Author: Chillmaadi Admin

Why you should be careful while buying a bank stock and prefer to buy only sectoral mutual funds.

Yes, I know HDFC is the best stock ever. A perpetual multi-bagger. But check this post.

Banks are a beast. This is one industry that makes money out of money, is highly regulated and yet they break the rules often, and is super complicated. Banks make money by four main ways –
1. Loans
2. Trading of securities
3. Taking deposits
4. Commissions
Almost all the other sources of revenues are some variant of the above.

So why not to buy banking stock?

A lot of people confuse banking stocks with other stocks; PE ratio, customer service quality, management quality, and blah blah. But remember, a bank must be judged only on its balance sheet and never on its income statement. Because reading the balance sheet of a bank is tough, I always ask people not to invest in bank stocks.

Why balance sheet only?

There are several reasons, and the main ones are-
a. Provisions- Bank knows that they won’t get their money back on most of the loans they give away. So they make provisions from their income every year to cover those losses. A bank can “manage provisions “ any year to alter its income statement significantly. This means there can be a huge profit when the bank is F****d

b. HFT- Banks keep Held-For-Trading bonds on their balance sheet. Every time interest rate and inflation moves, the value of this line item changes. Any decrease in this line item will mean the bank will have cut its exposure, and that will significantly affect the bank’s performance

c. Concentration Risk- A bank may be conservative, but its books may be focussed on one particular sector or division. Like HDFC is heavy on retail banking or IDFC on infra sector. This Concentration in exposure is good till the time is good, then the tide turns, the bank is destroyed.

Eventually, ratios like profit ratios, PE, PEG, EBITDA, Margins don’t work. We investors are wired to look for profit and YoY growth. We don’t have understanding or time to analyze the balance sheet plus the terminology is entirely different in banking.

Best is to buy the Banking Index fund or sector fund as a Fund manager will understand these things better. The guru mantra is – If you don’t understand the business, don’t invest in it.

HDFC –

I am very concerned about HDFC. It has continued to rise without a stop in the last 10yrs. It may be the first instance in the world where an FI has not been affected by industry-wise rout, mostly because banks are linked to each other and when one goes down, it takes the other one with it. Betting against history is too big a risk. Either HDFC is a black swan event or iska time bhi aayega!

Don’t ever think that retail banking moves the needle in the banking industry. Very few banks have a retail portfolio that can move the needle. HDFC and ICICI are two major ones. We know what happened to ICICI. The Subprime crisis was a typical case of a bank going overboard on one asset class. Banks were not foolish to give loans to anyone. They gave subprime loans so that they can make Mortgage-Back-Securities (MBS) and sell it off. The expectations were MBS gains will offset defaults in subprime lending. Unfortunately, they ended up multiplying their exposure to MBS without understating the base of the security, so the income statement kept looking wonderful while the balance sheet was destroyed. And then one day the music stopped

Stock is the share of ownership of to company. When you buy stocks, you became a co-owner of the company you purchased. Stocks are being bought and sold in a stock exchange or stock market wherein there you will buy and sell shares. You should have a stockbroker prior you can buy or sell stocks in a stock market. There you will enroll an online stock trading account so that you can buy or sell stocks personally.

I encountered the word “stock” six years ago when I worked in a manufacturing firm in the Philippines. It was provided to me by the company because it is one of the privileges of all the workers. The number of stocks disposed to meet depends on the job function. That stock aid is without a doubt a big help for my loved ones and me in terms of our financial demands in those time.

Investing in stock is a good investment you can ever make if you only learn when and how to invest in stocks. You should also have knowledge, discipline, and perseverance in managing your portfolio in order to have an excellent profit from stocks. Remember that you can only lose money in stocks in two actions: when you buy and sell it.

In addition, one good thing about investing in stock is that it will give you higher earnings in the long term than other investment methods available presently. Long term investing in stocks means you will buy shares regularly to selected stocks greater than five years.

In the Philippines, blue chips are those stocks comprised in PSE Composite Index (PSEi). According to on the fac tots from PSE and BSP, the shares invested in blue chips will give you a 14% average annual total return according to on the past behavior of Philippine stock market from January 1989 to August 2009.

