Adolf Merckle was one of Germany’s richest business man. He developed his grandfather’s chemical wholesale company into Germany’s largest pharmaceutical wholesaler, Phoenix Pharmahandel . He was educated as a lawyer,  but spent most of his time investing. He lived in Germany with his wife and four children.
In 2006, he was the world’s 44th richest man. Merckle’s group of companies employed 100,000 workers and had an annual turnover of 30 billion euros (around 39.9 billion U.S. dollars).

All this turned upside down after his business empire was plunged into difficulties due to the financial crisis. Merckle hit the headlines in 2008 when he suffered massive losses on investments he had made on movements of the share price in Volkswagen, Europe’s largest car company.
On Jan 06,2009 German news agency DPA reported that –  Merckle, 74, threw himself under a train at his hometown of Blaubeuren, a small town near southern Germany city of Ulm, and a railway worker found his body by the side of the track.
Before his death, he had been negotiating with banks for a bridging loan of 400 million euros (around 547 million U.S. dollars) to save his empire, which includes the pharmaceutical company ratiopharm and drugs maker Phoenix. That figure shows the depth of financial crisis he had.
The picture above shows the place where his body was found. What a tragic end to the life of one of the world’s richest man.


…MERCKLE ISN’T ALONE

Here’s more -
In Jan 2009 , The national suicide preventing hotline in US reports that, calls have soared by as much as 60 per cent over the past year – many of the  calls were from people who have lost their home, or their job, or who still have a job but can’t meet the cost of living.
A 45-year-old businessman in Los Angeles murdered five members of his family before turning the gun on himself, saying in a suicide note that he had done so because of his troubling financial situation.
Karthik Rajaram, 45, who had made almost £900,000 on the London stock market, shot his wife, three children and mother-in-law in the head before shooting himself at the family home near Los Angeles.He did this after seeing his family’s fortune wiped out by the stock market collapse.
A 90-year-old Ohio widow shoots herself in the chest as authorities arrive to evict her from the modest house she called home for 38 years.
In Massachusetts, a housewife who had hidden her family’s mounting financial crisis from her husband sends a note to the mortgage company warning: “By the time you foreclose on my house, I’ll be dead. Then, Carlene Balderrama,  shot herself to death, leaving an insurance policy and the suicide note on a table.


WE INDIANS AREN’T BEHIND..


Thousands commit suicide unable to bear the pressure and crisis, that mismanaged investments create.
Internet and newspapers report about people falling prey to financial frauds like ‘get-rich-quick’ schemes and money chains, eventually losing every penny they had earned.
Did you know that a small state like Kerala spends more than Rs 40 crores a day on lottery tickets alone?According to Tehelka.com’s reporter Shantanu Guha Ray , Illegal lottery tickets account for atleast 60 per cent —Roughly Rs 7,200 crore — of the Rs 13,000 crore gambled every year on lottery tickets in India. All sections of the society are involved in this. I know doctors, HR consultants, engineers, stock market investors, Government officials,housewives and students who regularly put money in lottery tickets. Anyway, lottery tickets ( if you’re lucky to get an original one ) at-least gives you a chance to win.
There is another section of people who gets involved in money chains – where wealth gained by participants entering the scheme earlier, is the wealth actually lost by those coming later. In-spite of hearing about many schemes in which people have lost their wealth, India continues to be a happy hunting ground for such fraudulent operators. The root cause of all this can be brought under one head-Greed for money and  financial illiteracy.
This is exactly the reason why we will first discuss about the basic principles of money management . People spend lakhs to get a  doctor’s degree or a MBA from the most prestigious of  institutes. They spend a lot to pursue their hobbies such as music and salsa.  But when it comes to managing their money , they hardly make any effort to learn  at-least the basics , forget about gaining specialized knowledge !
The next chapter will take you through the basic principles of money management. These principles are important to everyone out there– housewives, businessmen,musicians, students, professionals , priests , social workers.. anyone who deals with money directly or indirectly.

Millions of people fall prey to financial frauds;millions suffer from financial imbalance despite earning good money;even billioners have committed suicide due to financial problems- The root cause of all this is failure in handling their money in an informed manner. People from all walks of life face this problem of financial indiscipline.In the following articles,we detail the basics one must follow while handling their money in order to stay safe and have peace of mind. Some are concepts, while others are practical tips.

• The story of Adolf Merckle

• Principle 1.Finding money !

• Principle 2.Time value of money

• Principle 3. Compounding

• Principle 4. Interest rates.

• Principle 5: Cash reserves and idle cash.

• Principle 6: Never stretch beyond your limits.

• Principle 7. Don’t try ‘Get rich quick’ schemes.

