October 2021 - VSRK Capital

October 27, 2021October 19, 2023

Should I Invest in an IPO

Many new and existing investors have been disappointed for unable to subscribe to the much talked Zomato IPO, a first by a Food Tech startup? One has not been able to grasp the opportunity because of the question that should one invest in an IPO or Buy after its listing on the Exchanges?

Huge liquidity in the economy and a horde of investors to invest given Indian businesses a raise of Rs.27.5 crores through an IPO in 1st half of 2021. Various Indian businesses are lining up for an IPO in the next few months boosted by the IPO stocks successfully listed in 2020. Gearing as much as 400% since listing in many cases and the uptrend of the stock market inject investing in an IPO an exciting opportunity for investors. With Zomato’s successful listing, there are some big names going public before the end of the fiscal year. Here are a few reasons to consider investing in the IPO.

Enjoy the first come first serve advantage. Investing in an IPO, one gets the opportunity to buy shares of a business with a high potential to grow at a lower price. The IPO is a chance to make a short-term profit and increase your wealth in the long term. What’s more, the share prices may rise sharply after listing on the stock exchange.

Fulfill your long-term objectives. Equity investments are likely to offer high returns in the long term. When investing in an IPO, one must wait for momentous gains. The amount earned in a few years will help fulfil financial goals. And, if you’ve managed to pick a worthy, you will near to buy your dream home.

The prospectus includes transparent information about the company, its valuation, the number of shares offered to the public and the price per share. As an investor, one has access to real information. However, once listed, share prices vary based on dynamic market changes and the best price stockbrokers can offer.

Buy at a bargain price and earn big later as the IPO price band is usually the lowest a business offers to the public. In some cases, companies offer their shares at discounted prices, which is why many investors invest in an IPO. If you miss out on the investment, the stock prices may rise sharply, and you may find it hard to buy.

Does this mean that IPO is always the right choice? VSRK says, it is not always peachy-keen, as there can be an IPO that failed and did not offer the returns investors expected for each successful IPO. If one is not afraid of the wait and watch the play, then waiting for the stock to list on the exchange would be just your cup of tea. In such cases, buying when the shares are cheap makes perfect sense, but investing when prices vault-up means paying more for unworthy.

October 25, 2021August 16, 2023

Considering the Pros and Cons of Automated Trading

Because financial trading involves constant monitoring, automation in the space is often marketed as a silver bullet. Automated software programs employ algorithms that can execute trades on your behalf, typically based on established parameters you’re able to define in advance. For example, an automated program can execute a “buy” order of a stock if it falls below a certain price, reducing the need for the trader to monitor live price movements.

The convenience of functions like this has led to expanding use of automated trading tools. In fact, platforms by EBS and JP Morgan now estimate that some 70-80% of trades originate from algorithms –– whereas in 2004, EBS stated that all trade orders were executed by humans.

As appealing as all of this sounds however, automated trading may not be for everyone. So before you look to incorporate these tools and strategies, consider the following pros and cons.

The Benefits of Automated Trading

Timeliness: Timing is a key factor in maximising gains and minimising losses in trading. Unfortunately, humans are unable to monitor markets at all times…. But trading bots don’t have that limitation! Automated trading tools, then, can help day and swing traders alike keep up with market fluctuations and make timely decisions. This is also a helpful perk when it comes to maintaining a more diversified portfolio. Monitoring assets across different markets requires more attention, but here too a bot can help to handle the minute-to-minute attention and decision-making.

Objectivity: Earlier this year, a survey by MagnifyMoney revealed that 66% of retail investors regret decisions they make based on their emotions. Additionally, 58% are in agreement that it’s best to keep emotions in check. This is another issue that can more or less be solved by automated trading tools. Trading bots don’t hesitate or act based on emotion when they execute market orders. They operate with pure, emotionless objectivity, which can helpfully balance out a lot o human investors’ natural tendencies to be somewhat more impulsive.

Backtesting: Backtesting is more of an analytical tool than an active trading mechanism. But it is nevertheless another perk of automation in trading. If you’re not familiar with backtesting, FXCM’s guide to trading platforms notes that it is one of the features you can find through online investing platforms like Trading Station. And what it does is essentially to assess the viability of a user’s trading strategy by evaluating historical data. In other words, it’s an automated method that helps you to optimise your strategy based on historical trends and present conditions.

