Category: Jargons

Old vs New Tax Regime: Tax Slabs in India Explained

Post author By marketfeed Team
Post date July 6, 2023

The Indian Government has introduced various incentives in the Union Budget 2023-24 to encourage the adoption of the new income tax regime. These modifications demonstrate the government’s plan to gradually phase out the old system and make taxpayers adapt to the new one. The previous tax system will remain in place even though the new one is now the default. Let’s examine the old vs new tax regime, and which one you should choose!

The income tax laws have undergone several revisions that took effect this financial year (FY24). Some of the significant changes that took effect on April 1, 2023, included increasing tax rebate limits, changes to income tax slabs, and the elimination of the long-term capital gains (LTCG) tax advantage for some debt mutual funds.

The quick adjustments to the income tax that will affect taxpayers in 2023–2024 are listed below:

New Income Tax Regime to be the Default Regime (from April 1, 2023)

The previous system (old regime) will remain an option for taxpayers. If you are a salaried taxpayer, the new tax system will deduct Tax Deducted at Source (TDS) depending on tax rates. Therefore, you must carefully weigh your options when declaring investments between the old regime and the new tax regime.

Income Tax Slab Changes Under the New Tax System:

Income Slab	Old Tax Regime	New Tax Regime (from April 1, 2023)
₹0 – ₹2,50,000	Nil	Nil
₹2,50,000 – ₹3,00,000	5%	–
₹3,00,000 – ₹5,00,000	5%	5%
₹5,00,000 – ₹6,00,000	20%	5%
₹6,00,000 – ₹7,50,000	20%	10%
₹7,50,000 – ₹9,00,000	20%	10%
₹9,00,000 – ₹10,00,000	20%	15%
₹10,00,000 – ₹12,00,000	30%	15%
₹12,00,000 – ₹12,50,000	30%	20%
₹12,50,000 – ₹15,00,000	30%	20%
>₹15,00,000	30%	30%

Tax Rebate Limit Raised to ₹7 lakh

The increase in the tax rebate limit from ₹5 lakh to ₹7 lakh implies that residents with a total income under ₹7 lakh do not need to make any investments to qualify for exemptions. Their whole income is tax-free regardless of the number of investments they make.

Say, for example, you earn ₹7.5 lakhs a year. Then you’ll have to pay 5% tax on your income between ₹3 lakh to ₹6 lakh, and 10% between ₹6 lakh and ₹7.5 lakh.

Standard Deduction

The former regime’s standard deduction of ₹50,000 is carried over to the new system. The finance minister said that the standard deduction would be extended to the new tax system for pensioners. All salaried residents making ₹15.5 lakh or more will get ₹52,500 as standard deduction.

Surcharge

A surcharge is an additional tax rate imposed on businesses or high-income individuals. Usually, it is calculated as a percentage of the tax payable when the taxable income exceeds a certain limit. Under the new tax regime, the highest surcharge rate of 25%. People with income over ₹5 crore would pay a 25% surcharge rather than a 37% surcharge.

Life Insurance Premium

From the start of the new fiscal year (or April 1, 2023), the proceeds from life insurance premiums beyond the annual premium of ₹5 lakhs are taxed.

Leave Encashment Exemption

Retiring employees sometimes receive monetary compensation for any unused leave days through a practice known as “leave encashment.” The majority of countries consider this compensation to be income and tax it accordingly. This limit was ₹3 lakh since 2002 and is now increased to ₹25 lakh.

No Long-Term Capital Gain Tax Benefit on Mutual Funds

Investments in debt mutual funds were subject to short-term capital gains tax starting on April 1. With this change, Investors would lose the long-term tax advantages that had made such investments so popular.

Senior Citizen Saving Scheme

As opposed to the former deposit limit restriction of ₹15 lakh, senior individuals can now deposit up to ₹30 lakh under the senior citizens’ savings plan. Also, the maximum deposit for the monthly income scheme has been increased to ₹9 lakh from ₹4.5 lakhs for single accounts. The maximum limit for joint accounts has been increased from ₹7.5 lakhs to ₹15 lakhs.

Conversion of Physical Gold to Electronic Gold Receipt to become Tax-Free

As of April 2023, converting physical gold to an Electronic Gold Receipt (EGR) or vice versa will not trigger a capital gains tax.

Which Regime Should You Choose as Per Your Income?

Choosing between the old and new tax regimes is crucial because it affects the amount of income tax withheld from your paycheck each month by your employer. Choosing the wrong tax regime will drastically impact the income you take home.

The new tax regime is preferable if your income is up to ₹7 lakh, as there is no tax up to this amount and an extra standard deduction of ₹50,000.

If you have no tax savings and deductions to claim, consider the new tax regime, as the tax rates are lower under the new scheme. By choosing the new tax regime, individuals can benefit from lower tax rates without the need to track and claim various deductions.

The revised new tax regime will be more advantageous for an individual who only claims a deduction of ₹1.5 lakh under section 80C because of lower rates.

In contrast to the old tax regime, which had a maximum surcharge rate of 37%, the new tax regime’s maximum surcharge rate is 25%. The new system may be more advantageous for taxpayers who fall within the highest surcharge category.

Salaried individuals (having income other than income from business and profession) have the choice of being taxed under the previous tax system or the new one. So, if circumstances change, you will have complete discretion to make changes in the next assessment year. If you prefer to calculate the tax liability by yourself, you can use the tax calculator launched by the Income Tax Department to help you make the right decision!

To read about the current income tax structure for stock market investors & traders, click here!

Disclaimer: The information given in the article is purely for educational purposes. Please do your own research or consult an income tax consultant before choosing a regime.

Tags income tax, Income Tax Filing, income tax structure, Jargons, standard deduction, Tax, tax free, tax rebate, tax slabs

Jargons

Intraday Trading Explained For Beginners – All You Need to Know!

Post author By marketfeed Team
Post date July 5, 2023

Most beginners come to the stock market because of intraday trading. They see people posting screenshots of their impressive profits on social media and are drawn to the idea of “making ₹10,000+ daily”. However, it is important to emphasise that intraday trading requires a significant amount of awareness and knowledge. In this article, we will explain everything you need to know about intraday trading in the stock market.

What is Intraday Trading?

Intraday equity trading refers to the buying and selling of securities on the same day. For example, if you buy a stock at 10 AM after the market opens and sell the stock at 2 PM before the market closes, it is intraday trading. The trader exploits the small price movements in the stock to make a profit.

What Makes Intraday Trading Special?

Apart from the time period you hold the security, the two features that make intraday trading special are leverage and short selling.

What is Leverage?

Leverage is the extra money your broker offers you so that you can trade in larger quantities and potentially make more profit or loss. When you place a buy order for a stock, the broker will ask you for the order type. The two types are Intraday (MIS) and Long-Term (CNC). When placing an intraday order, you tell the broker that you will square off or exit the position before the market closes on the same day. The broker will automatically give you leverage if you choose an intraday order. Most brokers in India provide leverage of 5X for intraday trading.

Many traders are attracted to leverage as it allows them to trade larger quantities with less capital, potentially increasing their profits. Consequently, by offering leverage, the broker can also earn more brokerage.

An Illustration to Understand Leverage:

Let us assume that you have ₹1000 as your trading capital. You found that the current price of Mahindra & Mahindra (M&M) stock is ₹1000 after chart analysis. However, you predict the price will rise to ₹1010 or higher by 3:30 PM. So you decide to buy the stock now at ₹1000 to sell at ₹1010 later.

If you place a long-term (CNC) order, you must pay the entire ₹1000 to buy the stock. With the ₹1000 you have, you can only buy one quantity of the stock.

Alternatively, if you place an Intraday (MIS) order, you’re informing the broker that you will sell the stock before the market closes today. The broker will give you 5X leverage, meaning you can trade with five times the actual capital. Since you have ₹1000, you can trade with ₹5000, which means you can buy five stocks of M&M.

Scenario 1: Long-term (CNC) Order

You bought one quantity of M&M at ₹1000 and sold it at ₹1010.

Profit/Loss = (Selling Price – Buying Price) X Quantity

= (1010 – 1000) X 1

= ₹10

Your profit is ₹10.

Scenario 2: Intraday (MIS) Order

You bought five quantities of M&M at ₹1000 and sold it at ₹1010.

Profit/Loss = (Selling Price – Buying Price) X Quantity

= (1010 – 1000) X 5

= ₹50

Your profit is ₹50, which is five times more than scenario 1.

What if the Stock Price Falls?

Leverage is a double-edged sword. Although leveraged trades have the potential to make five-fold returns compared to non-leveraged ones, they also have an equal potential to make five times the losses you would otherwise make.

In the previous illustration, we saw what would happen if the stock went up to ₹1010. But what would happen if our analysis had gone wrong and the stock fell to ₹990 or even lower? We would be sitting with a loss of ₹50 compared to ₹10 in the non-leveraged trade.

What happens if the price goes below ₹990?

The loss will keep on accumulating the more the price dips. If the price of M&M goes to ₹900, your losses will amount to ₹500, and you will lose 50% of your entire capital in a single trade.

How to avoid huge losses?

