Gold has always been popular in troubled times.  During the Peloponnesian War (around 431 BC) between the Athenians and the Spartans, the Athenians melted down the gold from the statue of Athene in the Parthenon in order to issue an emergency gold currency.  It’s a fashion that has continued ever since.  Recent economically choppy waters have seen record rises in gold prices. Central Banks have their own reserves of gold and although not adverse to selling it from time to time the current trend is for them to purchase, keeping the prices high and returns good for investors.  However, despite its reputation as the investment of the wealthy, gold is accessible for investors of any level.

Cautious speculations

As a first time investor in gold, there are some sectors of the market to be wary of.  You can speculate by investing in shares in gold mining companies.  On average the World Gold Council estimates that 2500 tonnes of gold are being mined annually, much of which is destined for the jewellery trade.  With such small amounts being introduced into the market each year it may seem attractive to buy shares in your very own gold mine.  However, this is a high risk strategy.  Mining operations can be affected by all manner of problems; from sudden unexpected nationalisation to war, famine and plague.  Geology can affect expected returns and for this reason alone, investment in gold mining operations should be only undertaken by the experienced.

Also Read: Why Should I buy Gold?

Bullion, coins and jewellery

Once mined, unlike most other commodities, gold remains in circulation.  Jewellery can be returned to the market, and gold bullion is held by Central Banks and investment companies.  For those new to investing in gold buying bullion, gold coins or even jewellery is probably the safest way to invest.  Gold has been subject to some record breaking highs recently – but there is always the danger that it can fall.  Over time gold will remain a viable investment – very much like property investment and possibly less risky.  By investing a section of your portfolio in gold you create a sound basis to your holdings.  Gold, unlike cash, is not subject to spectacular devaluations and inflation.  An ounce of gold at today’s prices (around £1000) will be worth the equivalent if not more in 20 years’ time, whereas the same amount of cash will most likely have devalued to the status of ‘pocket money’.  Gold coins may hold more attraction for some investors as they have the potential for a ‘numismatic’ value in addition to the face value of the metal – this simply means that the older and rarer the coins the higher the price.

Secure shopping

Buying gold online is relatively straightforward although a number of factors need to be considered.  Gold bullion can be sent direct to you and you can arrange your own storage.  There are additional insurance costs in this case – to ensure you receive the gold safely.  However there are numerous gold trading sites that can arrange storage for you.  If you are buying gold for the first time it’s worth considering the reputation and the guarantees offered by the site your purchasing from.  National mints that supply gold bullion and coins should offer some of the best security and guarantees on the market.  For the first time investor gold bullion should be the first option to consider.  Gold is a reliable way to protect wealth and to establish a strong basis to a portfolio.  While wars and economic troubles can see rapid rises in the price of gold, silver and other precious metals, the most common gold investment strategy is to retain ownership for several years – to protect cash wealth against devaluation and inflation.  Investing in gold is one of the oldest methods of wealth protection, and offers a level of security that is available in few other investments.

For Further Reading:

1. Why Should I buy Gold?
2. Thanga Mayil Jewellery IPO to open on Jan 27
3. How to Short Sell: Earn in the Falling Markets?
4. Subscribe to Thanga Mayil Jewellery IPO: Hem Securities

Some of the greatest minds in the world have marvelled over a simple, but extraordinary forceful concept – the power of compounding. Einstein called it “the greatest mathematical discovery of all time” and “the eigth wonder of the world.” The economist John Maynard Keynes described the “awesome power of compounded interest”.

The Concept of Compounding

The key to this concept is the way in which, given enough time, even apparently trivial amounts of money can turn into sizeable sums. In other words, the longer you invest for, the more you benefit from the “snowballing” effect of achieving growth not only on the original amount you invested but also on all the growth it has achieved in the earlier years.

Example

Lets’ quote an example which will show how much growth you might achieve with a monthly investment over 10, 20 and 30 years. For example, if you invest Rs.1000 a month in a fund that grows by 8% on a monthly compunding basis you will have Rs. 184,166 after 10 years. The benefit of Compounding is evident when you look at the returns over a period of 30 years – they are far more than eight times the value of a 10-year investment. In fact, the final value is nearly Rs. 15,00,000.