• Principle 8. Inflation

• Principle 9. You are not safe with fixed deposits alone.

• Principle 10. Have a Monthly budget

• Principle 11. Utilize credit cards wisely.

• Principle 12. Lending money to friends and relatives.

• Principle 13. Signing surety for friends.

• Principle 14: Multiple streams of income.

• Principle 15. Do not spend recklessly

• Principle 16. Avoid financial litigations

• Principle 17. Pay your taxes.

• Principle 18. Safeguard your documents.

• Principle 19. Insurance is a must.

• Principle 20. Know your net worth

• Principle 21. Think of retirement when you’re young!

• Principle 22. Diversify your investments.

• Principle 23. Valuation is the key to right investments.

• Principle 24. Gold – A must in your portfolio

Trying to win in the stock market without a trading plan is like trying to build a house without blueprints – costly mistakes are inevitable.


1 – Your strategy to enter and exit trades

There is no denying the fact that earning from stock market is an art, not just speculation, forecasting and analysis. Whether you are a retail investor or a big fund, one question you should ask yourself is “what is your trading cost”?. How much part of your earning are you passing on to your broker in the form of commissions because it really affects your “profit margin”.

If you are already familiar with stock market, there is a small homework for you. Check out the contract note you have received from your stock broker. Or else, if you plan to enter into stock markets and seeking for a broker, exercise your mind a little to know the net brokerage being charged by your broker and study the various commission components. The reason is simple; the amount you pay to your broker may make difference your winning or loosing in the trade. Confused??…It is a common mistake that novice traders execute trade assuming they are earning atleast meagre profit margin, but if all the components including brokerage, taxes, and stamp duty are accounted for, the profit margin comes out to be negative. Isn’t it strange? Yes, so we are here to understand the computation of the net trading amount you pay to your broker.

RATES OF BROKERAGE

There are many brokers charging different rates of brokerage. For example, ICICI Direct charging @.75% and HDFC charging @ .5% of trading amount. However the net trading cost is computed as below:
Trading cost = Brokerage + STT + Stamp duty + other charges
So in addition to brokerage, there are below costs accounted in net amount:

1. STT – Sale transaction tax is imposed on the sale/purchase of securities by retail/institutional investors and is charged on total turnover (cost of each share * no. of shares). For delivery of shares it is charged at .125%. For intraday selling of shares, it is charged @.025%. For buying, there is no tax for intra day trades. Currently government is under consideration to remove/reduce STT because since it was introduced in 2004, the cost of transaction of trades has drastically increased. This leads to loss in business as Indian markets are becoming less competitive compared to other emerging markets.

2. Stamp duty: Stamp duty is also charged on total turnover. For delivery of shares it is charged at .01% and for intra day it is charged at .002%.

3. Other charges: it includes below component:

a. Transaction charges: For trading of shares at NSE, it is charged @ 0.0035% while for BSE, it is charged @ 0.0034%.
b. SEBI turnover charges: For equity transaction, this remains NIL but for derivative transactions, it is charged @ 0.0002% of total turnover.
c. Service Tax: Service tax is charged on all the components

So net brokerage will be calculated as below:
Net brokerage = Brokerage + STT + Stamp duty + Other charges
So next time you trade, try to find out how much earning have you shared with your broker. Happy trading!!

I love my grandfather’s stories. We won't get into the ones that my grandma loves to scoff at. Like his brave encounters with tigers. Or the one about the milk that needed boiling. 
But you must listen to this one. My dear grandpa used to buy 10 litre of milk for 50 paise and 40kg of rice for one rupee a good sixty years ago!  