The two rules you can use to minimize losses are:

1. Proper Learning & Systematic Trading Habits
2. Set a Stop-Loss

A stop loss is an advanced order which sells a stock when it reaches a specific price. It is a tool used to limit potential loss. If you had set a stop loss at ₹995 in the previous scenario, your loss would’ve been limited to ₹25.

What Happens if You Don’t Square Off The Position Before Market Closes?

Square-off refers to closing your intraday trade. If you don’t square off your positions, the broker will auto-square it off before the market closes. Find the auto square-off timings for different brokers below;

All intraday positions will be squared off automatically at the respective auto square-off timings at the stock’s current market price.

What is Short Selling?

Short selling is an Investment activity in which the investor borrows securities and sells them in hopes of purchasing them at a lower price later.

How Does Short Selling Work?

When a trader short-sells a stock via a broker, the short-seller first borrows the stocks from the broker for a small fee. These stocks are sold at the current market price in anticipation of a drop in value. Once the price drops, the short-seller buys back the same number of stocks at a lower price and pocket the difference. After this, the short seller will return the borrowed stocks to the broker.

Let’s say you believe that the shares of Reliance Industries (RIL) are overvalued and will decline shortly.

1. You approach your broker and borrow a share of RIL at the current market price of ₹2500 per share.

2. You immediately sell the borrowed share for ₹2500

3. Time passes, and as you predicted, the price of RIL shares drops to ₹2480 per share.

4. Now, you decide to close your short position and buy back the shares. You use ₹2500 of the cash you received earlier to purchase one share of RIL.

5. You return the share to your broker, effectively closing the short position.

6. By buying back the share at a lower price, you made a profit of ₹20 (₹2,500 initial cash – ₹2,450 used to buy back shares) from the price decline.

Please note that short selling involves risk because if RIL’s shares had risen instead of fallen, you would have faced a loss, potentially needing to buy back the shares at a higher price.

Long Position vs Short Position

A long position means that the investor has bought the shares and is expecting the price to go up.
A short position means that the investor has short-sold a share and is expecting the prices to fall.
A long position makes a profit when the price rises while a short position makes a profit when the price falls.

What Are The Advantages of Intraday Trading?

1. Leverage

It enables the trader to trade in higher quantities with less capital, potentially making more profit or loss.

2. Short Selling

Short Selling allows traders to sell a stock first and buy it later. It means that the trader can make profits even when the market falls. Intraday trading enables the trader to make a profit wherever the market goes.

3. No Overnight Risks

Any economic, social, or political events affect the stock price, and if you are in a swing or positional trade in that stock, the stock price can open at a gap down, which could lead to loss. When comparing intraday trading to swing or positional trading, this risk does not exist as you square off your positions on the same day, and whatever happens overnight will not affect you.

4. Trading is a Great Business

Compared to traditional businesses, trading offers a high level of convenience for starting a venture. It requires minimal infrastructure and can be done from anywhere in the world with minimal expenses.

5. Cashflow

Trading profits get realized in actual cash on the same day. Therefore, trading can generate cashflows for you.

What are the Disadvantages of Intraday Trading?

1. Leverage

Leverage is a double-edged sword. Even though it can earn you potentially higher profits, it can also lead to potentially higher losses.

2. 95 – 99% of Intraday Traders Lose Money

Intraday trading is a difficult skill to master. Trading without proper knowledge can lead to huge losses. When starting, only use the money you can afford to lose as your capital. You can gradually increase your capital once you become better.

3. Time-Consuming

Intraday Trading is not only very time-consuming but also mentally demanding. You have to sit in front of the screen throughout the trading hours, resulting in physical and mental exhaustion.

How to Start Intraday Trading?

To start intraday trading, you need a Demat and trading account with a broker. If you still don’t have a Demat & trading account, create one right away using the links given below:

Demat & Trading Account with Fyers (FREE)

Demat & Trading Account with Zerodha

Free Demat Trading Account With Upstox

(Full disclosure: These are affiliate links. Use the links to support us at no extra cost.)

How to Measure Intraday Trading Returns?

We should always measure returns in percentage terms and not in absolute terms. Absolute returns will not give an idea of the capital used.

Returns = (Profit / Capital Used) X 100

If you made ₹1000 using ₹1,00,000 as capital, then your returns would be:

(1000 / 100000) X 100 = 1%

How to Make Profit from Intraday Trading?

To succeed in intraday trading, focus on learning the basics and mastering the best strategies. Start with minimum capital in the initial stages to practice effectively. Conduct thorough research and analysis, implement risk management techniques, and maintain discipline. These key elements will help you navigate the markets with a calculated approach, increasing your chances of profitability. Through continuous learning and discipline, you can make consistent profit in intraday trading.

Disclaimer: The information and examples mentioned in the article are purely for educational purposes. Please do your own research before investing or trading in the stock markets.

Tags beginners guide to intraday trading, intraday equity trading, intraday trading, intraday trading risks, intraday trading strategies, Jargons, leverage in trading, short selling in stock market, stop-loss in trading

Jargons

5 Best Steps to Find Quality Stocks in India

Post author By marketfeed Team
Post date July 4, 2023

Investing in the stock market can help you create wealth over the long term. However, it requires careful analysis and research to find good stocks. One must know how to effectively apply their knowledge of fundamental analysis to identify high-quality stocks. In this article, we present 5 best steps to find quality stocks to invest in for the long term.

Step 1: Identify a Stock

How do we choose high-quality stocks from the thousands of companies listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE)? Here are five ways to identify stocks and find if they are the right ones for us to invest in for the long term:

1. Friends and Social Circles

Take notes from friends and family who invest/talk about stocks and do more research on them. You may also run into online posts or articles about good companies that you can add to your watchlist.

2. General Observation

If you notice a brand or product performing well and gaining popularity, you can verify if that company is listed on the stock exchange. If yes, you can add them to the list. Even when you go to a supermarket, you can see what products have high demand and customer base and note them down for further analysis.

3. Using Stock Screeners

You can also use stock screeners like screener.in and Tickertape, which have good preset screeners to filter or compare companies based on their fundamentals. Apart from the inbuilt filters, such as financial ratios and growth in net profits, you can also create custom filters.

4. New Sectoral Trends and Rule Changes

You can always check which industries benefit from regulatory changes and take note of the listed companies in those sectors. General observation often allows us to identify sectoral trends in many cases.

For example, the electric vehicle (EV) sector is trending because the future is moving towards green mobility. You can identify the companies directly or indirectly linked to the industry benefiting from this trend, such as battery manufacturers, electric vehicle (EV) companies, and other relevant firms.

5. Your Circle of Competence

A circle of competence is the subject area that matches a person’s skills or expertise. If you are working in the IT sector, you can analyse the business models of IT companies and identify the best ones in this sector. On the other hand, if you’re working in the medical field, you can identify good-performing pharmaceutical companies.

Utilizing all the methods above is unnecessary; their sole purpose is to help us identify companies for further study or in-depth analysis.

Step 2: Understand the Business

After identifying various companies or stocks, it’s essential to gain a comprehensive understanding of their businesses.

1. Read annual reports

Annual reports provide a comprehensive overview of a company’s financial performance, strategies, and objectives. They typically include financial statements, management discussions, and analysis. These reports are essential for investors, stakeholders, and analysts to assess the company’s profitability, growth potential, and overall financial health. They serve as a valuable source of information for decision-making and evaluating investment opportunities.

2. Gather data from media reports and interviews

Another method to understand the company’s business is by listening to its founders and management. Watch interviews with the management and founders in which they talk about their company and its business. Read news articles about them.

3. Learn everything you can about the company, business, and competitors

If the company you are analysing has a moat or a unique selling proposition (USP), it’s a bonus. [Moat refers to a business’s ability to maintain competitive advantages over its competitors to protect its long-term profits and market share.]

You can also refer to the questions given below to understand more about a business. After getting answers to these questions, you will have enough information about a company to understand its business.

If you don’t understand a company’s business even after all this, it’s better that you don’t invest in it.

Step 3: Ensure Quality

1. Read annual reports

Reading the annual report can give you an idea about a company’s quality.

2. Read financial statements

Financial reports like a profit & loss statement and balance sheet help analyse a company’s spending decisions and debt levels.

3. Study financial ratios

Ratio analysis unveils a company’s performance and growth trajectory over time. It would be beneficial to compare a company with others in the same industry or sector. Additionally, comparing a company’s ratios with industry standards provides a better understanding of its position and performance.

You can use the checklist below to analyze quantitative and qualitative factors. The table below is only for reference. You should also consider other checklist points for better analysis.

Thus, we should check both quantitative and qualitative factors while ensuring quality.

Step 4: Check Valuation

After completing the steps mentioned above and compiling a list of high-quality stocks, the next crucial step involves evaluating the value of the companies on that list. Valuation is a quantitative process of determining the fair value of an asset, investment, or firm. In this step, we compare the market value and intrinsic value of the company and determine if it is undervalued or overvalued. The market value of a company is what it is currently worth according to the market. It is calculated using the formula below:

The market value is the value the market (retail investors and institutions) gives a company. However, the company also has a true value, which is called its intrinsic value. If the market value of a company exceeds its intrinsic value, the stock is overpriced or overvalued. On the other, if the intrinsic value surpasses the market value, it is undervalued.

