Build an equity-heavy portfolio to meet child’s education or marriage goal

Only this will ensure that you are able to meet the escalation in costs over a 15-20 year horizon For Indian parents, providing the best education that they can afford to their children is a very important goal. Getting a girl child married into a good family is another important one. In fact, many parents start saving and investing for these goals right from the day the child is born. However, besides saving adequately, having the right asset allocation and choosing the correct investment instruments is equally important. These are aspects where many parents go wrong. Before you begin to save for the education or marriage portfolio, first buy adequate term insurance for your family. This will ensure that even in the case of an unfortunate event, there will still be money for the children’s education and marriage. The next step is to begin saving any extra money that comes your way. Children get small sums of money on several occasions from relatives and friends. Parents often squander this money because they consider the amounts to be too small to be worth saving. However, if such sums are saved diligently, they can add up to a tidy sum by the time the child is ready to go to college or get married. Next comes the task of constructing the right portfolio for these goals. Since they are very significant goals, parents often err excessively on the side of caution and invest all the money in fixed-income instruments, such as recurring deposits. Actually, you should invest the bulk of the portfolio in equities, for two reasons. One, these goals would...
The Ultimate guide Of Corporate Action – Bonus / Split / Rights Issue

The Ultimate guide Of Corporate Action – Bonus / Split / Rights Issue

Corporate Action – Bonus / Split / Rights Issue Investors frequently come across terms such as bonus, stock splits and right issues. All these are examples of what we call corporate actions. These are simply actions taken by a company once agreed upon by its board of directors andthen authorized by its shareholders.All such actions have announcement date, ex-date, and record date. Let’s have a quick look at what these corporate actions mean which will help us understand their impact on the company’s share prices. Bonus A bonus issue is a stock dividend. A company allots these shares for rewarding its shareholders. Issue dout of the company’s reserves,bonus shares are free and the shareholders receive them against the shares currently held.Allotments are typically made in a fixed ratio e.g., 1:1, 2:1, 3:1 etc. A 2:1 bonus ratio means the existing shareholders (as on the record date) will get 2 additional shares for every 1 share held at zero cost. A shareholder holding 100 shares will get additional 200 shares free, taking his total number of shares held to 300. On bonus issue, the number of shares held will increase but the overall value of investment will remain the same. Hence price per share reduces. Let’s take an illustration Bonus Issue No of shares held before bonus Share price before Bonus issue Value of Investment Number of shares held after Bonus Share price after Bonus issue Value of Investment 1:1 200 50 10,000 400 25.0 10,000 2:1 20 200 4,000 60 66.7 4,000 4:1 1000 20 20,000 5,000 4.0 20,000 Companies generally give away bonus shares to boost participation of retail...
BTST : What you need to be careful of!

BTST : What you need to be careful of!

Fellow Traders BTST refers to Buy Today and Sell Tomorrow But here is something which you need to be careful of while executing this strategy in trading online. As you all know, Cash Delivery Trades are settled on a T+2 basis in India. This means that if you buy delivery on Monday, then you have to pay the exchange on Wednesday and you will get the corresponding delivery on Wednesday after the payment. Similarly, if you sell delivery on Monday, then you have to pay the shares on Wednesday to the exchange and will get the corresponding payment on Wednesday after you have transferred the shares. You need to be careful of short delivery from the exchange while buying delivery today and selling the same delivery tomorrow. Let’s say that you buy 100 shares of Reliance on Monday and sell those same shares on Tuesday. Theoretically, there is no problem with these trades as your shares will be payed out on Wednesday to you from the exchange and you will have to pay in those shares to the exchange on Thursday. Completely Fine. But practically, if the shares you sell on Monday are NOT payed out from the exchange on Wednesday, that is there is a short delivery from the exchange, then you will not be able to pay in those shares on Thursday (for the selling trade on Tuesday). In that case, your delivery pay in will be short to the exchange (for your selling trade) and the corresponding delivery will be auctioned at whatever price the exchange determines. More often than not, an auction results in a...