Don't believe me? Then sample this. In those days, there were coins of one paise and even less! Incredible, eh? But I have seen those with my own eyes in my father's collection of old coins.
What’s more, I also remember seeing and transacting in five paise and ten paise coins in my childhood. Alas! My son won't get to see those currencies. Except in a collection of old coins perhaps. 
Wondering why I am rambling about one paise coins and getting into the generation business? 
This is not a “Kal Aaj aur Kal” story. Or maybe it is. 
If you have an eye for detail you will have noticed the common thread that runs through these anecdotes. The point that I have been trying to make is how expensive things have become over the years. 
My grandfather used to buy 40kg of rice for one rupee and today a kilo of rice costs Rs30! Ten litre of milk cost 50 paise in his days but today you need at least Rs180 to purchase the same amount. 
See what the passage of time has done. It has eroded the value of money. Having Rs800 today is equivalent to having one rupee fifty years ago. 
Economists call it a decline in the purchasing power of money. The purchasing power of money is the amount of merchandise that a unit of money (say a rupee) can buy. 
And the term “inflation” has its roots right there. When the purchasing power of money dwindles with time, the phenomenon is called “inflation”. This is manifested in a general rise in prices of goods and services.
But why do prices rise? Let us understand why this happens with the help of a simple example. Onions are an integral part of any food preparation in our country. Can you think of having a meal without having a dish that contains onion? Why, onion and chapattis constitute the staple diet for many people!
Let us assume the onion crop fails in a particular year, for whatever reason.
What happens then? The supply of onions in the market drops. However, people still need onions. Inevitably, the price of onion shoots up as people scramble to buy the limited supply of onions. 
Remember November of 1998? Such a situation had actually happened in several parts of the country.  It had nearly brought down the government. The price of onions had risen to as high as Rs40 per kg or more. 
But how does a simple thing like a one-off drop in onion supply causes prices to rise across the board in a sustained fashion? 
In the winter of 1998, the dabbawallas and restaurants were forced to hike their prices in response to the rising prices of onions. Even your local barber and maidservant demanded a higher pay to meet their higher daily expenses. All thanks to the (mighty?) onion. This set off a chain reaction. 
How?
Think again. It is not only onions that we consume in the course of a day. There is a whole basket of products and services that we draw on, on a day-to-day basis.
Hence, some of you decide to use more of garlic to make up for the lack of onion. The demand for garlic goes up. A few who eat raw onions decide to substitute it with more of tomato and cucumber. The local sabjiwala senses this shift in consumption happening. The smart businessman that he is, he hikes prices of all vegetables. He starts earning more money. Now his children demand that he should get them a new 21" TV with 100 channels.
And with all sabjiwalas rushing to the nearest TV shop, the sales for TV picks up. The TV company makes more money. Noticing the ballooning profits, the employees of the company demand a hike in their salaries. You are lucky to be working for one such profit-making company. You have more money in your pocket. And you have always wanted to buy a car...
We could go on and on, but you get the idea, don't you? The price rise is here to stay. We just need to understand the concept of inflation. After all, the main objective is to figure out how inflation affects the three friends, saver, borrower and investor.
We know how important it is for all of us to save. We all need to save for the day when we will not be earning but will still need to spend money on food, clothing and the occasional movie. 
What would have happened if my grandfather had saved a rupee fifty years back to buy rice now? Oh boy! It would have been a total rip-off. He would receive a few grains of rice in exchange for that amount.
In short, inflation is one BIG enemy of savers.
So, why should we save?
A good and important question. But we will come back to it later. We need to find out how this monster they call inflation affects our two other friends.
We know that borrowing is the opposite of saving. So if the saver is losing, the borrower must be winning.
Yes, of course. After all, the borrower borrows to spend today and repay later. Imagine if my grandfather had saved a rupee fifty years ago and my grandfather's neighbour had borrowed it from him. The neighbour could have bought 40kg of rice then and have had a feast. In case he repaid the money to my grandfather now, all that my grandfather would have been able to buy with the rupee would be a few grains of rice!
To top it all, the borrower spends NOW and adds to the inflation effect, compounding the misery of our saver.

What about our last friend, investor, the slightly difficult one to understand? 

Imagine once again (just one last time, we promise) that my grandfather's friend had invested a rupee in a paddy field. That is imagine if he had bought a paddy field with a rupee. The smart guy would have been raking in money today, selling a kg of rice at Rs30! 
Our investor friend seems a lot better off than even the borrower who benefits from inflation.
No wonder investing is always considered as a good thing to do to beat inflation. It is what textbooks call “hedging inflation”.
Inflation is constantly increasing the cost of goods and services and eating into the value of your income and wealth. You need to save money and invest it well so that the value of every rupee is augmented. There are several investment options available including equities, mutual funds, bonds, deposits, real estate and gold to name a few.

Investors buy stocks to acquire a partial ownership in a particular company and buy bonds to make a loan to corporations or governments. While stockholders benefit from the company profits, the bondholders receive returns. A fixed rated return is a percentage of the bond’s original offering price. The return is called a “coupon rate.” The principal amount of bonds is returned during the maturity date. Because they can be issued for any period of time, there are some bonds which take about 30 years to mature.