The Drawbacks of Automated Trading

Anomalies: Many traders trust automated software not to make mistakes. Unfortunately, these programs are not yet entirely foolproof. Program errors can occur, lost or interrupted internet connections can interfere with trading, and various other discrepancies can occur. This doesn’t mean automated trading tools are always unstable, but neither are they 100% reliable.

Overconfidence: Unless your strategy revolves around more long-term investment, automated trading is not equivalent to hands-off trading. Nevertheless, some traders are inclined to get carried away with the implications of “automation,” ultimately becoming too confident in (and too reliant on) software. These tools are meant to be leaned on to some extent, but it’s important for traders to remember that they are not infallible, and they also don’t guarantee profits on their own.

Scams: The growth of automation has unfortunately also led to a rise in fraud. In 2018 for example, BitConnect investors were scammed out of almost $2 billion in crypto holdings by a bot. The trading bot they used guaranteed returns, but was instead instrumental in siphoning funds away from their accounts. Of course this doesn’t happen often, particularly on such a massive scale. But traders need to apply caution when evaluating automated trading services, particularly given that so many of them are new, and relatively unknown.

Bottom-line: Should You Automate Your Trading?

Automated trading can be helpful if you want to evaluate your strategy, maintain objectivity, and execute orders at lighting speeds. That said, it is also an imperfect practice, and should be approached with care and caution, if at all.

Ultimately it’s up to each individual trader to evaluate the pros and cons. And in most cases, even if you do decide to try automated trading, advice and guidance from human professionals is still the best way to improve your trading practices. If you feel you could use further guidance on this topic or on trading in general, get in touch with VSRK Wealth Creator here.

October 21, 2021August 16, 2023

Resolving Misconceptions about Tax Saving Mutual Funds (ELSS)

Equity Linked Savings Schemes funds are one of the best tax savings schemes available without any question of doubt. Let’s give a brief look at how ELSS funds have steadily outperformed other tax-saving investment options. These equity-linked schemes offer tax benefits under 80C of the income tax act. These schemes also give investors the higher ROI with the option of short lock-in periods, all the while compiling a long-term corpus to meet financial goals.

With the growing interest over the years, ELSS has become an interesting investment avenue. As the coin has two sides, unfortunately there are various myths attached to the scheme. ELSS is looked upon with a certain degree of apprehension due to some of the myths which are demystified in the column below.

MYTH 1: Can invest only ₹1.5 Lakhs

This is of the biggest myth about ELSS funds. In reality, one can park as much funds as one likes with availing ₹1.5 Lakhs of tax benefits under 80 C of the Income Tax Act.

MYTH 2: 3-year Lock-in Period

The fact says although one can’t withdraw parked money before the lock-in period, & can remain invested for as long as one wants. After the fulfillment of the 3-year lock-in period, one don’t necessarily need to withdraw funds.

MYTH 3: Short Term Investment

The 3-year lock-in period doesn’t make ELSS a short-term investment option. ELSS can be judicious to remain invested for 5+ years to enjoy the power of compounding.

MYTH 4: ELSS are Risky Schemes

Investing in equity linked mutual funds is highly risky and should be avoided. The fact states, due to its equity nature, indigenous risks are aligned with. Seeing on the brighter side, the risks doesn’t matter considering the returns in the long-run.

MYTH 5: Demat Account is Necessary

One does not need a Demat account to invest in ELSS. If you have a Demat account, you can very well use it to make investments. However, this can also be done through VSRK.

MYTH 6: Low NAV Funds are Cheaper

The reality check says, low or high NAV has nothing to do with the scheme’s performance. If 3 funds with different NAVs gives 18% returns, anyhow, the portfolio will go up by 18%.

MYTH 7: Infused Dividend adds to Gains

In reality, a NAV falls as the dividend is distributed. A consistently outperforming fund may not declare a dividend and may handsomely reward in the long run with its performance.

MYTH 8: Surmounts are “Safe Avenues”

Investors buy last year’s outshining funds, may be the fund may subsequently cease to exist now. VSRK suggests to study the performances over the last 3 – 5 years before investing.

MYTH 9: ELSS is too Complex

ELSS is simple mutual fund scheme which has a 3-year lock-in period with an amount as little as 500INR, which makes it easy and affordable for anyone.

Conclusion

ELSS is not any different. As with everything investments, associates inherent risks which require graceful pre-planning. Never fall for the myths discussed above, may one miss a great investment promising a plentiful return.

October 19, 2021August 24, 2023

Invest Even If You are Not Rich Yet!