After finding the intrinsic value of a company, we have two methods of investing:

1. Growth Investing

Buy a stock if it has a high growth history/potential and fits all your checklists. In growth investing, we ignore the intrinsic value of a company. If a company has been continuously growing for the past few years and still has high growth potential, we can buy its stock despite its overvaluation. For example, Hindustan Unilever has always been overvalued in the past, but it kept on growing despite its overvaluation.

2. Value Investing

Buy a stock if its current market price is lower than its intrinsic value. We choose not to buy overvalued stocks. Veteran investor Warren Buffet and his mentor Sir Benjamin Graham are renowned value investors.

Both growth investing and value investing can yield good returns. Growth investing is comparatively easier than value investing. However, if done right, value investing can build you a fortune!

There are many methods to value a company and find its intrinsic value. You can use Dividend Discount Model (DDM), Present Value Methods, etc to value companies.

Step 5: Make a Decision

After completing all these steps, your next action will be to make an informed decision. First, we identified a few stocks, understood their business, ensured the quality, and valued the companies. The final step is to decide whether to add that stock to your portfolio. While building a portfolio, it should be well diversified. So, we should avoid adding multiple stocks from the same industry to our portfolio.

When to Invest?

The two ways in which people invest in stocks are:

1. Lump Sum Investment

When we invest a huge amount into stocks all at once, it is called a lump sum investment. People usually do this when they receive bonuses or a large sum. However, the drawback of this method is that we cannot maintain a better average price. If we make a lumpsum investment and the stock keeps on falling, we cannot take advantage of this price discount as all the money was invested in a single go.

2. Systematic Investment Plan (SIP)

SIP is a method of investing a fixed sum regularly into a portfolio. Most salaried people have a regular income every month. Out of this, they invest a certain percentage as SIP. A better average price can be maintained in this method as the purchase price will be lower and higher sometimes.

In value investing, we only buy the stock when the intrinsic value is lower than its actual market value. Only a lump sum investment is possible here. On the other hand, with growth investing, we can invest in SIPs. One can perform technical analysis and buy the stock when its price dips or at regular intervals, such as monthly or weekly.

We should always invest in a portfolio of high-quality stocks while investing for the long term. If we invest in a single stock or sector/industry, there won’t be any diversification. When that particular industry starts performing poorly, our portfolio also dips substantially. Success in long-term investment is not finding or selecting that single multibagger stock. Rather, it is finding out and investing in a well-diversified portfolio.

Disclaimer: The information or any examples mentioned in this article are purely for educational purposes. Please do your own research before investing in stocks for the long term.

Tags Annual reports, financial ratios, financial statements, Fundamental analysis, Growth investing, high-quality stocks, investing, Jargons, Quality stocks for long term, SIPs, stock market investing, valuations, value investing

Jargons

What are Candlestick Charts & How to Read Them?

Post author By marketfeed Team
Post date July 3, 2023

A candlestick chart graphically represents a share/stock’s price and volume data. They help us visualise the price movement, making it easier to understand and analyse. In the past, traders had to constantly monitor the screen for hours and try to memorise significant price levels, which was practically impossible. Thankfully, the introduction of candlestick charts revolutionised how we interpret market data.

In this article, we will learn how to read candlestick charts, the types of candlesticks, and a few candlestick patterns.

What is a Candlestick Chart?

A candlestick chart is a type of price chart that displays four prices per data point. It shows the opening and closing prices and the high and low prices during a period. These price points are known as the OHLC data in short, which stands for Open, High, Low, and Close, respectively. Furthermore, a candlestick chart also portrays the emotions of the investors and traders.

Candlestick charts originated in Japan, where technical analysis has been in use for centuries. A Japanese rice trader, Homma Munehisa, developed a system of charting price movements using candlestick patterns and observations of market psychology. His work laid the foundation for candlestick charting methods.

Structure of Candlesticks

A candlestick chart is a collection of candlesticks. There are two types of candlesticks based on whether the price increases or decreases. They are bullish (green) and bearish (red) candles. A candlestick has three parts that depict four prices:

The central real body – It is a rectangular shape that connects the opening and closing prices.
Upper shadow – Indicates the high
Lower shadow – Indicates the low

The four price points are:

Open – The price at which the asset started trading in the timeframe.
High – The highest price at which the asset got traded.
Low – The lowest price at which the asset got traded.
Close – The price at which the asset got traded at the end of the time frame. The Last Traded Price (LTP) of the timeframe will be the closing price.

Both bullish and bearish candles have OHLC price points. However, the position of opening and closing prices in both are different.

If the closing price is higher than the opening price, it is known as a Bullish or green candle. On the other hand, If the closing price is lower than the opening price, it is known as a Bearish or red candle. A green or bullish candle symbolises buying, while a red or bearish candle symbolises selling. Next, let’s look at some basic candlestick charts!

Basic Candlestick Patterns

1. Bullish and Bearish Engulfing Patterns

A bearish engulfing candlestick pattern occurs during an uptrend and consists of two candles. The first candle is a bullish (green) candle, followed by a larger bearish (red) candle that completely engulfs or covers the previous candle’s range. This pattern suggests that selling pressure has increased, overpowering the previous buying momentum, and indicates a potential shift toward a downward trend. Traders often interpret a bearish engulfing pattern as a bearish signal.

On the other hand, a bullish engulfing pattern occurs during a downtrend. It also consists of two candles, but in the opposite configuration. The first candle is a bearish (downward) candle, followed by a larger bullish (upward) candle that completely engulfs the previous candle’s range. This pattern suggests that buying pressure has increased, overpowering the previous selling momentum, and indicates a potential shift toward an upward trend. Traders often interpret a bullish engulfing pattern as a bullish signal.

2. Bullish and Bearish Harami Patterns

A bullish harami pattern consists of two candles. The first candle is a large bearish (red) one, indicating a prevailing downtrend. The second candle is a smaller bullish (green) candle that is completely engulfed or covered by the body of the first candle. This pattern suggests that selling pressure may be weakening, and a potential trend reversal towards an upward move could occur. Traders often interpret the bullish harami as a bullish signal.

On the other hand, a bearish harami pattern also consists of two candles. The first candle is a large bullish (green) candle, indicating a prevailing uptrend. The second candle is a smaller bearish (red) candle that is completely engulfed by the body of the first candle. This pattern suggests that buying pressure may be diminishing, and a potential trend reversal toward a downward move could occur. Traders often interpret the bearish harami as a bearish signal.

3. Morning & Evening Star Patterns

A morning star pattern appears during a downtrend and consists of three candles. The first candle is a large bearish (red) candle, indicating the prevailing downtrend. The second candle is a smaller candle with a small body that may be bullish or bearish. This candle represents indecision in the market. The third candle is a large bullish (green) candle that closes near or above the midpoint of the first candle. This pattern suggests that the selling pressure is diminishing, and a potential trend reversal toward an upward move could occur. Traders interpret the morning star pattern as a bullish signal.

On the other hand, an evening star pattern appears during an uptrend and also consists of three candles. The first candle is a large bullish (green) candle, indicating the prevailing uptrend. The second candle is a smaller candle with a small body that may be bullish or bearish. This candle represents indecision in the market. The third candle is a large bearish (red) candle that closes near or below the midpoint of the first candle. This pattern suggests that the buying pressure is diminishing, and a potential trend reversal toward a downward move could occur. Traders interpret the evening star pattern as a bearish signal.

In conclusion, reading candlestick charts is not just about understanding the price and volume data. These candles provide insights into the underlying psychology and market sentiments. Identifying patterns and taking the right action at the right time can only get better with time and practice. Make sure to practice identifying patterns on historic charts to get your game on for actual trading.

Tags bearish candle, bullish candle, candlestick charts, candlestick patterns, how to read candlestick charts, Jargons, morning star, OHLC, price action, stock trading, stocks, Trading

Jargons

What is The Difference Between NSE and BSE?

Post author By marketfeed Team
Post date June 30, 2023

What is Stock Market?

A stock exchange plays a crucial role in facilitating the buying and selling of financial securities/instruments between investors and traders. The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the leading stock exchanges in the Indian market. These exchanges operate under the rules and regulations set by the Securities and Exchange Board of India (SEBI), an authoritative body dedicated to safeguarding investor interests and fostering the growth of the Indian stock market. Read on to learn more about the difference between NSE and BSE!

What is Bombay Stock Exchange (BSE)?

The Bombay Stock Exchange (BSE) was established way back in 1875. Located on Dalal Street, Mumbai, it is the oldest stock exchange in Asia. There are more than 5,400 companies listed on the BSE. Its benchmark index, the S&P BSE Sensex, is widely tracked by investors across the globe. The Sensex (Sensitive Index) tracks the performance of 30 of the largest and most actively traded stocks on the BSE. As of 2020, BSE is the 10th largest exchange in the world in terms of the cumulative market capitalisation of all companies listed on its platform.

What is National Stock Exchange (NSE)?

