Who is Trader & who is Investor.

Trader
 Buying and selling of shares based on technical analysis or market trend for very short duration like from single day to couples of days is called trader. Mostly trading is done through out the day and with it is called as Day trading or Intraday trading.
Traders buys and sells stock but not worried about the company's performance or how strong the company is.

Investor
Buying shares after analyzing the fundamentals of the company and holding them for long term like from couple of months to couple of years is called Investor.
Investor buys company's shares only after analyzing its worth. If the current stock price is available at discount or undervalued than he buys it for long term prospective.

How stock market works.

To learn about how you can earn from stock market first of all one has to understand how it works. When a person want to buy or sell shares in the stock market then he has to first place an order with a broker or can do themselves using online trading systems. ( explained later )
When you place the buy order, the message is transferred to exchange ( either NSE National Stock Exchsnge or BSE Bombay Stock Exchange ) and the order stays in queue of exchange's other orders and get  executed if the price of that share comes to that value. Once you get confirmation of this transaction of purchased share, will be sent to your Demat account . The shares will be stored in demat account in an electric format.

TYPES OF MARKET

Basically there are two types of markets,
1. Primary market
2. Secondary market

Primary market
A Primary market is a place where a companies, government and other corporate bodies sell new shares and other financial products. In Primary market trading is not allowed.
Like any listed company sells IPO ( initial public offer ) then it happens in primary market or whenever any already existing company goes public then at that time it issue an IPO in primary market.

Secondary market
A market place where actual share trading ( Buying & Selling ) takes place is called Secondary market.
Majority of share trading in India happens in two top exchanges NSE & BSE.

Understand Stock market

STOCK MARKET or SHARE MARKET

A Share marketor Stock market is the place where buying and selling of shares takes place. Now a days due to internet and modern technology there is no need to present physically in the exchanges like NSE, BSE but infact the buying and selling of shares can be done from anywhere in the world.
One should have demat and trading account, computer and internet connection and he or she can start trading from anywhere. 

SHARE or STOCK

Share or Stock is nothing but the ownership of the company divided into small portion and each portion is called Share or Stock. It is also known as different names like Equities, Financial securities and so on.
A person carrying share of a company holds that part of ownership in that company. Holding maximum shares carrying maximum ownership and designated as Chairman or Director.

World's Shortest Story of 100 years.

                                         
In 1920s a family needed Rs 1 for a month to survive
In 1940s a family needed Rs 10 for a month to survive
In 1960s a family needed Rs 100 for a month to survive
In 1980s a family needed Rs 1000 for a month to survive
In 2000s a family needed Rs 10000 for a month to survive
Now apply your brain and work out yourself
WHAT A FAMILY NEEDS IN 2020 FOR A MONTH TO SURVIVE.
In 2020s a family needs Rs ___________ for a month to survive. ( Fill the Blank )


( Here word survive mean's an average life style of middle class people).

Want to be Millionare, then start investing early.

George Bernard Shaw had it right when he said "Youth was wasted on the young".
When you are in your 20s, your typical worries include graduating from college, getting job and chatting on web. thinking about how you are going to support your family how you retire doesn't usually top your list of concern.
Thanks to the magic of compounding, money saved early on has more time to grow.

                                                    
Let's try and understand with example of two friends Ram and Shayam. Both start working at same time at the age of 23.
Ram start saving when he turn 25 and he invests Rs 50,000 every year. Assuming that he earns a return of 10%  every years, at the end of ten years, Ram has been accumulate Rs 8.77 lacs.
After that, due to some person finiancial problems Ram is not able to invest Rs 50,000 every year but at the same time he does not touch the money that he has already accumulated, hoping to live on it when he retires.
He lets the Rs 8.77 lacs grow and assuming that it continues to earn a return of 10% every year, he would have been able to accumulate around Rs 95 lacs by the time  he turn 60.
So the Rs 5 lacs ( Rs 50,000 x 10 years ) he had invested in the first 10 years has grown to 95 lakhs. even though Ram has stopped investing Rs 50,000 every year after first 10 years.