The powerful effect of compounding is another inportant reason why it actually makes sense to maintain a long term strategy, rather than changing your investments in response to the short term Market Movements.

Also Read: When is the best time to invest?

So, are you taking the full advantage of this miracle? If yes, then which channel have you invested your money to see the compounding magic work wonders for you?

For Further Reading:

1. Investing can be rewarding but is often uncomfortable!!!

Are you losing your hard-earned money in the share markets or making a little or even less than what you should ideally be? Do you still wonder what people like Warren Buffet, Anthony Bolton know about the market investing strategies that you do not? Well their secret is very simple : They buy the shares from the market for less than they are worth of and then, wait until they appreciate.

Stock picking is primarily about evaluating the potential of a share relative to the price in the stock market.

Photo Credit: nDevilTV

When one buys a share as an investor, he actually buys a part of the business, and obviously wishes to buy the share at a price that is below the valuation of the business. In simple words, we want to buy cheap! The challenge for the investor is to estimate the value of the assets and activities that the share represents. Valuation of a share gives the reader the tools required to make complete share analysis and valuations of companies.

Coming to the valuation of shares of a company, there may be a number of reasons for the valuation of shares of which two main reasons are  -

#  where  there is no market price.

#  where in certain cases in  market the true value/market value of the shares in not known.

Usually in case of shares there may be a number of reasons why a company  or share sector is there to evaluate or value its shares.

#  In case the company amalgamates, the company which is being taken over wants to know the exact value of the shares of the company in the market.

# In case where there is a partnership firm and when dissolution takes place both the partners may be interested to know the value of the shares.

#  In case of a loan, where loan is advanced against security of shares, the party or financial institution giving loan may be interested to know the  value of shares .

#  Shareholders, the real owners are the people interested to know the actual present value of their shares.

#  Large units have major stock or overall profitability in form of stocks being owned by the shareholders so it may be helpful at times to shares.

What are your views about the valuation of shares and what practice do you follow to get the best out of the Stock Markets. Share your views in the comment form below.

This is a guest post by Gagandeep Singh who also writes regarding Latest Movies and Movie Reviews at MoviesTemple.

For Further Reading:

1. How to decide when to sell Shares?
2. Sold the Shares; Do I have to Pay Tax?
3. RIL Rewards 1:1 bonus to Shareholders
4. [Video Tutorial] How do Stock Markets Work

All of us find reasons before making any kind of investments. A couple of days ago, I was in the same dilemma and I was asking myself the reasons why I should buy Gold.

Here, I am listing a few of them that I had in my mind to justify my thought of investing in gold and also, while browsing on the internet, I came across some interesting reasons behind why at all should one invest in gold. However, let me warn you that I do not have any trading interest in gold, but do have an investment interest in a company called Deccan Gold which is the only gold company listed in India.

Here are the reasons:

1. According to experts, the total world gold production is decreasing. I was surprised increasing selling prices make it attractive to search so production should increase. This is what happens in theory, but it is getting to be more difficult to prospect, mine and produce gold.

2. The gestation period even for gold which is spotted is quite long. According to some experts it is as high as 10 years. Hence gold mining companies prices go up over long periods and in a lumpy kind of a fashion. If gold is found it goes up, if mining starts prices go up, if production starts, prices go up. So be careful while buying a gold mining company.

3. Chinese demand is likely to go through the roof. Very few people understand the Chinese economy. If the population does not trust its currency, they are likely to keep their money in gold! The Chinese government had banned the population from owning gold for a very long time. Obviously once the ban gets lifted buying will start (it happened in US if you remember). It may take 2-4 years by which time the retail network to sell gold to the whole Chinese population is set up. Once it is set up, prices will boom.

4. Indian demand is difficult to predict. However, there is some talk of Jewelers suicide in Kerala (with prices rising, consumption is going down, so shopkeepers are dying). However, there is a huge “wannabe” population which will keep buying and chase prices! Be that as it may, selling may not be enough to exceed demand; another cause for prices to go up.