The risk of not being paid back with the principal amount is always carried by bonds. Although companies with higher credit worthiness are more likely to be safe investments, their coupon rates will be lower than those companies with lower credit ratings. Firms such as Standard and Poor and Moody’s Investor Service provide such credit ratings that range from a high AAA to a low D.
The safest type of bonds is the US Government bonds. Blue chip corporations, which are companies with established performance records for over several decades, are also considered to be safe bond investments. Although smaller corporations carry greater risks of defaulting bonds, bondholders of smaller corporations are considered to be preferential creditors because they will be compensated before stockholders in case the business goes bankrupt.
Bonds, just like stocks, can be bought and sold on the open market. The fluctuation of their values is based on the level of interest rates in the general economy. For example, an investor who holds a $1000 bond that pays 5% per year in interest is capable of selling the bond at a price that is higher than the face value as long as the interest rates are below 5%. If the interest rates rise above 5%, the bond can still be sold but it is usually at a price that is less than the face value. Because the potential buyers are capable of getting a higher interest rate than what the bond pays, the seller has to sell at a lower cost in order to offset the difference of the bond.
Most bonds are traded in the Over-the-Counter (OTC) Market that is composed of banks and security firms. Corporate bonds which are listed on stock exchanges may be bought through stock brokers. New bond issues are usually sold in $5000 increments while initial bond issues are quoted in $100 increments. A bond listed at 96 indicates a selling of $96 per $100 face value.

Stocks or Bonds

The risks and the potentials have to be weighed when deciding to invest either in stocks or bonds. Stocks carry a greater potential to increase in value but they also hold a greater vulnerability to market fluctuations. Investment grade bonds, which are rated BBB or better, carry slightly lower risks but offer relatively low yields.
A lot of investors agree that bonds offer greater security and return for short-term situations but when a time span over ten years is considered, the situation changes. The stock market has consistently outperformed bond investments by a large factor since companies tend to increase in value and any short-term fluctuations in the stock market are smoothed out over time.
Because they provide a stable investment that helps cushion against stock market fluctuations, bonds still have their place in most investor portfolios. A mixture of investments that includes stocks from different industries, bonds from various corporations, and other fixed-income investments is one strategic way of providing maximum growth while securing investment funds for the future.

Firstly, decide if you are a trader or an investor. 
 
If you decide to become a trader – to win – you must have a survival strategy…

You need to study the market yourself – not just rely on ‘reading the news’, or listening to others advice and tips.

Take advantage of technology – computers, software, electronic data – all at your finger tips. Seek out charting software and appropriate internet sites – they are plentiful.


Ensure that you ‘manage’ your money and keep some in reserve.

Have the ability to quickly identify failures as well as successes.

Stock Market trading appeals to those who are a little adventurous – rather than just placing their capital into bricks and mortar.


But – be mindful that portfolio values are less stable than real estate as they are continually moving up and down.

However – investing in the Stock Market means that you are putting your money to work – be aware, and enjoy the gains !

Online Stock Trading is a recent way of buying and selling stocks. Now you can buy and sell any stock over the Internet for a low price and you don’t need to call up a broker.
 

Indian indices:

Welcome to the ‘Weekly Market Wrap’ for July 11, 2014 where key benchmark indices slumped last week as investors booked profit after a strong rally in the past few months. An upward momentum in Indian shares kicked off after BJP led NDA government won a thumping victory in general election in May this year. Investors build up position in the equity market ahead of the Union Budget 2014-15 on expectations of far-reaching reforms.
Modi government's maiden Budget on Thursday, 10 July 2014, fell short of the hype. It lacked any major policy reforms and roadmap for reduction of subsidies. But Narendra Modi's administration earmarked substantial sums for new infrastructure, which should revitalise growth. Finance Minster Arun Jaitley made a number of announcements in Budget such as a proposal to increase in foreign direct investment in insurance and defence manufacturing, a sharp increase in plan expenditure, measures to boost long-term financing for infrastructure by banks and provided clarity on taxation with respect to foreign portfolio investors. But, market expectations that the Finance Minster would scrap the law on retrospective taxation were not met. Government spending on plan expenditure was substantially increased to support growth.
The S&P BSE Mid-Cap index fell 670.51 points or 7.02% to 8,875.24 and the S&P BSE Small-Cap index fell 819.92 points or 7.80% to 9,688.11. Both these indices underperformed the Sensex.
The S&P BSE Sensex fell 937.71 points or 3.61% to 25,024.35. The 50-unit CNX Nifty fell 292 points or 3.77% to 7,459.60.