The National Stock Exchange (NSE) was incorporated in 1992. It is also located in Mumbai. NSE is ranked the third-largest stock exchange globally in terms of the total number of trades in equity shares. There are more than 1,600 companies listed on the NSE. It is the first exchange in India to implement electronic or screen-based trading. The Nifty 50 is NSE’s benchmark index that represents the weighted average of 50 of the largest companies listed on its platform.

What are the Differences Between NSE and BSE?

Both NSE and BSE provide a platform for companies to raise funds efficiently. The exchanges allow investors to trade in equities, currencies, debt instruments, derivatives (F&O), and mutual funds. Moreover, they provide services such as risk management, clearing and settlement, and investor education.

Basis of Difference	NSE	BSE
Brief	National Stock Exchange is the biggest stock exchange marketplace in India. They introduced the fully automated, electronic, and screen-based trading system in India.	BSE or Bombay Stock Exchange is the oldest and the first stock exchange, not just in India but in the whole of Asia. They offer high-speed trading for their customers.
Number of Companies Listed	NSE has nearly 2100 companies listed on it.	BSE has about 5300 companies listed on it.
Benchmark Indices	NSE’s benchmark index is the Nifty 50, which is based on the market capitalization of top 50 companies.	BSE’s benchmark index is the Sensex, which is calculated based on the market capitalization of 30 companies.
Derivates Contract	NSE has a higher market share in the derivatives market than BSE with a market share of about 94%.	BSE has a comparatively lower market share in derivatives with nearly 6%.
Liquidity	Of all the Indian stock markets, NSE has the greatest average daily turnover for equity shares.	Low liquidity in comparison to NSE.
Products Offered	Equity, Mutual Funds, Exchange-Traded Funds, Corporate Bonds, Initial Public Offering (IPO), Offer for Sale, and also Equity, Currency, and Commodity Derivatives.	Equity, Mutual Funds, Exchange-Traded Funds, Security Lending & Borrowing Schemes, Corporate Bonds, Initial Public Offering (IPO), Institutional Placement Program (IPP), Offer for Sale, and also Equity, Currency, and Commodity Derivatives.

Which is better, NSE or BSE?

While we cannot state specifically which is better, the choice will ultimately depend on your investing and trading styles/preferences. NSE is the preferred exchange for intraday, swing, and derivatives trading due to high liquidity. If you are a long-term investor, it does not matter where you buy/sell shares. However, BSE gives access to more than 5,000 stocks across various sectors. There could be a minor difference in the prices of stocks in NSE and BSE. The costs related to investing and trading are similar for both exchanges.

In conclusion, the investor’s profile ultimately determines which stock exchange they choose among the NSE and BSE. The NSE may be preferred due to its bigger trading volume, cutting-edge technology, and wide range of product offerings, while the BSE offers advantages due to its historical relevance and several specialized markets. Investors should carefully choose which exchange best fits their profile by evaluating their investment objectives, risk tolerance, and specific needs.

Tags Bombay Stock Exchange, bse, Indian market investments, Jargons, Long-term investment strategies, National Stock Exchange, NIFTY, NSE, NSE vs BSE, Portfolio diversification, sensex

Jargons

Share Market Investment Tips & Tricks

Post author By marketfeed Team
Post date June 28, 2023

Investing in the share market can be a great way to grow your wealth and achieve your financial goals. However, it can also be overwhelming for those who are just starting out. With so many stocks to choose from and a constantly changing market, it can be difficult to know where to start. In this article, we’ll explore a few share market investment tips and tricks to help you navigate the market and make intelligent decisions.

1. Understand the Different Types of Stocks and How They are Classified

Before you start investing in the share market, it’s important to understand the different types of stocks and how they are classified. Stocks can be classified in several ways: by market capitalization, sector, or investment style.

Market capitalization refers to the total value of a company’s outstanding shares and categorises stocks as large-cap, mid-cap, or small-cap.
Sector refers to the industry in which a company operates, such as technology, healthcare, banking, or energy.
Investment style refers to the approach that an investor takes while selecting stocks. Growth investors seek companies that offer strong earnings growth, while value investors look for stocks that appear to be undervalued in the marketplace.

2. Analyse Financial Statements to Pick Stocks

One of the most important aspects of investing in the stock market is understanding how to analyse financial statements and company earnings to pick stocks. Financial statements provide insights into a company’s financial performance, including its revenues, expenses, assets, and liabilities. By analyzing these statements, investors can gain insights into a company’s financial health and potential for growth. Company earnings (quarterly and annual) reports provide additional information on a company’s performance and can help investors make informed investment decisions.

3. Identify Market Trends and Investment Opportunities

Another key to successful investing in the share market is identifying market trends and investment opportunities. At any given time, the market can be in an uptrend, downtrend, or sideways trend. By staying up to date with market news and trends, investors can identify emerging sectors and companies that have growth potential. This can help investors to capitalise on opportunities and maximise their returns.

4. Create a Diversified Portfolio of Stocks to Reduce Risk

Creating a diversified portfolio of stocks and other investments is essential for reducing risk and maximising returns. By spreading your investments across different asset classes, sectors, and geographies, you can minimise the impact of any single investment on your overall portfolio. This can help to reduce the risk of loss and increase the potential for long-term growth.

5. Learn Technical Analysis to Make Informed Trading Decisions

Technical analysis refers to the study of historical price and volume to forecast future price movements. It does not take into account the financial statements of a company but only the historical price and volume of the shares of the company. Technical analysis can help investors to make informed trading decisions based on market trends and signals. Charting is a tool that is commonly used in technical analysis to visualise market data and identify patterns.

7. Start Systematic Investment Plans

Systematic Investment Plans or SIPs are a smart and hassle-free way to invest in stocks. It. involves investing a fixed amount of money at regular intervals, such as monthly or quarterly, regardless of market conditions. Whether you’re a beginner or a seasoned investor, SIPs provide discipline, convenience, and the potential for long-term wealth creation.

8. Invest in Blue-Chip Stocks

Blue-chip stocks are stocks of large, well-established companies with a proven track record of performance and stability. These stocks are often considered to be safe investments, as they are less likely to be affected by market volatility or economic downturns. By investing in blue-chip stocks, investors can benefit from steady growth, dividend payments, and the potential for long-term capital appreciation.

9. Avoid Stocks with High Volatility or Questionable Financial Statements

While investing in the share market can be lucrative, avoiding stocks with high volatility or questionable financial statements is important. High-volatility stocks can be risky and unpredictable, making them unsuitable for risk-averse investors. Stocks with questionable financial statements, such as high debt levels or low-profit margins, may also be risky investments. By conducting thorough research and analysis, investors can avoid these types of shares and minimize their risk of loss.

10. Approach a Financial Advisor to Manage Your Portfolio

Financial advisors are professionals who can help investors to manage their portfolios and reduce risk. They provide personalised investment advice and guidance based on an investor’s individual goals and risk tolerance. By utilizing their services, investors can benefit from professional advice and guidance, as well as a reduced risk of loss.

11. Avoid Common Investing Mistakes

Emotional investing and market timing are common investing mistakes that can lead to significant losses. It refers to making investment decisions based on emotions, such as fear or greed, rather than sound investment principles. Market timing refers to trying to predict the direction of the market and making investment decisions based on these predictions, which can be risky and unpredictable. By avoiding these common investing mistakes, investors can reduce their risk of loss and maximise their returns.

12. Stay up to Date with Market Trends

Staying up to date with market trends and news is essential for making informed investment decisions. By reading financial news and analysis, investors can gain insights into market trends, emerging sectors, and potential investment opportunities. This can help investors to make informed investment decisions and maximize their returns.

13. Set Realistic Financial Goals and Determine Your Risk Tolerance

By setting achievable financial goals, such as saving for retirement or a down payment on a house, investors can stay motivated and focused on their long-term objectives. Determining your risk tolerance is also important, as it can help you to select investments that align with your risk appetite and minimise your risk of loss.

In conclusion, investing in the share market can be a great way to grow your wealth and achieve your financial goals. While there is always a risk involved with investing, following these tips and tricks can help you limit the risk of loss and maximize your returns. Remember, investing in the share market is a long-term game. It requires patience, discipline, and a willingness to take risks. Whether you are a seasoned investor or just starting out, these tips and tricks can help you to succeed in the share market and achieve your financial dreams.

Disclaimer: The share market investment tips and tricks mentioned in the article are purely for educational purposes. Please do your own research or consult a registered financial advisor before investing in stocks.

Tags Blue Chip Stocks, Jargons, Market cap, market trends, share market investment, share market investment tips, Stock market, stock market for beginners, stock market tricks, technical analysis

Jargons

What are the Best Ways to Make Money From the Stock Market?

Post author By marketfeed Team
Post date June 27, 2023

The stock market is where shares of public companies are bought and sold. A share represents ownership in a company, and shareholders are entitled to a portion of the company’s profits. People have different perspectives on the stock market. Some consider it a great method to generate wealth, while others perceive it as a risky financial gamble. We firmly believe that the stock market can serve as an incredible opportunity for wealth generation and passive income. You need to gain a deep understanding of how it works to make money from the stock market.