There’s a misconception that one needs a lot of money to start investing in stocks, mutual funds and Exchange Traded Funds (ETFs). This is the vital reason why a few people actually do investments. One thing is for sure, one will never get rich by concealing money under a mattress or in a bank account. In order to build wealth, one need to invest money with time.

Read tips given further to start investing even if you don’t have much money.

One can get started investing with small amounts of money. No matter how small one start, the most important thing is to get started. One can always increase the amount with time.
Get your 401K match at the bare minimum. For your information, a 401(K) plan is generally termed as an employer-sponsored retirement plan wherein eligible employees based on pre-set criteria can make tax-deferred contributions from their salary or wages like the EPF contributions in India. It acts as a hike which can range from 2- 15% of one’s annual salary depending on employer.
You’ll never be rich if you don’t invest. There are countless people who are scared of investing. While the sad reality is that most people will never achieve financial freedom if they don’t invest. Not investing is the huge market risk.
Let compounding interest work its magic. Start investing on early basis. The earlier one starts, the major shift will be taken off from one’s shoulders by compounding interest with years.
Take control of your finances and make smarter financial decisions today with VSRK. The sooner one starts the easier it will be to get on track for predefined financial goals, which may vary on individual level. Even if one wants to start small, get started.

One may not be rich today, but will never be if one don’t get started. Once started, then you will be rich one day for sure.

October 13, 2021August 16, 2023

Learn To Manage Your Finances this Ram Navami

Be your own Knight Armor

Nobody will act as an armor in the times of need. One has to create own angel brew and that is health insurance which will help cover any health contingency that may come at any point of time. With pandemic which spilled like termite globally, health insurance has become all the more necessity. This will not only help in covering all the expenses of treatment from the scratch but will also give a sense of satiety. Health insurance is prerequisite to financial planning for uncertainty.

Emergency fund a must

Nobody can predict what life has planned for anyone. Even, Lord Rama was given 14 years of stubborn exile when he was preparing for his Rajtilak for the thrown. For unforeseen situations like these one must always have an emergency fund in hand. This has happened recently with many people when many bread-earners lost their jobs and life savings during this pandemic, Emergency fund can help people sail through during such tough times.

Win with Disciplined Planning

Discipline a key attribute to learn from the episodes of Lord Rama’s story. Just like his brother drew a line (Lakshmana Rekha) to protect Goddess Sita, every individual should draw a budget to frame financial stability. One must estimate how much expenses should be incurred during different periods and how much savings are essential. If one fails to adhere to set budget may drown in financial debt during difficult times.

Achieve goals with Patience and moderation

Lord Rama went through much hardships during exile. His patience kept him firm and he did not lose hope. His patience and planning helped in saving Goddess Sita from Ravana. Just like that one should not lose patience during bearish market. Keeping calm will help to manage the finances in market correction timings.

Device financial portfolio to play safe

When Goddess Sita asked Lord Rama to catch a deer and when he didn’t come back on time she sent brother-in-law behind him and got kidnapped by Ravana. Diversify your portfolio by doing some research. Investing in one avenue might now get you high returns.

October 11, 2021August 16, 2023

Indian Chemical Industry: The Next Eye Catchy Sector!

The Indian Chemical Industry is growing in leaps & bounds not only in India but also the world. It not only plays a vital role in our economic development but also serves as an important ingredient for the industrial and agricultural development. The Indian Chemical & Petrochemical Industry is currently valued at close to $180 Billion i.e. ~3% of the global chemical industry and is expected to reach $300 Billion by 2025.

India’s Specialty Chemical Industry has been esteemed at $35 Billion and is well tranquil for growth. It has grown by 13%-14% in the last five years and is expected to reach $70 Billion by 2025. It is to be noted that a sharp fall in the crude prices from $100 to $35/barrel has improvised the margins for alluring chemical players. The Colorant Chemical Industry is worth $7 Billion in India thereby exporting more than 72% of the annual production.

A huge domestic consumption is major growth driver behind India’s Chemical Industry. Indians consume more than 40% of its output with promising new heights. The growing urbanization and increasing disposable incomes of the Indian economy is fueling substantial growth of the domestic Chemical Industry. Chemicals constitute close to 5.5% of total Indian exports.

After the giant dye manufacturer from China has been shut down due to governmental policies, which has created a fairly huge supply glut and increased the profitability of Indian companies. As a key ballooning element for developing economy, the government has permitted cent percent FDI through automatic route and de-licensed the manufacture of most of the chemical products except a few hazardous chemicals.