5. Investment demand is high: All fresh bankers are busy selling gold mutual funds. This is a funny situation where the price is going up because the fund is buying. People are buying gold ETF/regular funds which is causing gold prices to go up! Case of tiger chasing its tail. 6. Governments attitude towards gold can be foolish and slow. The rich countries which have a lot of gold (including IMF) have a pact wherein they will not sell more than 400 Tonnes a year (not sure about the figure). This will restrict supply on the one hand, but mutual fund demand will drive the prices.

7. Bank relationship managers are pushing gold mutual funds, websites are screaming that gold is a good buy, people without understanding of interest, compounding, etc. think this is a great ideal This almost blind and noisy screaming will push prices high. Most fund managers are buying with a vengeance! So, what is your view on investing in Gold? Your feedback is always appreciated. Do give your views in the Comments Section below.

For Further Reading:

1. Stock Picking – Which stocks to buy?
2. Buy and Sell Mutual Funds Via mobile
3. Adani Power :: Should you buy the stock now?
4. Dell to buy Perot Systems for $3.9 bn

Now that you are into a Job for quite some time now, do you remember the days when you were just awarded with your first job and your father told you to open a recurring deposit account in a bank and make all your tax saving investments in provident funds.

At that time there were not many investment options available or a more appropriate fact to quote here will be that people were not aware of all the investment instruments available to them so they rather trusted the very basic investment options available like the Recurring deposits and more easier way, to park their money in their savings account itself and earn interest on that.

After all, they always preferred the options that would give you assured returns with a capital guarantee. And the advised you to do the same. Those were the words of wisdom then, but not anymore. Times have changed drastically now and lets see to what extent.

Today, with all the things getting expensive, the inflation is eating into your returns even when you are sitting in front of your computer reading this article.

Lets quote an example here to understand this in detail:

If your monthly expenses today are Rs 10,000 and annual inflation rate for the economy is 5%, 20 years later, when you will most probably retire, you can expect your monthly expenses to rise to at least Rs 26,000. Now, taking the best case that Bank deposits will give you a return of 6%, but post inflation and tax; you will be left with a rate of return which actually runs into the negative. This means that while on the paper, you will be happy to see your returns as a handsome 6%, your capital is actually eroding in the real scenario.

Thanks to the increased life spans with the advancements in medicine, research shows that you are now going to live much longer. Your grandfather worked and earned an income for 25 years of his life, he lived for another 10 years after his retirement. Your father worked the same number of years but lived for 20 years post retirement. You will probably work almost the same number of years that they did, but in every probability live even longer! Therefore, you have to SAVE a lot more to plan and enjoy those extra twilight years of your life.

Today, you like to drive around in an SUV, are a member of an Elite countryside club where you go golfing on the weekends, you treat your family to a fine dinner at least once a week and of course, love those weekend getaways to the holiday resorts with your children. Do you ever ponder over the thought of how many of these luxuries will you be able to actually afford after you retire?

Wealth creation is all about making money last till the end in order to continue enjoying all of these luxuries.

Most of the large expenses in life are planned expenses. For instance, purchase of a home, your child’s education or marriage, your own retirement and so on. These expenses are to be incurred no matter what you do about them.

Conclusion:
All of the above listed points take into account the importance of Investing in one lives by taking real life time examples and the actual problems faced by the most of us. Readers are welcome to share their individual thoughts on this topic in the comments section below.

Rather than cribbing about your financial sources and your job, we have to Plan accordingly and successfully create wealth to meet our individual needs.

Remember one thing in life:
Failing to plan is Planning to fail.

So, plan, save, have a happy life and Happy Investing!

For Further Reading:

1. Importance of Long Term Investments
2. Importance of dividends
3. Investing can be rewarding but is often uncomfortable!!!
4. First Time Investing – Learn How Not To Fail On Your Debut

As a matter of fact you can earn more money in a falling market than in a rising one because when the market rises, it rises like a bull climbing the stairs but when it falls, it falls like a bear thrown out of the window. But the question that comes into picture is how? The simple answer to this question is short selling.

What is short selling?
Short selling means selling the shares which you do not own i.e. First you sell the shares at a higher price and then buy them in the same quantity at a lower price. Basically, in simple words it means you are selling the shares at a higher price which you normally do, but the difference is that the shares which you are selling are not owned by you. You will buy these shares later at a suitable lower price. The margin between the buying and selling is your profit.