Weekly market trend from July 07 – July 11:

July 07- India's NSE index rose on Monday to a third consecutive record high, while the benchmark BSE index surpassed 26,000 points, riding on gains in technology stocks ahead of Infosys Ltd's results and hopes of a fiscally prudent budget. The BSE Sensex rose 0.53% and NSE Nifty gained 0.46% for the day. The Sensex closed at 26100.08, up by 138.02 points, while the Nifty rose 35.55 points to close at 7787.15
July 08- Indian shares fell more than 2 percent on Tuesday, marking their biggest single-day fall in over 10 months as a lower-than-expected railway budget outlay sparked worries about subdued government expenditure in the federal budget due on Thursday. The BSE Sensex fell 1.98% and NSE Nifty slipped 2.11% for the day. The Sensex closed at 25582.11, down by 517.97 points, while the Nifty fell 163.95 points to close at 7623.20
July 09- India's NSE index marked a 1-1/2 week closing low on Wednesday, continuing to retreat from the record high hit in the previous session, as investors pared positions in blue-chips such as Tata Motors ahead of the federal budget. The BSE Sensex fell 0.54% and NSE Nifty slipped 0.50% for the day. The Sensex closed at 25444.81, down by 137.30 points, while the Nifty fell 38.20 points to close at 7585.00
July 10- Indian shares edged lower in a volatile session on Thursday as Finance Minister Arun Jaitley's pledge to narrow the fiscal deficit and open up sectors such as insurance and defence were offset by disappointment over the lack of major reforms. The BSE Sensex fell 0.28% and NSE Nifty slipped 0.23% for the day. The Sensex closed at 25372.75, down by 72.06 points, while the Nifty fell 17.25 points to close at 7567.75
July 11- India's NSE index fell 1.4% on Friday to post its biggest weekly loss since March 2013 as blue chips were hit by a range of factors including profit-taking and disappointment over the budget's lack of specifics. The Sensex closed at 25024.35, down by 348.40 points, while the Nifty fell 108.15 points to close at 7459.60

Global indices:

Top Losers: CAC40 down 3.75%, DAX100 fell 3.50% and FTSE100 slipped 2.82%.

Sectoral and stock screening:

Top Gainers: S&P BSE FMCG up 1.47% and S&P BSE IT up 0.73%
Top Losers: S&P BSE Power down 10.16%, S&P BSE CG slipped 9.98% and S&P BSE Realty fell 9.18%
Looking at the 'A' group stocks, the top three gainers of the week were – Crisil up 11.28%, IDFC up 9.52%, Sun Pharma up 6.84%
Top three losers of the week were - Unitech fell by 26.93%, GMR Infra fell by 22.75% and JP Power down 21.40%.

FII/MF activity

The foreign institutional investors (FIIs) have been the net buyers of the Indian stocks to the tune of Rs2091.93 crore and the domestic investors bought Indian shares worth a net of Rs131.60 crore as on July 09, 2014.

Market outlook for the coming week!

In the coming week, selling may continue amid lack of any major event. There could be some stock-specific action based on April-June 2014 corporate earnings announcements.
Macroeconomic data, trend in investment by foreign portfolio investors (FPIs), trend in global markets, trend in other global emerging markets, the movement of rupee against the dollar and crude oil price movement hold key.
On the macro front, the government is scheduled to announce the rate of inflation based on the wholesale price index (WPI) for the month of June 2014 on 14 July 2014.

Budget 2014: Breather for FDI!

Budget 2014: Revenues and Expenditure

• Estimates that total expenditure will be Rs 17.95 trillion in 2014/15
• Revenue deficit seen at 2.9 per cent of GDP in 2014/15
• Capital receipts seen at Rs 739.5 billion in 2014/15
• Retains tax collection targets and makes no major changes to direct tax rates
• Allocates Rs 2.29 trillion for defence spending in 2014/15; capital outlay raised by Rs 50 billion over interim budget
• Earmarks Rs70.6 billion to create 100 'smart cities'
• Proposes Rs 50 billion for warehousing capacity; Rs 100 billion of private capital for start-up companies; and Rs 378 billion of investment in national and state highways
• Rs40 billion for affordable housing proposed through national housing bank; Rs 80 billion proposed for rural housing scheme

• Budget 2014: Cigarettes to lit Fire in pockets

   FM Jaitley targets raising Cigarettes prices which may lit Fire in common man’s pockets

• To raise export duty on bauxite to 20% from 10%
• To cut excise duty to 6% from 12% on footwear below Rs1,000
• To raise excise duty on cigarette between 11%-72%
• To raise excise duties on chewing tobacco, cigars
• To raise excise duty on aerated water containing added sugar
• Raises excise duty on pan masala to 16% from 12%

 

Budget impact on consumer goods

• Footwear (excise duty reduced from 12% to 6%)
• LED TVs with panel below 19 inches (basic custom duty on import of panel made nil)
• CRT TVs

• Gutka (excise duty hiked to 70% from 60%)
• Aerated water products with added sugar
• Cigarettes (excise hike on some cigarettes to 72% from 11%)

 

Budget 2014: Education

• To set up Jai Prakash Narayan National Centre for Excellence in Humanities in Madhya Pradesh.
• To set up five more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
• To set up five more IIMs in Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra.

