FDS, after exhausting their borrowing limits from the banks, by offering higher interest rates. This leveraging enabled them to pocket profits When income from their activities was higher than the interest payable on their FD Smany companies found that such borrowing was locked in their work-in-progress but since the company was required to stop accepting deposits, it was difficult for them to clear off the excess within one year from 1.4.2014 or From the date on which such payments were due, whichever is earlier. Several companies which were earning profits through such leveraging .have been facing liquidation. Therefore this avenue Is a no-no for retail investors like me
3.the other options are a direct investment in equities.
Well, you have been repeatedly stating that at any given time the current price of any given scrip is placed at a certain point at which when someone buys, only one of them depending upon his luck, gains and the other loses an equal amount. As a matter of fact, The entire community of traders taken together will lose by way of brokerages,sTT, KKC tax on brokerages, SEBI TuRnover Tax Stamp Duty, etc. Therefore, no direct investment For me
4. That leaves only one avenue ...
mutual Funds. But again there, I have been repeatedly told that these are subject to market risks and I am supposed to read the offer documents carefully. Well, I do not have time to read over hundreds of offer documents, carefully or otherwise Consequently, you will realize that l have no option left with me...no to Banks, no-finds no direct investment in shares and no mfs So then what do I do? like l said, the only safe avenue seems to be banks but their Returns have dropped to even below the inflation rate, rendering me earning negative real returns. please HELP This was our reaction towards his confusion ...
We find that many clients and readers are willing to invest directly in shares -perhaps since there is no warning against such investment it takes us quite some time to sink into them the fact that MFs invest In shares on their behalf. Since such investments made by the MFS are backed by a fair amount of -line research related to fundamental governance standard, future plans growth prospects, the rise, and fall in local and global demand for their products and services, sectoral government policies, etc.
The risk is Very much lower than a direct investment in the shares .yes there is a fee charged by the MFS and monitored by SEBI for such services .if you have the time ,energy and capacity of taking such decisions yourself, go direct .in any case, there is a risk Let us have a good and clear risk at this market -related risk
There is an omnipotent risk involved in any action you take and even when you do not take it. For instance, when you are crossing a road, a car may hit you .if you are sitting under a fan, it may fall on you. Does This mean that you should never cross a road or sit under a fan? The answer lies in the extent of the risk .our observation that when you buy a script, someone else is selling it and only one of you will be proved right or wrong depending upon how the market moves is a universal truth This is akin to betting on tossing a coin. Betting on the toss of a coin does not involve any related expense
But market transaction attracts some expenses. Agreed, that you become a gambler when your time horizon is just one day -this is akin to day trading. day traders have to settle their buy-sell transaction within one day with sell- buy Transaction .obviusly, the risk is less if you have a time horizon of a long period Sensex was launched on 1.4.79 When it's value was 100 31.05.2019 almost 40 years later, its value was almost 40 years later, its value was 39,914. This is a growth of 16.07%p. The
actual figures are much higher when you add to it the dividends you have received During this period .in other words, long-term investment in the market is not a gambler, it is an investment, creating wealth Finally, the most important question... should one spread his investment amongst deft-based and equity-based schemes of MFs?The Idea is good but avoids deft-based if you already have enough investment in such schemes such as EPS, PPF, NSS, banks, etc
Finally, and most importantly while you have to take I. Perspective the statutory requirements of SEBI mandating MFs to declare that investment are subjected where AMFi relays the message ...yeh Sahi Hai