Moreover, for the last 20 years, investing in stocks gives you higher average annual total profit compared to Treasury bills (T-Bills) and savings account with 11.0% and 2.3% average annual total returns, respectively.

Therefore, investing in stocks, particularly blue-chip stocks, is the best technique to earn a more significant profit in stocks.

Many people are just plain fearful of investing their hard-earned money in the Forex market. Most of these fears are the result of hearing inaccurate or incomplete information. In other words, prevalent myths about the currency markets keep many people from investing. Don’t fall into this trap. Read on about several myths being dispelled.

You, Will, Get Rich Quick In The Forex Market

Far too many people fall into the trap of thinking they can take their money, invest it into a few prime forex pairs, and then sit back and watch the wealth roll in. While this may happen occasionally, it is the exception to the rule.

Very few people ever build wealth by investing in the forex market. And becoming rich is not necessarily the best reason for trading currency. Instead, considering your investment as a nest egg or retirement funding is a much better way to think about the forex market.

Knowledge Equals Success in the Forex Market

While it is commendable to want to increase your understanding of the forex market, it does not guarantee success. Too many investors feel invincible after taking a workshop and delve into trading currency pairs too quickly. The truth is, being informed of the risks does not reduce them.

Listen to the Forex Experts

It is not hard to find people who claim to be experts in trading on the forex market. It is hard, however, to determine what parts of their advice might work best for your own needs. These “experts” do not know everything, and at times, they can be downright wrong. Know when to follow a good tip and when to step back and listen to your intuition.

A Forex Market “Hobby” Can Make You Successful

Treating your investments as a weekend hobby will never make you wealthy. If it were that easy, more of us would be laughing all the way to the bank. There is no easy way to make a profit through forex market investment; only time and skill will produce real wealth.

Keep these common myths in mind as you begin investing. Don’t expect positive results overnight. Do your homework and take others’ advice with a grain of salt. As long as you are aware of the realities of investing, you need not fear the Forex Market myths.

Exchange-Traded Funds allow investors to trade index portfolios just as they do shares of stock. Exchange-Traded Funds can be sold throughout the day, unlike open-ended mutual funds which can be traded only at the end of the day when net asset value is calculated. Moreover, the Exchange Traded Funds can be sold short or purchased on margin.

Exchange-Traded Funds also offer potential tax advantage over mutual funds. The capital gains tax that results when the fund sells securities to meet the redemptions made by investors are passed through to the remaining investors of the mutual fund. In the case of Exchange Traded Funds, investors sell their shares to other investors. Therefore the fund need not sell securities. Hence there will be no capital gains tax incurred by the fund.

Large investors can redeem Exchange Traded Funds for a portfolio of stocks comprising the index or exchange a portfolio of stocks for shares in the corresponding Exchange Traded Funds. This ensures that the price of an Exchange Traded fund will be close to the net asset value of that portfolio. Any significant discrepancy would offer arbitrage opportunities for these large traders, which would quickly eliminate the disparity.

Exchange-Traded Funds are also cheaper than mutual funds. Investors who buy Exchange Traded Funds do so through brokers rather than buying directly from the fund. Therefore, the fund saves the cost of marketing itself directly to small investors. This reduction in expenses results in lower management fees.

There are some disadvantages to Exchange Traded Funds, however.

1. Because they trade as securities, there is the possibility that their prices can depart by small amounts from net asset value. As noted, this discrepancy cannot be too large without giving rise to arbitrage opportunities for large traders, but even minor differences can easily swamp the cost advantage of Exchange Traded Funds over mutual funds.
2. While mutual funds can be bought at no expense from no-load funds, Exchange Traded Funds must be purchased from brokers for a fee.

Australian investors are incredibly fortunate to have a wide variety of options available in terms of investment strategies. However, the questions often arise, what to invest in? Most financial advisors and experts agree that holding a variety of investments is a sage idea. However, in today’s economic climate knowing which investments are sound ideas and which might be best left alone can be confusing. The following article describes several of the best investments ideas in Australia for 2019 through 2020 and the coming years.