 

Share Market Terms

INVESTING

Investing is not just about depositing your savings in the bank every few months. It’s about growing your money. It’s about making your money work for you.

INVESTING IS A LONG TERM ACTIVITY

When you invest, you  buy an asset like shares, mutual funds, gold or real estate when it’s available at a bargain and wait till its price go up. You may have to wait for a long time, say 5 or 10 years to get a real appreciation for your invested funds. So,  investing is a long term activity, you have to wait for your rewards.

IT’S ALSO ABOUT GROWING YOUR MONEY PRUDENTLY.

Money is a weapon that’s to be used very very carefully or else, it can backfire within no time resulting in a total ruin of your life. By being ‘prudent’ we  mean, determining an action or a line of investing that’s practically wise, judicious and careful.
When you look around for opportunities to invest, it’s natural to stumble upon ideas like multi level marketing of certain financial schemes or money chains etc that may seem to be too good an opportunity to make a quick buck. It’s important not get tempted by such investment offers. Any investing decision you take must be practical, legal, safe and capable of creating wealth for you in the long run.

REWARD FROM INVESTMENTS

Investments range from risky types like stocks  to very safe ones like fixed deposits. Depending on the type of investment you’ve made you get return in the form of rent, interest, dividends, premiums, pension benefits or appreciation in value. The more risk you take, the more you earn as rewards.

OBJECTIVES OF INVESTING

Objectives or purpose of investing would be different for different people.  By choosing to budget your expenses, accumulate money, invest that accumulated fund and limiting the amount of debt – you can achieve most of your life’s goals. Normally, a person would invest with one or many of the following objectives in mind:

• A Regular Income
• Creation of wealth
• Preserving his capital
• Planning for retirement life
• Education /marriage of his children.
• To start a business

THE PROCESS OF INVESTING

The process of investing is quite simple-
Depending upon the money you got, you will have to short list the type of asset suitable for investment.
Next, you’ll have to assess yourself and find out how much knowledge you have in that particular asset category. This assessment will tell you where you stand right now, and the amount of preparatory work you need to do before investing you money in it.
Once you gain enough knowledge, try to draw a plan to invest systematically – get access to the right information, plan properly and make the right choice.

REASONS TO INVEST

Why does investing acquire so much of importance? That’s because of three core benefits of investing-
First, the probability that you’ll beat inflation.
Second, the probability of achieving your financial goals quickly.
Third, the probability of building something for your next generation.
An investor’s  main focus should be to beat inflation.  Inflation and it’s after effects were discussed in our previous articles.  You’ve to invest in such a way that the rate of return beats the inflation rate. If you don’t do that, it eats away your returns. Unless your rate of return beats the inflation rate, you’re not growing your investments.We said ‘probability’ because, investments carry the risk of not hitting the desired targets. When you set higher targets ( higher returns) the risk of not achieving it is also high.
Apart from achieving financial goals and securing your children’s future, another important reason would be to plan for your retirement. When do you plan to retire? At 60 or at 50? You can opt to retire when you have a sufficient amount of wealth so that, you can maintain the standard of living that you are maintaining today. The earlier, the better!
In the coming lessons, we take to you through different aspects of investing. Each lesson has a concept to share. At the end, you’ll know what investing is all about, why it’s essential to invest early, different avenues to invest etc..In our next article , let’s see why investing is the most important activity one should have.

The markets ended on a high note last week after three weeks of sideways movement. It was the hopes built around the first budget of Modi government that made the sensex and the nifty rally 862 and 242 points respectively.
Going ahead, the Big day is here. Millions of people, corporates and businessmen are waiting to hear what the finance minister has worked out for each one of them so that they may retain the hope of good days ahead. A friendly budget which will not impact the living standards of the people negatively and which will kick off the growth process will immediately spur an upward movement that may crack the 27,000 level (sensex) and 8,000 levels (nifty) for the first time. But on the other had if the budget turns out to be a disappointing one (especially for the FD investors) we’re going to witness a plunge that may dip below 23,500 (sensex) and 6,500 (Nifty). Finally, if the budget happens to be an ordinary one which leaves some happy n some sad, it’s going to have a mixed reaction with a short rally on the budget day and then a retreat back to where we’re standing now.