Notably, such chemical majors have a commanding market share in their respective segments. Great rallies can be expected in the Indian chemical markets till the time Chinese competitors become operational again.

This will create volatility in the prices of the chemicals and India is set to be benefitted the most from this in the near future. VSRK is all engaged to earn the revenue from the same for its reputed investors.

October 7, 2021August 18, 2023

Why do you Need Blue-chip Funds in a Portfolio?

Every coin has two sides, risk and returns are those which comes with investing in any financial product. The decisions can be personal or suggested by an expert which can be based on age, risk appetite, investment horizon, financial goals, and other vital factors.

Mutual funds are trending, because of sorted risks by fund managers with higher returns than bank savings and term deposits. Fund houses offer different types of schemes, carrying a different investment strategy which are suitable for various needs of individual investors. Blue Chip funds have become “hot pancakes of the Industry”.

Blue-chip mutual funds invest in a few selected large-cap companies with a proven track record and established businesses with some lucrative characteristics attached. The companies in conversation are managed by professionals with sturdy leadership based on business insights. Established business models with market kingpin or one of the top ranked within the industry having verifiable track records. They show profits year on year with uninterrupted dividend payouts. Tend to deliver good returns over the long period, help growing capital to build a huge corpus

The major reasons to support blue-chip funds as an excellent way to achieve long term financial goals such as retirement planning. The dynamism & volatility of stock markets and of course economy needs stable investment returns which are provided by such companies to withstand the market hush without difficulties.

Reasons to include blue-chip funds in investment portfolio

The blue-chip companies pay regular dividends, which is an excellent way to earn an additional income.
Being a part of the market leaders, Blue-chip investments are financially strong maintaining a balanced debt-equity ratio further reducing volatility.
Investments done in diversified businesses enables to earn income through different streams serving a wide demographic which diversifies risks.
These companies are part of Fortune 500 list, which gives an additional security while investing in a diversified portfolio.
Investing in the Equities among different sectors reduces risks and enhances the returns from the growing markets.

October 1, 2021August 18, 2023

Infinite Health and Wealth at VSRK

VSRK is acting as a catalyst to promote awareness in managing funds which would cater to both the health and wealth security processes affecting families. An important economic subject of concern which largely affects the upliftment of any individual is health and financial security.

The relationship – financial security, health and happiness

It’s seen that nothing makes people happier or more confident than the satisfaction & contentment of having secure finances. The investors are blessed tremendously with the peace of mind that comes with having the financial basics covered. It’s not only the wealth which induces the feeling of financial security but rather the knowledge of having built a shield of financial protection to defend loved ones against life’s inevitable uncertainty.

Unplanned financial emergencies

Rainy day savings or an emergency fund, if you don’t have one, start saving now to accumulate at least 6 months’ worth of necessary expenditures. Learn from the Pandemic that could be finding yourself unemployed for a period, huge unexpected medical emergencies or urgently replacing motor vehicle.

Family’s health

The rising cost of healthcare as primary concern of Indians with 63% experiencing high or moderate levels of anxiety over the issue. Additionally, 73% fear from an unplanned medical emergency. VSRK brings the good news that this fear can be eliminated by taking out a comprehensive health insurance policy. The financial risk is transferred to your insurer & that brings the real peace of mind.

Loss of income after death

Hopefully everyone lives a long and happy life but the truth is that nobody is mortal. Getting an insurance and knowing that a lump sum payment would be forthcoming if you came to an early demise is reassuring and the ultimate in protection from beyond the grave.

Protect your estate

One can follow some steps to minimize the amount of inheritance tax payable when one dies. There are other essential to dos such as naming guardians for your children and, for expats, cross-border estate planning issues to take into account, particularly for those with assets in different jurisdictions. Professional advice by VSRK is essential & helpful.

There is a lot that can be done towards your financial security by VSRK. It might be formidable but your one step will amaze you how quickly we will build your family’s protective shield and your peace of mind.

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Month: October 2021

Resolving Misconceptions about Tax Saving Mutual Funds (ELSS)

Invest Even If You are Not Rich Yet!

Learn To Manage Your Finances this Ram Navami

Indian Chemical Industry: The Next Eye Catchy Sector!

Why do you Need Blue-chip Funds in a Portfolio?

Infinite Health and Wealth at VSRK

The relationship – financial security, health and happiness

Unplanned financial emergencies

Family’s health

Loss of income after death

Protect your estate

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