Making money from the stock market is not a walk in the park. While the potential for making money is high, it also has an equally high risk of making losses. In this article, we will take a closer look at a few of the ways by which one can make money from the stock market.

1. Investing in Index Funds or Exchange-Traded Funds (ETFs)

An index fund is a type of mutual fund that tries to replicate the returns made by a stock market index such as Nifty 50 by investing in the constituent stocks of that index. These funds are passively managed. This means that the fund manager invests your money in the same securities that constitute the index and in the same proportion. The portfolio composition will remain unchanged.

An Exchange Traded Fund (ETF) is a type of fund that tracks the performance of a certain basket of assets such as an index and can be traded on the stock exchange. Unlike mutual funds, ETFs have low transaction costs, can easily be traded through any broker, and requires very low minimum investment.

2. Investing in Blue-Chip Stocks or Dividend-Paying Stocks

Blue-chip stocks are stocks of large well-established companies with an impeccable reputation and track record of stable earnings and performance. They are fundamentally strong companies with very high market capitalisations. Investing in these stocks is an easy and low-risk way to make money from the stock market.

Companies that make a profit may choose to share a portion of those profits with shareholders as dividends. As a shareholder, you will receive dividends based on the number of shares you own. Dividend payments can be quarterly, annually, or semi-annually. Investing in dividend-paying stocks can be a way to earn money from the stock market, as dividends provide returns in the form of cash to your bank account.

3. Investing in International Stocks or Emerging Market Funds

International funds are mutual funds that invest in the stocks of global multinational companies. Meanwhile, an emerging market fund is a fund that provides investors access to countries and regions that are undergoing economic transition. One can invest in such funds like any other mutual fund.

4. Investing in Initial Public Offerings (IPOs)

An Initial Public Offering (IPO) is a method by which a company raises equity capital from the public. Equity represents the ownership of a company. Once a company’s IPO is completed, its shares get listed in a stock exchange, i.e. BSE & NSE. You can invest in IPOs of fundamentally strong companies after thorough research. If the public response is positive, you also stand a chance to make money through listing gains.

5. Trading in Options & Futures Contracts

Futures and options are derivative contracts that derive their value from an underlying asset. These underlying assets can be indices, equities, currencies, commodities, etc. Although derivative contracts were originally invented to hedge risk, it is popularly used as a speculative instrument these days. With the right knowledge and skill, it can be a great way to make money from the stock market. However, derivatives trading is considerably hard and requires practice and learning. This makes it unappealing for beginners.

6. Day Trading or Swing Trading

Day trading or intraday trading refers to the buying and selling of equities or derivatives in a day. For example, if you buy a stock at 10 AM after the market opens and sell the stock at 2 PM before the market closes, it is intraday trading. The trader exploits the small price movements in the stock to make a profit. Features such as short-selling and leverage help to enhance returns and make profits even in falling markets.

Swing trading is a style of trading in which the trader buys and holds the stock for two or more days to capture the short to medium-term price movements in the stock. The trader takes delivery of the stocks and no leverage will be available. Short selling is also not possible in equity swing trading.

7. Investing in Value Stocks or Growth Stocks Based on Market Trends

Value stocks and growth stocks represent different investment philosophies: value investing and growth investing. In value investing, the focus is on finding stocks with intrinsic values higher than their current market value. In growth investing, the emphasis is on companies with strong growth prospects, regardless of their current valuation. Value investors like Warren Buffet and Rakesh Jhunjhunwala are known for their approach to buying undervalued stocks. Growth investors prioritise companies with good fundamentals and growth potential even if their current market value is higher than their anticipated or calculated value.

8. Investing in Socially Responsible Stocks or Funds that Align with Your Value

Investing in socially responsible stocks or funds that align with your value is a way to make money from the stock market. Here, you support companies that are committed to social, environmental, and governance (ESG) principles, while seeking returns. You can start by defining your values and researching funds or stocks that align with those values. Then you can move to invest in these funds or stocks.

Powerful Investment Hacks:

1. Approach a Financial Advisor to Manage Your Portfolio

Seeking professional advice can be beneficial, especially if you’re new to investing or prefer a hands-off approach. A financial advisor can provide personalized guidance based on your risk tolerance, financial goals, and investment horizon. These professionals can help construct and manage a well-diversified portfolio while ensuring it aligns with your individual circumstances.

2. Avoid Common Mistakes Such as Emotional Investing, Overtrading

Always have a solid investment plan, diversify your portfolio, avoid overtrading and chasing hot stocks, manage your emotions, regularly review and evaluate your portfolio, and seek professional advice if needed. Discipline and mindfulness can increase your chances of achieving long-term investment success.

3. Learn Technical Analysis to Make Trading Decisions

Technical analysis is a technique that uses historical price and volume data to form analysis and forecast the direction of prices that can be used for decision-making. Technical analysis can be applied to securities in any freely traded market around the globe. Utilising technical analysis and charting can be a helpful tool for making trading decisions, especially for short-term traders who rely on technical indicators and price patterns.

4. Start SIPs

Systematic Investment Plans or SIPs are a smart and hassle-free way to invest in stocks. It. involves investing a fixed amount of money at regular intervals (monthly or quarterly) regardless of market conditions. Whether you’re a beginner or a seasoned investor, SIPs provide discipline, convenience, and the potential for long-term wealth creation.

5. Analyse Financial Statements to Pick Stocks

Analysing financial statements and earnings is fundamental to stock picking. Consider reviewing financial health and performance, assessing profitability and growth prospects, and comparing with peers. Thorough research, considering economic and industry factors, and risk awareness are crucial. Fundamental analysis equips you with the right knowledge for analysing financial statements and company earnings.

In conclusion, making money from the stock market requires thorough research, planning, and risk management. Align your investments with your financial goals, risk tolerance, and time horizon, and regularly review and adjust your strategy. Start with small investments and gradually increase over time, staying informed about the market. A financial advisor can be valuable for beginners to avoid mistakes and make informed decisions.

Disclaimer: This article is only for educational purposes. Please do your own research before investing or trading in the stock market!

Tags Blue Chip Stocks, dividends, F&O, index funds, investing, investing in stocks, IPOs, Jargons, make money online, options, Stock market, Trading

Jargons

How to Make Side Income From Home?

Post author By marketfeed Team
Post date June 26, 2023

With rising inflation (essential items getting expensive), having an extra income can make your life easier. Although a full-time job can provide a stable income, it may not always be sufficient to meet your bills. The pandemic has proved how important, useful, and reliable the internet is to make additional money. Many people have started earning a side income online in addition to their primary income. Here are some great ways to earn a side income from home:

1. Investing in Stocks and Real Estate

One can easily make a side income by investing in stocks and other securities. You can buy and hold stocks, bonds, commodities, mutual funds, or exchange-traded funds (ETFs) for extended periods to grow your wealth. High-quality stocks that pay consistent dividends can be a source of passive income. When a company makes a profit, it may choose to distribute a portion of those profits to its shareholders in the form of dividends. As a shareholder, you will receive a portion of those dividends based on the number of shares you own.

Meanwhile, you can invest in real estate through Real Estate Investment Trusts (REITs). A REIT owns, operates, or finances income-generating real estate and pays out the cashflows as dividends. You can invest in stocks and REITs through any broker.

2. Creating a YouTube channel

YouTube channels that meet the eligibility criteria can monetize their videos through Google Adsense. Advertisements will be displayed before, during, or after the video, and you earn a percentage of the revenue those ads generate. Channels with huge viewerships can attract sponsors who’ll pay considerable sums of money to promote their products or services. The amount of revenue you can earn from youtube depends on various factors such as the number of views, engagement levels, and the type of content.

3. Renting Out a Property

Renting out unoccupied properties or homes can generate a decent passive income. You can either rent out properties privately or through platforms like Airbnb. The rental income depends on the type, location, size, and demand of the property. On Airbnb, you can rent out your whole property or just a few rooms. Maintaining the property periodically can generate maximum revenue. Leasing out your property is also a great way to make a side income.

4. Selling Products in Online Marketplaces

E-commerce platforms such as Amazon and Flipkart are great places to sell your products. You can list products on these platforms and sell them by paying a small commission to the e-commerce operator. This is highly economical compared to traditional commerce as the infrastructure needs are minimal.

5. Online Tutoring or Teaching

Chegg is an education technology company that helps with homework, digital & physical textbook rentals, textbooks, online tutoring, and other student services. As a Chegg expert, you can solve various questions in Mathematics, Healthcare, Earth science, Business, Engineering, and Science. You can earn up to ₹1 lakh side income from home every month.

Course Hero is also a platform like Chegg, but with more subjects like arts, humanities, languages, engineering and technology, Business, maths, science, and social science. You can make up to $1500+ per month.

6. Online Surveys and Microtasks

Amazon Mechanical Turk is a crowdsourcing platform for businesses to hire remotely located workers to perform discrete on-demand tasks that computers are currently unable to do. It is owned by Amazon and operates under Amazon Web Services. Employers post jobs known as Human Intelligence Tasks (HITs) such as identifying specific content in an image or video, writing product descriptions, or answering survey questions. You can browse among existing jobs and complete them in exchange for a fee set by the employer. The payment will be in cash or Amazon gift cards.