Now, we can’t really say what exactly is going to come out of Mr. Arun Jaitley’s box on July 10^th. So we suggest investors to watch the game from the sidelines. It will be prudent for those who have profitable positions in cash market to liquidate a portion and take some profits home. Investors having loss positions may hold on to their investments for a gamble – should the budget spark a rally, they might get an opportunity to off load their investments at a profit or at least at par. Remember that not all is well with the fundamentals and Mr. Modi had earlier hinted about taking tough steps that may not impress the common man. Apart from the budget, the first quarter earnings results will also kick off this week with Infosys results on July 11th. For investors looking for opportunities in banking sector , Indian overseas bank looks fairly valued at the present market rate of Rs 84.
Expect a volatile week ahead. We expect the sensex and the nifty to trade in a range of 25,000-26,500 and 7,550-7,890 for the nifty assuming that the budget is going to be a reasonably good one.

Commandment 1: Don't attempt to time the market

Timing the market is no guessing matter. To the little investor, timing the market is like taking a random walk. Most people only recognise the correct path after already having set foot on the wrong one. One exception to this is “bottom-fishing”, an approach to buy stocks that you want in your portfolio at prices below the prevailing levels. This entails biding your time and buying into a market downturn before the others do (the age-old philosophy of buying low, selling high). The downside of this approach being that the stock you want may never see the downside you expect.

Commandment 2: Don't try to outguess the market

Market psychology is for shrinks, not for couch potatoes like we humans. What captures the imagination of the market is transient. This means that what is “in” today is “out” tomorrow. Most people only recognise the pattern after it has become apparent to almost everyone else and is too late to act upon. For example, if investment in technology appears to be the current flavour, you are probably already too late to cash in on the trend. In this instance, you should only invest in technology as part of a long-term balanced approach.

Commandment 3: Treat investing like marriage--go for the long haul

Short-term investing could go either way. Invest for the long term. Almost all market pundits and investment studies show that stock investing should be part of a long-term strategy, lasting for five to ten, or even 20, years or longer. Beware that not every year will result in a positive return on your investment. However, over time the plus will likely overwhelm the minus by a substantial margin.

Commandment 4: Stay clear of broker's advice, hot tips and "multibaggers"

Every portfolio advisor is not Sharekhan (J) who swears by sound investment principles. Think. Wouldn't most brokers be tempted to make their living by goading their clients to constantly move in and out of positions, thus garnering commissions? This is diametrically opposite to Commandments 1, 2 and 3. For most people, stock advice is like a game--of darts! Only accept advice if the person has your financial interest in mind and is not making a living by selling your stock. Of course never buy from someone who calls on you and gives you advice. J

Commandment 5: Almost always invest in blue chips and blue chips-to-be

Do invest in companies that are considered blue chips. These include not only the BSE 100, but also the others that are slowly stepping into the big league. Invest only in established companies with a good track record. Beware that not every blue chip will rise after you buy it, and that even these otherwise stellar performers will have their good months/years and bad months/years. But over time, the fluctuations will even out and you would be left with a considerable net plus. Also invest in companies that have a good record of declaring dividends (and if you find the solitary one that increases its dividend pay-out each year...you know what to do).

Commandment 6: Prefer steady installment-like buying of stock to buying at one go

Investing should never be done in panic or be treated as an emergency. Purchasing your favourite few is best accomplished at a steady rate over time, so as to avoid the ups and downs of the market. This is called rupee cost averaging and is one of the safest approaches to investing. It works just like any other habit: you buy, regardless whether the price is up or down, until you reach the desired number of shares of that stock.

Commandment 7: Diversify, diversify and diversify

Do diversify your portfolio, both within your selected sectors and within the overall industry. For example, don't invest in only technology because it happens to be in vogue but consider the other industries as well.

Commandment 8: No shopping with borrowed money and maintain a core reserve

Never use margin money to buy stocks. You should not invest money you don't have. A simple and basic rule is to not leverage yourself to an extent that when the tide turns against you, all you are left with is nothing.

You never know when a financial emergency might arise. That's why you must keep a comfortable cash reserve in your savings account, so you do not have to tap into your long-term investments. A reserve equal to six months of salary should be just about ideal.

Commandment 9: Set realistic financial goals

Treat a 500% return with as much derision as you would a 5% return. Decide what you need the money for: To retire early, to finance your kid's college education or to fund your daughter's marriage or just to preserve and build wealth? Whatever the goal you set, make sure it is reasonable and attainable. Expecting too much will only lead to disappointment down the road. Aim for an expected return level that is realistic--not mediocre or overambitious.

Commandment 10: There are 10 more commandments

For those who thought that was the last of the ten commandments I have good news. There's more. Ensure that your portfolio size is controllable (15 stocks is about ideal) and your stocks are well researched. Checkpoints: Is the management quality above board? Does the company have a positive cash flow? Does it have the capability to compete on a global scale? Most importantly, is it shareholder friendly?