What is the right way to short sell?
Short selling should be done when you are sure that the market is going to fall. But how can you know that for sure? There are times when it is almost certain that markets will fall, such as conditions like global market meltdown, corrections etc. These are the best times to short sell as the market along with most of the stocks falls heavily in such conditions. If you do it right you would earn quite more than what you could have earned in a rising market.

Also Read: 3 important things to know as a new investor!!!

You can also insure yourself in case the trend reverses by purchasing options such as call or put depending upon whether you are going long or short. These options tend to limit your losses to the level which you have decided no matter where the stock price is.
(I would be explaining Call and Put Options in the forthcoming Posts. You can get them in your mail by Subscribing here)

Which companies should you short sell?
When a market crashes almost all the stocks fall. But to maximize your earnings you will have to pick some stocks which fall the most. Such stocks can be of two types one which are high growth stocks and other which are speculative stocks.

The high growth stocks: These have huge investor interest and so when the market starts falling huge selling is seen in these stocks. Also as these are trader’s favorite, shorts are opened in these stocks earlier than in the others which pull the stock prices further downwards.

Speculative Stocks: These have no fundamental foundation. The stock price of such companies is controlled by the traders and hence when the market falls these tend to have high selling and build up of shorts which pull the stock price down.

So the next time when the market crashes you know what to do. Just keep a cool head and look out for stocks which fall the highest and just enjoy your profits as the markets fall.

Please put your Comments below for the article.

For Further Reading:

1. How to decide when to sell Shares?
2. Tips for Small investors: Don’t buy; don’t sell!
3. Buy and Sell Mutual Funds Via mobile
4. ADAG accuses RIL of short-changing govt on gas mktg margins

Many investors are unable to sell a stock; either they ‘fall in love’ with an investment, or are unwilling to admit a failed investment and end up to book losses later when they are in dire need of money. Sell decisions should be made at the time of an investment.

As an intelligent investor, if you master the following key points, you will never lose the track of making BIG MONEY in the stock markets; be it BSE, NSE, NASDAQ or DOW JONES, for that matter.

1. Concentrate on selling stocks within your portfolio that are doing poorly, William O’Neill compares a portfolio to a garden, you need to pull your weeds and not your flowers in order to have a profitable ‘garden’.

2. Consider setting a limit on your losses. Many traders set that floor in the 6% – 8% range, depending on the volatility of the stock. They may not be happy about a small loss, but they make sure it doesn’t become a big loss.

3. Evaluate earnings trends, management changes, revenue growth and other basics to determine whether fundamentals are sound. Even if the stock price is sluggish or, for that matter, has hit new highs, you might want to hang on to the stock if fundamentals remain sound and growth prospects look good.

4. Consider selling small portions of your successful investment at previously decided appreciation targets. This will cover your losses from unsuccessful investments and will also ‘lock-in’ profits.

5. Admit mistakes quickly, and get out of investments that have fundamental problems. You will master this by doing your homework about the particular company before putting in your money.

6. Avoid becoming emotionally involved with your investments. Consider that all paper losses are real losses and all paper gains are real gains to provide you with the proper perspective.

There may be other market-driven reasons to sell that are just as valid as these are. Always consider the consequences (transaction costs, taxes, etc.) before making any decision to sell.

Article by wikiHow, a wiki building the world’s largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Decide When to Sell a Stock. Content on wikiHow can be shared under a Creative Commons License

Also Read:

Sold the Shares; Do I have to Pay Tax???

The Basics of Fundamental Analysis

For Further Reading:

1. How to Short Sell: Earn in the Falling Markets?
2. Sold the Shares; Do I have to Pay Tax?
3. Tips for Small investors: Don’t buy; don’t sell!
4. Buy and Sell Mutual Funds Via mobile

Having understood all the basics of the stock market and the risk involved, now we will go into stock picking and how to pick the right stock. Before picking the right stock you need to do some analysis.

For Further Reading:

1. Adani Power :: Should you buy the stock now?
2. Why does a company issue stocks?
3. What makes stock prices go "up" and "down"?
4. Why Should I buy Gold?