Swagbucks is a platform that pays you for giving your opinion in various surveys. You can select from thousands of surveys. You can choose the length and reward amount of the survey from the available surveys. The surveys can be of any type such as reviewing upcoming super bowl ads, sharing your political beliefs, testing new products, being a mystery shopper, or helping a company decide on a new slogan. The payment will be in SB points, and you can redeem these points for cash or gift cards.

7. Affiliate Marketing

Amazon Associates Program helps content creators, publishers and bloggers monetize their traffic. With millions of products and programs available on Amazon, associates use easy link-building tools to direct their audience to their recommendations and earn from qualifying purchases and programs. Advertising fees for qualifying purchases differ based on the product category.

8. Freelancing

Upwork is a marketplace for freelancers in fields like writing, translation, graphic design, web development, finance, and accounting. The platform helps freelancers find projects, communicate with clients, and get paid. To start, create a profile, search for jobs, submit a proposal, make a contract, and complete the work. This way you can easily make a side income from the comfort of your home.

Fiverr is also a platform aimed at freelancers. You get paid to design websites, logos, and much more. You can offer any service you wish as long as it’s legal and complies with Fiverr’s terms.

9. Creating and Selling Digital Products

If you have good subject knowledge in any topic, you can plan a curriculum and record classes that can then be sold online on platforms like Udemy from the comfort of your home. You can add assignments, quizzes, and exercises to the course for creating a more rich learning environment. The payout depends on the number of courses sold and learner engagement.

10. Renting Out Your Belongings

Renting out your personal belongings can be a great source of side income. You can rent out your car on days that you do not use it for a daily minimum charge and an additional charge per extra kilometre.

Electronic items such as cameras, projectors, laptops, tablets, gaming consoles, etc, can be easily rented out.

Renting out personal belongings can be a convenient way to generate extra income, but it’s important to ensure that your belongings are protected and that you have the appropriate insurance coverage in case of damage or theft.

11. Online Transcription Services

Transcribeme is a platform that provides transcription services through machine learning technology and human transcriptionists. It involves the conversion of audio and video clips into texts. To join, you only need a computer and a stable internet connection. Headphones or earphones will enhance the transcription process.

In conclusion, earning a side income from home is always beneficial as it increases your purchasing power. Income diversification, financial security, increased savings, and debt reduction are a few benefits of having a side income. Before you commit your money and resources to such income sources, always perform a proper analysis to understand the risks involved!

Tags airbnb, investing, Jargons, make money online, online business, online income, online tutoring, real estate, side income, side income from home, work from home

Jargons

What are The Best Ways to Generate Passive Income?

Post author By marketfeed Team
Post date June 23, 2023

Passive income is what you earn when you don’t actively work or put forth constant effort on a task/job. It includes regular earnings from a source other than your employer. Simply put, it is an income source that will make you money while you sleep. In this article, we will explore a few reliable ways to generate passive income, ranging from investing in real estate to creating digital products. So, let’s dive in and explore some of the best ways to generate passive income:

1. Investing in Dividend-Paying Stocks

High-quality stocks that pay consistent dividends can be a source of passive income. When a company makes a profit, it may choose to distribute a portion of those profits to its shareholders in the form of dividends. As a shareholder, you will receive those dividends based on the number of shares you own. Some companies pay dividends quarterly, while others may pay them annually or semi-annually. More importantly, you can generate good passive income over the long term by investing in shares of top Indian companies.

Dividend yield mutual funds and dividend smallcases are a great way to invest in dividend-paying stocks!

2. Creating a YouTube channel

YouTube channels that meet the platform’s eligibility criteria can monetize their videos through Google AdSense. Advertisements will be displayed before, during, or after the video, and you earn a percentage of the revenue those ads generate. Channels with huge viewerships can attract sponsors who’ll pay considerable sums of money to promote their products or services. The amount of revenue you can earn from YouTube depends on various factors such as the number of views, engagement levels, type of content, etc.

3. Renting Out Properties

Renting out unoccupied properties or homes can help you generate passive income. You can either rent out properties privately or through platforms like Airbnb. The rental income depends on the type, location, size, and demand of the property. On Airbnb, you can rent out your whole property or just a few rooms. Maintaining the property periodically can generate maximum revenue.

4. Creating and Selling Online Courses

If you have good subject knowledge in any topic, you can plan a curriculum and record classes that can then be sold online on platforms like Udemy. You can add assignments, quizzes, and exercises to the course for a rich learning environment. The payout depends on the number of courses sold and learner engagement.

5. Starting a Blog

A blog is an informational website published on the internet, consisting of discrete, often informal diary-style text entries. Posts are typically displayed in reverse chronological order so that the most recent post appears first, at the top of the web page. You can run ads and affiliate links on your website that creates revenue. Sponsored posts are also another great way to generate income from blogs.

6. Affiliate Marketing

It is a performance-based marketing strategy that pays the affiliates for the visitors or customers brought by them to the business. Affiliate links are placed often on banners on the website or in the form of affiliate links. When a reader clicks on the affiliate link and purchases a product or service, the affiliate earns a commission from the business. The amount of commission varies depending on the agreement between them. Affiliate marketing can be done through various mediums such as websites, social media platforms, emails, podcasts, etc.

7. Selling on Amazon and Other Marketplaces

E-commerce platforms such as Amazon and Flipkart are great places to sell your products. You list your products on these platforms and sell them by paying a small commission to the e-commerce operator (Amazon, Flipkart, etc). This is highly economical compared to traditional commerce as the infrastructure needs are minimal.

8. Investing in REITS

A Real Estate Investment Trust or REIT allows you to invest in real estate companies and earn income. A REIT owns, operates, or finances income-generating real estate. These trusts take money from small and big investors and put it into real estate companies. A REIT can possess several properties like complexes, infrastructure, healthcare units, apartments, and more.

REITs can be a reliable source of passive income as they are legally required to pay out a minimum of 90% of their income to shareholders. Brokers such as Zerodha and Groww allow you to buy and sell REITs like shares.

9. P2P Lending

Peer to Peer or P2P lending is a form of lending directly between individuals without a bank. The banks charge a high-interest rate from borrowers and return a low-interest rate to depositors. The absence of banks results in a higher yield to depositors. Most P2P facilitators diversify the deposits and lend to multiple borrowers to mitigate default risk.

You could look into platforms like Lendbox, a Reserve Bank of India-certified P2P-lending NBFC. One can earn up to 11% returns per year with daily or monthly interest credits.

10. ATM Franchise

Like starting a Mcdonalds’ or KFC franchise, you can start an SBI ATM franchise. The Reserve Bank of India (RBI) has allowed companies to set up ATMs on behalf of the bank through a franchise model with the mission to provide ATM facilities to all corners of India. Tata Indicash is the most popular of the four companies authorized to give franchises.

For the installation, you need at least an 80-sq.ft ground floor commercial space with a minimum of 100 footfalls a day. A refundable security deposit of ₹2 lakhs and an additional ₹3 lakhs of working capital should be maintained. The revenue generated depends on the transactions. A monthly revenue of ₹45,000 to ₹50,000 can be expected if there are 300 transactions per day. SBI pays ₹8 per cash transaction and ₹2 per noncash transaction. You can apply for the ATM franchise from the Indicash website.

11. Royalty from Books, Music, and Podcasts

Royalty refers to the payment by one party to another for the ongoing right to use an intellectual asset.

Authors can earn royalties from the sale of books that they write. It can either be based on the number of books sold or the number of books printed.

Artists can earn royalties by publishing music on various platforms like Apple Music and Spotify. The royalty will be based on the platform’s average pay per stream.

You can stream podcasts on platforms such as YouTube and Spotify. Content with high engagement and popularity can attract sponsorships and paid advertisements, which can be an additional revenue stream. The number of listeners and engagement affects the pay scale.

We have mentioned a few methods by which you can generate passive income. You can earn an extra income without putting in continuous effort! However, it’s crucial to approach such opportunities with caution and ensure that they are legitimate and trustworthy. Explore platforms that leverage your skills, expertise, or hobbies so that you can enjoy the process while earning!

Disclaimer: This article is only for educational purposes.

Tags airbnb, amazon seller, blogs, dividend stocks, earn income, earn passive income, generate passive income, online courses, passive income, REITs, royalty, stocks, youtube

Jargons

What are Active Income and Passive Income?

Post author By marketfeed Team
Post date June 22, 2023

“If you don’t find a way to make money while you sleep, you will work until you die” – Veteran investor Warren Buffett. But what does he mean when he says, ‘Make money while you sleep’? In this article, we will explore the concepts of passive and active income, their differences, and a few ways to earn a passive income.

What is Passive Income?

Passive income is what you earn when you don’t actively work or put forth constant effort on a task/job. It includes regular earnings from a source other than your employer. Simply put, it is an income source that will make you money while you sleep.

Examples of Passive Income:

Returns from stock/mutual fund investments, dividends, rental income, royalties from book sales, and YouTube revenue are the best examples of passive income.