Finally, leave your emotions behind when you enter the world of investing. Follow the ten commandments. Time is on your side. Investment success won't happen overnight, so stay focused on long-term returns and avoid overreacting to short-term market swings. Remember, investment success depends on time, not timing.
Sharekhan has the best stocks under its coverage. Invest in them for the long term for healthy returns.

In line with the key identified investment themes (policy push-driven re-rating of construction, power and public sector undertakings, and early beneficiaries of an economic revival, like auto and financial services), we are adding
LIC Housing Finance, 
TVS Motor Company, 
Gabriel India and  
Gateway Distriparks
to the Top Picks basket. We believe that a possible pull-back or correction in these stocks after the recent upsurge would offer an attractive opportunity for investors to accumulate these stocks with a little longer time horizon.

2:00 pm Asian Markets: Japanese stocks rose to a three-week high , helped by gains in construction equipment makers on news China is taking steps to stimulate its economy, and as the dollar hit a 10-week high to the yen after solid US economic data. The Nikkei ended 0.8 percent higher to 15,071.88 points, the highest close since March 11. The broader Topix rose 0.5 percent to 1,216.77.
The JPX-Nikkei Index 400, a gauge comprised of companies with a high return on equity and robust corporate governance, added 0.6 percent to 11,029.28.
1:50 pm Interview: Debunking the myth that weak monsoons lone can be responsible for affecting the fast moving consumer goods (FMCG) growth in the rural areas, Sunil Duggal, CEO, Dabur said the rural demand has been lower over the last two quarters. According to him, the correlation between rural income and monsoon is very direct. But the same with consumer demand is not always true. "We cannot be completely insulted from the impact of a bad monsoon. But it doesn’t alter the dynamics of consumption to a very great degree. Likewise a great monsoon also doesn’t accelerate demand, there are host of other conditions required to stimulate or depress demand," he added.
1:40 pm In focus: Shares of Unitech are attracting buyers after the company said it has been approached by a third party for its stake in Candor Investment- the IT parks. The stock gained as much as 6.5 percent intraday. Meanwhile, sources told CNBC-TV18 that real estate major Unitech and Unitech Corporate Parks (UCP) will sell six India assets for up to Rs 12,500 crore. It is learnt that the company will raise Rs 4,000-5,000 crore from milestone payments over three years. Unitech and UCP have signed exclusivity with a potential buyer and they will exit IT park portfolio of 16 million square feet, sources say.
1:30 pm Market outlook: Nirmal Jain, chairman, IIFL recommends long-term investors to hold on to their equity investments now. “Most foreign investors remain bullish on India and if nothing catastrophic happens then we can see a sustained bull market,” he told CNBC-TV18 in an interview. Market participants should adopt a bottom-up approach, but must not leverage given that election is a high risk event. “If the election outcome is not as per expectations then it will have a huge impact,” he cautioned. Meanwhile, the Reserve Bank of India granted in-principle nod for the much-awaited bank licence to IDFC and Bandhan Financial Services on Wednesday. “This is positive start. They want the banking sector to open up,” Jain said. 1:20 pm Buzzing: Shares of Siti Cable Network rallied as much as 5.5 percent intraday after the company said promoters raised stake in the company to 72.82 percent, up from 63.08 percent as of December 2013.
The cable television service provider in its filing to the exchange said the promoters have invested additional Rs 243 crore in the business to support the aggressive growth plan to grow subscriber base to 10 million in FY14-15. "As per the approval received from Foreign Investment Promotion Board (FIPB) in March 2013 to raise Rs 324 crore from promoter entities, the company has already received first tranche Rs 81 crore in March 2013 and this is balance tranche fund of Rs 243 crore.
With this total promoter shareholding rises to 72.82 percent," the company elaborated. Don't miss: Bank licence regrets: L&T Fin, Muthoot, JM Fin tank 9-14% The market continued to remain under pressure as the Sensex is down 107.10 points at 22444.39, and the Nifty is down 33.45 points at 6719.10. About 1122 shares have advanced, 1380 shares declined, and 124 shares are unchanged. Banking, capital goods and oil & gas stocks are dragging the indices. 
BHEL loses 3 percent, followed by Coal India, SBI and L&T. The MCX board is likely to meet today to consider preferential allotment. Sources indicate that some private equity investors may join the board. Earlier, Financial Technologies was asked by FMC to reduce its stake in MCX to 2 percent from 26 percent.
The Aam Aadmi Party is likely to release its national manifesto for the 2014 Lok Sabha elections today. The manifesto will spell out party's stand over different issues including the party's agriculture, economic and foreign policy. Issues like gas price may also find place in the manifesto.