Equity : A broad view as asset class

Equity : A broad view as asset class

There are many investment avenues available in the market like equity investment, fix deposit, debt/ bonds, metal, arts etc. We can divide financial assets in 3 types. These asset types are equity, debt and gold. In this article we will discuss about equity investment.

We are often told that equity investments are subject to risk and in nature it is very volatile. In simple terms, equity means the ownership, investor who own equity in company participate in company’s growth like a promoter. If you hold equity in a particular company, it means you become beneficial owner of that company. As an equity shareholder, you also get the opportunity for the vote on important business decision.

Advantage in equity investment:

Profit making companies share their profit with shareholder as a dividend and it is totally tax free as per the current law. Over a long period you can make a capital gain through increase in share prices by investing in good companies. As per current law, in our country long term capital gain in equity is nil. It has outperformed in terms of return to other asset class over the long period. It has ability to beat inflation and generate super return. It is very crucial investment to achieve long term goal.

It has greater liquidity compare with other assets. The transaction of shares happened on exchanges and it is regulated by SEBI. Equity trading mechanism is very transparent and no room for wrongdoing. Equity investment play very important role in the economic growth of the country. It mobilize funds from public towards various sector which is very crucial for country’s development.

Disadvantage in equity investment:

Return of Investment in equity is not guaranteed. It depends on company’s performance. If company is doing better, you will get higher return but if it is not doing good, then you have risk to lost your capital also. In short run, it is very volatile so it is very risky investment in short term investment point of view. If you have invested in bad companies or enter when the prices are very high then you can lost substantial amount of money.

Equity investment for whom and how we can invest in it. We will discuss about this in next article. For more detail and any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Mantra for wealth creating in long term

When you have read the above heading before read the entire article it seems very exciting. Most of the person may think that there would be a unique formula for wealth creation in this article but I would share some important guideline and principle which seem very simple but I am sure implementing this is not so simple. For implementing these mantras of growing wealth, one need to understand the logic and the concept of wealth creating from root level. So now I am going to share with you some principal to become successful investor.

(A) Find a good financial planner and discuss with him about your near and future financial goal, your current asset and liabilities and other vital information asked by the planner. A financial planner will definitely help you to educate about basic money management, to know your risk profile, make financial plan, informed  investment decision and goal based financial plan.

(B) Make regular investment through SIP (Systematic Investment Plan) and get benefit of rupee cost averaging. Recommended SIP by your financial planner will help you to create wealth in long term. Patience is the key to successful investing. Stay invested through entire market cycle whether bull or bear. Never try to time the market, invest in both bull and bear market and reap the benefit of wealth creation.

(C) Be in touch with your planner and discuss about the market environment. If need then rebalance your portfolio according to market phase after discussing with your planner. 

(D) Stay away from complex product like ULIP. Keep simple approach towards investment, not indulge with these product which you don’t understand properly. Invest in those products which are transparent and you understand better.

(E) Never mix your insurance and investment need. There is not a single product in the market which fulfill your insurance and investment need both.

(F)  Choose your financial planner very carefully because it is like your family doctor. Ask educational and professional qualification and assess the knowledge of your planner.

(G) Start investment as early as possible. If you delay one year your investment you will loose as much as you cannot imagine. For understand it better discuss it with your planner.

(H) Don’t invest not only for tax deduction purpose, understand risk, return and your need also. Make your tax plan at the beginning of financial year and avoid march month tax saving race.

The above mentioned few mantras are essential for every successful investor. For understanding it in detail contact any qualified financial planner. Keep it in your mind and think about this before you going for any investment.

If you have any query regarding investment please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com