What is Active Income?

Income earned by performing a service or work actively is termed active income. All the income sources that require persistent work and effort are active income sources.

Examples of Active Income:

The best examples are salaries, wages, and commissions earned from jobs and professions.

How to Earn Active Income?

The most traditional and popular method of earning active income is through full-time jobs. The skills, knowledge, and expertise you have in an area get used for the job. A professional job requires a college degree, while a non-professional job does not. You can look for job openings online on platforms such as Linkedin or in newspapers.

You can also earn an active income by offering freelancing services such as writing, video editing, coding, designing, etc.

What is the Difference Between Active and Passive Income?

Active and passive income are two types of income sources that differ only in terms of effort and time spent to earn them.
An active income can only be earned by devoting a significant part of your time and effectively applying your skills or expertise.
In contrast, passive income eliminates the need for active involvement after the initial effort. However, periodic maintenance and upkeep are required for some passive income sources.

Why is Passive Income Important?

“Passive income” has become one of the most trending topics over the past few years. But why is there so much hype around it? Its rising popularity can be attributed to people’s desire to make extra money without too much effort. A few reasons why you should have a passive income are discussed below:

1. Beat Inflation

Inflation is the increase in the general price level of goods and services in the economy. It eats away the purchasing power of money. With a passive income, you earn more money which can be used to meet expenses comfortably during periods of rising inflation.

2. Financial Freedom

Financial freedom is a desirable condition of having enough money in your bank account to cover your expenses without having to work, run a business, or rely on others. Having a passive income can improve your chances of financial freedom as the extra income can be invested in the long term.

3. Reduced Stress

The inability to pay bills and meet expenses is one of the leading causes of stress and anxiety. By sourcing extra funds through passive income, you will be left with more money that can be used to meet expenses comfortably and on time.

Passive income can give you more freedom and flexibility to pursue personal interests and goals. Spending quality time with family and friends, travelling, and exploring new hobbies can become a reality as passive income sources can reduce work hours.

4. Diversification

Passive income helps you diversify your income streams. Not having a backup source of income will greatly affect you if something happens to your primary income. It will also give you additional income hence increasing your purchasing power.

5. Early Retirement

Multiple passive income sources can create higher surplus funds that can be invested for the long term, which can mean early retirement. Reliable passive income sources can also contribute to retirement income.

Pros and Cons of Active and Passive Income

	Pros	Cons
Active Income	Reliable, consistent income, career advancement	Requires more time & energy, limited earning potential, lack of flexibility
Passive Income	Flexibility, unlimited earning potential, diversification, financial independence	High initial investment, inconsistent & unpredictable income.

Importance of Diversifying Income Streams

As the saying goes, “Don’t put all your eggs in one basket.” Relying on a single source of income is not financially intelligent. If the single income source is to stop, you might be in big trouble. Multiple passive income sources will cushion you during financial adversities and help maintain financial stability.

For example, a large number of companies went out of business and many lost their jobs during the pandemic. If they had a source of passive income, the layoff wouldn’t have affected them much.

This is why diversification of income streams is crucial.

Myths About Passive Income

Here are a few myths and misconceptions about passive income sources:

1. Passive Income is Always Reliable

Some types of passive income are unreliable. For example, stock dividends might fall during an economic crisis as the companies’ profits might reduce. Rental income may also decline if the property is mismanaged or not maintained properly.

2. Passive Income Requires Huge Initial Capital

While a few passive income sources require high investments, plenty of options do not. Buying and renting out a property requires high initial investment and maintenance costs while starting an online blog or course can be done at minimal costs.

3. Passive Income is a Get-Rich-Quick Scheme

Passive income is not a get-rich-quick scheme. It requires patience, hard work, and dedication to create a sustainable and reliable source of income.

4. Passive Income is “Completly Passive”

Although passive income needs less work than active income sources, it still requires periodic maintenance and review to sustain and grow the income stream.

Mistakes to Avoid When Pursuing Passive Income

Below are a few tips that you should follow when pursuing passive income to increase your chances of success:

1. Perform Due Diligence

Before committing to any passive income streams, thoroughly research the available options and understand the risks involved. Due diligence can minimize the risks associated with passive income investments and increase your chances of success. It’s important to be patient and take the time to thoroughly evaluate any investment opportunity before committing your funds.

2. Diversify Income Streams

Diversification is crucial when it comes to passive income. Investing all your money in a single source can be risky as it increases your exposure to potential losses. So you’ll need to allocate your money across various financial instruments or industries.

3. Maintain Risk to Reward

High-reward passive income sources can be attractive, but they often come with the same level of risk. It is essential to balance the risk to reward when selecting passive income streams.

4. Don’t Underestimate the Effort Involved

Even passive income streams require some effort and maintenance. Being realistic about the time and effort required to manage your investments and income sources.

How Much Money Can You Make From Passive Income?

The major drawback of active income is scalability and earning potential. Even though it has a higher earning potential in the short-term, passive income sources can earn you more in the long term and possibly in the short term too. The amount of money that you can make from passive income sources depends on several factors such as the type of income stream, the amount invested, the scale of operations, and performance level.

Passive income sources such as trading and real-estate business can generate huge returns if you have sufficient capital and the right strategies.

Future Trends and Opportunities in Passive Income

In the era of digitization and technology, there are lots of opportunities for earning a passive income. Web3 and Artificial Intelligence (AI) have opened up earning opportunities like never before. It is clear that the future will be technology intensive. Therefore, future trends and opportunities lie in tech and related areas.

In conclusion, there are two kinds of income sources: active and passive. While passive income is generated through investments and doesn’t require constant attention or effort, active income involves exchanging time and effort for money.

Both types of income have advantages and disadvantages, but passive income offers greater flexibility, scalability, and the potential for more significant long-term returns. However, it requires careful planning, research, and a willingness to accept some level of risk. Ultimately, multiple sources of passive income are what we should strive for. You can achieve a more stable financial future by using your active income to invest in passive income streams!

Tags active income, active vs passive income, diversification, early retirement, financial freedom, Jargon, marketfeed, passive income, Portfolio, Stock market

Jargons

Easy Steps To Earn Money From Trading

Post author By marketfeed Team
Post date June 21, 2023

Several studies conducted over the past few years suggest that a staggering 95% of Indian traders lose money in the markets! But we believe that with the right approach, making a profit through trading in the stock market can be achievable. In this article, we will suggest some easy steps to help you earn money from trading. These suggestions will not only help you execute profitable trades but also help you manage risk and avoid common mistakes that could lead to significant losses. Here are a few easy steps to earn money from trading:

1. Set Realistic Financial Goals and Determine Your Risk Tolerance

Before you start trading, you must understand how much money you should aim to make from the stock market. Moreover, you must set realistic financial goals and determine your risk tolerance. If you ask beginners, the two most common answers would be as much as possible, or in absolute terms, maybe ₹5000 or ₹10,000 a day with very less capital. If this is your perspective, then you need to reconsider it as soon as possible. Your goal must be to meet industry benchmarks in the trading ecosystem.

The top traders in India make nearly 40-70% returns on their capital every year. So you should aim to generate the industry benchmark of 40-65% returns per year through trading. Risk tolerance refers to the level of financial risk that you are willing and able to withstand. You must only trade with the money that you are willing to lose.

2. Choose a Trading Platform or Broker That Fits Your Needs and Budget

A broker is an intermediary that facilitates transactions in the stock market. If you want to start trading, you should open a trading and Demat account with a broker. While choosing a trading platform or broker, you must select one that fits your needs and budget. Discount brokers such as Zerodha and Fyers are excellent new-age trading platforms. However, it is always better to test out a platform first before you start trading. You also need to look out for brokerage and other charges while selecting a broker.

3. Develop a Trading Plan That Includes Entry & Exit Points, SL Orders, and Profit Targets

Developing a trading plan that includes entry and exit points, stop-loss (SL) orders, and profit targets is crucial for successful trading. It helps you stay disciplined, manage risk, and avoid making impulsive or emotional decisions. The trading plan should be based on your risk appetite and market outlook. It should also be flexible enough to adjust to changing market conditions. By having a solid trading plan in place, you can make more informed trading decisions and improve your chances of achieving your financial goals.

4. Choose a Trading Style That Fits Your Personality and Time Availability

Choosing a trading style that fits your personality and time availability is crucial to your success as a trader. There are several trading styles to choose from such as swing and intraday trading.

Intraday trading involves buying and selling securities (shares, commodities, currency, derivatives) within the same trading day. Day traders usually hold positions for a few minutes to a few hours and aim to make profits from short-term price fluctuations. However, this style requires a lot of time and attention, as you need to monitor the markets closely throughout the day. For this reason, this trading style is not suitable for office-goers and students.

On the other hand, swing trading involves holding positions for several days to a few weeks. Swing traders aim to capture medium-term price movements and tend to have a more relaxed trading schedule than day traders. This style of trading is most suitable for traders with busy schedules.