Gold

Investments in gold are much safer than other investment options available today. Whether you choose to take physical possession of gold in the form of coins or bullion or you decide to use any of the several online gold purchasing options to trade gold on paper, it is essential to research gold purchasing in-depth before investing. Gold investment can be an excellent method of diversifying your portfolio. Traditionally gold is negatively correlated to stocks and can make a reliable hedge against stocks in your portfolio.

Commodities

By and large, commodities have been one of the best investments of 2019. While the commodity market involves a great deal of volatility, the potential for high returns attracts many investors. In recent years commodities prices have outperformed stocks and bonds. One reason is that the demand for commodities from developing countries is increasing Commodities also move up when stocks go down. Commodities are real assets, unlike stocks and bonds, and they react differently to changing economic conditions. Again adding commodities to your portfolio is a very sound method of diversifying your portfolio.

Mutual Funds

Mutual funds are another excellent investment option in 2019 and 2020. Investing in mutual funds can help you avoid risks associated with direct stock trading. Most mutual fund companies provide the opportunity for investors to invest in companies with substantial capital and earnings in addition to small companies experiencing high returns. Fund managers closely watch global markets and trends and adjust their strategies based on changes in the market. The result is that many mutual find investors realize a steady return on investment as their portfolio

Property Investment

Property and real estate are still considered one of the best investment option in Australia. Both commercials, residential and rental features as well as property situated in popular tourism areas all provide a healthy return on investment for those in the market today. Both capital growth from real estate investment and recurring income from rentals make property investment an attractive proposition to many Australians today and one of the most lucrative asset class investments available today.

While these investments are predicted to provide stable returns in the coming years, they are by no means the only forms of investment that you should consider. Consult with a professional financial or investment adviser to help diversify and build your portfolio and as always steer clear of investment strategies that sound too good to be true.

Every person faces a time in his life in which quick cash is needed to handle the financial problem. Instant money for the financial crisis can be required at any time and usually not under the best circumstances that may also be beyond our control. This may include medical emergencies, house repairs, and overdue bills or maybe even job loss or some other reason. However, there are cases in life when things are simply out of your control and you want to manage. In such cases, you will require some quick extra cash help. There is a way to gain access to quick money with a secured loan best known as “Car Title Loans” that will help you out until you are able to get back on your feet again. If you own a car, you can easily pawn your car and get the money you need. You can get these loans with competitive interest rates and convenient payment options.

But now you don’t have to worry about all these problems. You can get rid of all these problems by getting a loan against your car and which will give you the money on the same day. These loans are called “car title loans”

What is a car title loan?

A Car Title Loan is a type of a secured loan where the borrower can use their vehicle title as collateral to borrow funds. To get these quick cash loans, you must submit documents of your vehicle. The value of your loan amount will depend on your vehicle’s equity. Once your loan is paid back, the lien is removed and the car title is returned. If the borrower fails on their payments then the lender has the right to sell the vehicle to get their money back. You can easily borrow money based on the market value and condition of your vehicle. Our loan terms are long and flexible which allow you to pay off your loan over time.

How do Car Title Loans work?

To borrow a loan against your vehicle, you need to have enough equity in your car to fund a loan. The amount you can borrow is based on the value of your car or the equity you have in the car. The value of your vehicle will measure your loan amount.

Get Rid of Poor Finance

Car Title Loans are loans that can be taken against your vehicle. If you do, and you make all payments, it will reflect positively on your credit score by making on-time payments on these loans. You can also improve your poor finances because these loans usually have low monthly payments and the lowest interest rates as compared to other loans.

The benefits associated with availing car title loans:

• No Credit Checks or Job Requirements

You do not require good credit or employment history. If you do not have perfect credit, you can still apply for a loan.

• Low Monthly Payments

Car title loans offer low monthly payment plans for collateral loans that are affordable and manageable.

• Reasonable Interest Rates

Get the reasonable interest rates in the industry with the zero penalties for paying off your loan ahead of schedule.

• Flexible Repayment plans

You can choose a convenient monthly repayment plan. You may deposit payments at any time in varying amounts because of the flexible repayment plan

• Quick and Easy process

The loan procedure is easy and fast. For a car title loan, all you require is a fully owned vehicle.

