Increase in lot size of F&O

Increase in lot size of F&O

The next month means November expiry there would be increase in lot size of index and stock future and option segment. For controlling the speculative trading of retail trader in F&O segment, market regulator SEBI has issued some guidelines to increase the lot size. The value of minimum derivative contract will increase to Rs 5 lakh. Earlier this limit was Rs 2 lakh.

Now the expert says the volume of future contract may be shift towards option segment. In option you have to pay only premium amount not the whole margin. So the expectation is there may be 5% drop in turnover of future segment. Option contract have some complex calculation for valuation so it is very difficult to participate the retail trader in this segment. The other problem is liquidity, the stock option is not much liquid. Only index options may witness the some increase in turnover.

In the last one month, the average daily turnover of option segment has been 1.5 lakh crore whereas in future segment it was just only Rs 43,000 crore. Some future contract lot size has increased up to 3 times. The lot size of nifty is 25 at present which would be 75 from next November month. So the margin would be also triple. Many stocks lot size got doubled so needed margin has also become double. The participation of retail obviously would be come down.

Overall, now the trading in derivative segment would be much costlier for retail trader.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Different Financial Goals

Different Financial Goals

What are financial goals? When an individual make financial plan for self then he/she try to find out what responsibilities in future he/she has to fulfilled. To set the financial goal is very important process of one’s financial planning. It should be practical and achievable.

Although, Indians are good savers but not so smart in investment. Only 4% of household saving comes into stocks and mutual fund. It is because of lack of awareness. Systematic Investment Plan (SIP) route is the best way to achieve your future financial goal. For example if you invest Rs 33,000 per month in equity SIP till 20 years, it would be Rs 5 crore with 15% CAGR. It is a good retirement corpus at the time of you will get retirement. The important factor is time. If you delay 5 year to start a SIP for your retirement, then you have to invest Rs 66,000 (just double from above mentioned Rs 33,000) per month till 15 year to achieve the same Rs 5 crore retirement corpus.

Another important financial goal is child education which is equally important for every person. I will give you a simple example to achieve your child’s education goal. Please start Rs 5,000 every month till 15 year you will get around Rs 30 lakh with 15% CAGR return and if you invest the same amount 5 more years means total 20 year then you get around Rs 66 lakh with the same rate of return.

In general, parents spend more than half of their income on their children’s education and it prove significant burden on their family budget. According to a survey, majority of parents spend on average more than 18-20 lakh for raising a child from 10^th standard to graduation.  

So it would be better if you plan for the same before the time in prudent manner.

There may be many financial goal for a person so make investment separate for each financial goal with the help of financial expert.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Are you first time MF investor?

Are you first time MF investor?

I dedicate today’s blog to my new mutual fund investors. India has less invested in mutual funds if compare with other asset class like fix deposit, real estate, post office saving etc. Although the mutual fund has been the great wealth creator in long run and outperformed to all asset class but still it is not very famous among investors.

Since last 2 years the scenario has been changed, many new investors have started to invest in mutual fund. The problem is many investor do not know the basic of mutual fund schemes and often choose wrong schemes, so now it is more important to educate the investors about mutual fund which is new to these investors. There are many types of mutual funds are available in the market but what is your requirement you should know first.

First of all if you are planning to invest for 1-5 years, never go with pure equity plan. You should go with debt mutual fund or balance plan depend on your time horizon and risk appetite. In debt plan, there are many types of plan which are good for different time horizon investor. So investment time plays vital role to decide the mutual fund scheme.

After deciding the investment time frame, you should also know the expected return, fund’s track record, fund manager and where the fund investing your money. All the information is also available with your adviser and online also. You should know the real rate of return after adjusting taxes and inflation. After all, your investment must beat the inflation at all.

Never go after scheme’s NAV. It does not mean that the lower NAV scheme is better than high NAV scheme. Old schemes often have higher NAV and new investor think it is very costly. It is wrong assumption after all rate of return is important not the current NAV figure. Always choose growth option if you are going for long term investment.

When you plan to invest in mutual fund, please follow the old golden rule that never put all eggs in one basket. It means never invest all money in one particular scheme. You should diversify your portfolio and review it time to time.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com