5. Learn Basic Technical Analysis and Charting to Make Informed Trading Decisions

Technical analysis refers to the study of historical price and volume to forecast future price movements. It does not take into account the financial statements of a company but only the historical price and volume of the shares of the company. Candlestick charts (which visually represent the price & volume of securities) and indicators form a part of technical analysis. They are tools used to analyse charts and make predictions about future trends.

Once you learn basic technical analysis and charting, it is very crucial to practice with the help of historical data. Once you feel comfortable with basic charting, start analysing current market data. Use your charting platform to track price movements, identify trends, and make informed trading decisions based on your analysis.

6. Use Risk Management Strategies

Utilizing risk management strategies is essential for investors who want to protect their capital and reduce the risk of losing money. Two key risk management strategies are stop-loss orders and position sizing.

A stop-loss (SL) order acts as a safety net for traders by automatically triggering a sell order if the price of a security falls to a certain level. It protects traders from significant losses and allows them to manage their risk.

Position sizing refers to the amount of capital allocated to each trading position. It helps you determine the right quantity of shares or derivative contracts to buy or sell to manage your risk effectively. By sizing your positions appropriately, you can control the potential impact of a trade on your overall portfolio and protect yourself from excessive losses.

Together, these tools help traders manage risk and protect their capital. You need to determine your risk tolerance and use these strategies to protect your hard-earned money while still being able to take advantage of market opportunities.

7. Stay up to Date With Market Trends and News

Staying informed about market trends and news is critical for making informed trading decisions. To stay informed, follow financial news outlets such as the Economic Times, Bloomberg, and CNBC, and follow financial experts and analysts on social media platforms. Attend investment conferences and events to network with other investors and learn from industry experts. Conduct your own research on companies and industries, and utilize analytical tools such as stock screeners to make profitable trading decisions.

8. Avoid Overtrading

Trading in the stock market can be an exciting and potentially profitable venture. However, it’s crucial to exercise caution and avoid overtrading. Overtrading can lead to excessive transaction costs, eating into your profits. Placing frequent trades may result in emotional decision-making, leading to impulsive and irrational choices. Moreover, constantly monitoring the market and executing trades can be time-consuming and mentally exhausting.

Instead, adopting a patient and disciplined approach, creating and sticking to a specific trading strategy. Avoiding excessive trading can lead to more consistent long-term success in the stock market and earning money from trading.

9. Use a Paper Trading Account to Practice Your Trading Strategies

Utilizing a paper trading account is a great way for traders to practice and refine their trading strategies before investing real money. By using a simulated trading account that allows you to trade securities using virtual money, you can gain a realistic trading experience without risking real money.

However, real trading has an emotional factor as real money is involved. Paper trading accounts simulate real market conditions, including price movements, order types, and market data, which helps you gain confidence in your trading abilities. You can use a paper trading account to test and refine your trading strategies, experiment with different strategies, and find what works best for you.

10. Keep Track of Your Trading Performance and Adjust Your Strategies as Needed

Keeping track of your trading performance and adjusting your strategies as needed is crucial for success in trading. By tracking your performance over time, you can identify patterns in your trading behaviour, measure progress, and make more informed trades. Additionally, tracking your performance allows you to make data-driven decisions and reduce the likelihood of making emotional or impulsive decisions. By identifying which strategies are working and which are not, you can make adjustments to your trading strategies and improve your overall investment performance to earn money from trading.

May your trading journey be filled with success!

Tags broker, Jargons, paper trading, stock market trading, stockmarket trends, technical analysis, traders, trading risks, trading style, trading tips

Jargons

How to Safely Invest in Stocks and Make Money

Post author By marketfeed Team
Post date June 20, 2023

In today’s fast-paced financial world, investing in stocks has become an attractive option for individuals looking to grow their wealth. However, it’s important to approach stock market investing with caution and a well-thought-out strategy. This article serves as a comprehensive guide on how to safely invest in stocks and make money while minimising risks.

(Before diving into the world of stock market investing, it’s crucial to learn the basics and understand the risks associated with it. Learn concepts like stocks, shares, and equity markets. Stock prices fluctuate based on market conditions, economic factors, and company performance. So be prepared for potential losses and understand the importance of a long-term investment approach).

1. Create a Diversified Portfolio of Stocks and Other Investments

Diversification is the key to managing risk in your investment portfolio. Spread your investments across different sectors, industries, and asset classes. This diversification minimizes the impact of any single investment on your overall portfolio performance. Explore other investment options like bonds, real estate, or commodities to further diversify and balance your risk exposure.

2. Invest in Low-Cost Index Funds or ETFs

Index funds and Exchange-Traded Funds (ETFs) offer a simple and cost-effective way to gain exposure to a broad market index. These funds track the performance of a specific market index such as NIFTY. By investing in index funds or ETFs, you can achieve instant diversification and benefit from the overall growth of the market while minimizing the risk associated with individual stocks.

3. Invest in Blue-Chip Stocks

Blue-chip stocks are shares of well-established companies with a history of stable earnings and dividend payments. These companies have a strong market presence, solid financials, and often operate in mature industries. Investing in blue-chip stocks can provide stability to your portfolio and offer potential long-term growth opportunities. Reliance Industries, Tata Consultancy Services, HDFC Bank, Hindustan Unilever, Infosys, and ITC are examples of some blue chip stocks in the Indian stock market.

4. Invest in Companies with a Strong Economic Moat

Identify companies with a competitive advantage or a strong economic moat. Such companies have unique strengths, such as superior technology, brand recognition, or intellectual property rights, that make it difficult for competitors to replicate their success. Investing in companies with a sustainable competitive advantage can provide long-term growth and a higher margin of safety.

5. Start SIPs

6. Conduct Thorough Research and Analysis Before Investing

Performing comprehensive research and analysis is essential before making any investment decision. Evaluate a company’s financial statements, growth prospects, competitive landscape, and industry trends. Look for companies with a strong balance sheet, low debt-to-equity ratio, and consistent cash flow generation. A healthy financial position indicates stability and the ability to survive economic downturns.

Utilize fundamental and technical analysis tools to assess the intrinsic value (the real worth) and growth potential of a stock.

7. Avoid Stocks with High Volatility or Questionable Financial Statements

Volatility can lead to significant price swings and increased risk. Avoid stocks with excessively high volatility unless you have a high-risk tolerance and are actively engaged in short-term trading strategies. High volatility can make it challenging to predict future price movements and increases the potential for losses.

Always exercise caution while dealing with companies that have questionable financial statements. Conduct thorough due diligence and ensure the company’s financials are transparent and reliable. Look for warning signs such as inconsistent earnings, high debt levels, or a history of accounting irregularities. Investing in fundamentally strong and transparent companies reduces the risk of financial fraud or misleading information.

8. Use Risk Management Strategies to Limit Losses

Implementing risk management strategies is crucial for protecting your investment capital. One effective tool is a stop-loss order, which automatically sells your shares if they reach a predetermined price level. This strategy helps limit potential losses during market downturns or if a stock’s price experiences a significant decline. Consider setting a stop-loss order at a level that aligns with your risk tolerance and investment goals.

9. Invest in Dividend-Paying Stocks for Long-Term Income Generation

Dividend-paying stocks provide a reliable source of income and can contribute to long-term wealth creation. Look for companies with a history of consistent dividend payments and a sustainable payout ratio. Dividends not only provide regular cash flow but also indicate a company’s profitability and financial strength. Reinvesting dividends can amplify returns through the power of compounding. Click here to learn more about dividends!

10. Approach a Financial Advisor to Manage Your Portfolio

Seeking professional advice can be beneficial, especially if you’re new to investing or prefer a hands-off approach. A financial advisor can provide personalized guidance based on your risk tolerance, financial goals, and investment horizon. These professionals can help construct and manage a well-diversified portfolio and make sure it aligns with your individual goals and aspirations.

11. Avoid Common Investing Mistakes Such as Emotional Investing or Market Timing

Emotional investing and market timing are common dangers that can erode investment returns. Emotional decision-making driven by fear or greed often leads to impulsive and ill-informed investment choices. Similarly, trying to time the market by predicting short-term price movements is notoriously difficult and can result in missed opportunities and losses. Adopt a disciplined and rational approach to investing, focusing on long-term objectives rather than short-term fluctuations.

12. Staying Up to Date with Market Trends and News

Stay informed about market trends, economic indicators, and industry developments. Regularly review financial news, company announcements, and macroeconomic factors that impact the stock market. Subscribe to reputable financial publications, follow trusted analysts, and leverage online resources to stay updated. This information can help you make informed investment decisions based on a broader understanding of the market environment.

Investing in the stock market can be highly rewarding if you approach it with a focus on safety and long-term wealth creation. By following the strategies outlined in this article, you can mitigate risks and increase the likelihood of achieving your financial goals. Remember, investing in stocks involves inherent risks, and there are no guarantees of returns. It’s essential to conduct thorough research, seek professional advice when needed, and stay committed to a disciplined, long-term investment approach. Consult a qualified financial professional before making any investment decisions.

Happy Investing!

Tags bluechip stocks, dividend stocks, ETF, indian stocks, invest india, Investing in India, Jargons, Long-term investment strategies, safe investments, SIPs, stock investing, stock portfolio