• Cash on the same day

After getting approval, get your cash on the same day and drive off with your vehicle.

Requirements to get a car title loan:

• You must own a vehicle not older than 10 years.
• Your vehicle must be lien-free.
• You should have vehicle registration and insurance of your vehicle in your name.
• A valid Canadian driver’s license.
• Proof of permanent residency.
• Duplicate keys to your car.

Below listed are some of the best companies which provide car title loans and offer the best deal on it:

1. GetLoanApproved.com
2. InstantLoansCanada
3. SnapCarCash

You can choose any one of the above according to your needs and requirements.

I was listening to the Dave Ramsey show during work one afternoon as I always did, and he offered a caller a peculiar piece of advice that stuck with me. The caller had all sorts of debt and had nothing to show for himself, and Dave asked the caller “If you were hired to handle money for a business called You, Inc. could you do it?” The caller responded that he could. Dave then asked the caller if he had been running a business’s finances in the manner that he ran his personal life, would he get fired? Most probably, yes.

Here are the facts. Most people do not do smart things with money because they make emotional decisions with their money. When it is someone else’s money, they do not make emotional decisions because it’s not their money. It’s much easier to be smart with someone else’s money than our own. To be successful with money, you have to break the tie between your emotions and your purchasing habits. The only way to do this is to run your financial life as if you were running a business called Me, Inc.

If you were to run a business, would you do it with just a checkbook and make a financial decision if it sounded like a pretty good idea? Of course not, you would want to maximize your return on investment and keep a close eye on your expenses. You have to be able to track where your money is going, not just for one month, do it for every month. Use a QuickBooks, Microsoft Money, or a fancy Excel Spreadsheet.

You would never run a business without a financial plan and an annual budget for the business, and you should never run your personal life without those things either. You need to have a list of financial goals that you want to achieve. You can’t just say that “I want to save for retirement.” You have to specify how much you want to save for retirement, where that money is coming from, where it’s going to be invested, and when it’s going to be invested. Use specific goals. Doing a budget every single month is also a must. If you’ve never done a budget before, there are plenty of great free budget forms online.

Most people fail to do research and planning with money, and in the end, it just slips away from them. You have to be intentional about your finances. Research as to what you should be doing with your money, have a specific financial plan, do a budget, and don’t let your emotions get the best of you when it comes to making purchases!

To be successful financially, having a budget, and sticking to it is a must! A budget will tell you where all your money is going, and allow you to show your money where you want it to go rather than just allowing it to slip away from you! It will help you make priorities and reach your financial goals. This works great if you know what your income will be every month, however not all of us quite know what our income will be every month because part or all of our income is based on commission and other factors which cause our salary to change from month to month, so it can be quite difficult to budget an unknown amount of money, but it can be done, and here’s how you do it!

The first thing that you need to do when budgeting on an irregular income, is to list all of the things that you would like to do with the money in a month. This will include everything, paying for groceries, buying gasoline, paying the mortgage, your insurance bill, putting money away for retirement, and you name it. This can even include outlandish things that you know you’ll never get to, such as buying a new car.

The second thing you need to do is prioritize. Write a one besides the most important thing, which is buying groceries. Write a two next to the second most important thing, which is paying utilities. Write a three next to the third most important thing, which is paying rent. Four is groceries, and five is some necessary clothing. After those items, keep numbering down from most important to least important. Now when you get money, you can start by spending money for the items on the top and go from the most important to least necessary. That way, all of the important stuff will happen first, and the less essential items are secondary.

If you have a very irregular income, such as if you work in real estate solely based on commissions, you can do something else, you could make nothing one month, $20,000 the next month, and then nothing for the next two months! It’s not an option to quit eating and driving for a month, so we have to do something different here. Figure out what your average income a month is, and when you make any more than that a month, put it in a separate checking account, and keep it for when you don’t make as much money in another month. When you have a month which is under your average, take the difference from the average in your other checking account. This is your “hills and valleys” fund, which helps flatten out your income so that you can more predictably spend money every month.

Budgeting on an irregular income can be more complicated than on a fixed income, but it can be done, and it is worth it!