 Now let's take the case of Shayam.During the first few years of his life Shayam enjoyed life spending money on all kind of things rather that invest regularly. At the age of 35 reality suddenly drawn on him and he start investing regularly Rs 50,000 every year. He invests this amount every year till he turn 60 that means for complete 25 years. Assumong he also earns a return of 10% per year on his investments.
At the end Shayam managed to accumulate Rs 54.1 lacs.
Even after investing Rs 50,000 regularly for 25 years  Shayam has managed to accumulate Rs 54.1 lacs which is around Rs 41 lacs less in comparision to Ram.

The way compounding works is that your money compound slowly at first but it picks up speed the longer it's invested. So strongest advice is to begin investing early and set up a regular plan to invest a set amount per month.

You can start investing as low as Rs 100 to Rs 500.Later we discuss on such type of investments.

Compound Interest Formula

Investing at early stage in your life and getting compound interest rate on your investment makes you Millionare.

Simple Interest :  Simple Interest is the basic flat interest that is charged on the principal amount only.
                              Formula for calculating interest rate is
                              Simple Interest = P x I x N
                              P= Principal amount invested
                              I = Interest rate
                             N = Number of period invested
Example : If Deepak invested Rs 50,000 for 3 years at 10% simple annual interest rate than
                Simple interest rate = P x I x N = Rs 50,000 x 0.1 x 3 = Rs 15000
It means Deepak earned total interest of Rs 15000 for periods of 3 years.

Compound Interest : Interest earned not only on an original investment, but on its accrued earning as well.
                                 
Example : Suppose Deepak invested Rs 50,000 for 3 years at 10% at compounded interest rate,
Interest for Year 1 = P1 = P x I x N = 50,000 x 0.1 x 1 = 5000
( total = 55,000 )
Interest for Year 2 = P2 = (P1) x I x N = ( 55,000 ) x 0.1 x 1 = 5500
( total = 60,500 )
Interest for Year 3 = P3 = (P2) x I x N = ( 60,500 ) x 0.1 x 1 = 6050
( total 66,550 )
Total interest earned by Deepak over the period of 3 years through compound interest rate
     5000 + 5500 + 6050 = 16,550

Now you can compare this to 15,000 earned over the same number of years using simple interest rate.

Inflation

Q. What is Inflation ?

Ans. A general increase in prices and fall in the purchasing value of money is called INFLATION.

For example if today we have 10,000 Rs and we keep this money in our pocket without any proper planning and investment than the the purchasing value of our money will decreased by span of time which is explained and shown on above picture,

TODAYS 10,000 will be

7,817 after 5 years

6,110 after 10 years

3,733 after 20 years &

2,281 after 30 years 

if we assume inflation rate of 5.05%. 

(*figures taken on 01-01-2011)

Financial Advisor, Do we really need them ???

YOUR MOST EXPENSIVE ADVICE IS THE FREE ADVICE YOU RECEIVE FROM FINANCIALLY STRUGGLING PEOPLES, YOUR FRIENDS OR RELATIVES.
                                                                                                                             (Robert Kiyosaki)
        
                                                          
Financial Advisor is a professional who renders investment advice and financial planning services to individuals, businesses and governments. But the question is do we really need them to plan our financial statements. If someone ask me this question 20 years back may be I say yes but now when we are in Informational age when every thing is just a click away from you, I will not recommend anyone to hire or take any advice from any financial advisor.
If the people like Bill Gates, Warren Buffet, Mukesh Ambani, Rattan Tata, Laxmi Narayan Mittal advise you on your financial matters its sounds great and worthwhile because all of them are billionare, But a person who just completed his management garduation or working with some insurance and investment companies is not so competent to manage yours financial goals. It sound ridiculous if he say so because he might be belongs to some middle class family or might be upper middle class which according to you is Richer class.
Never get in trap with these kind of people. They are not so intelligent to advise you on your financial matters they are just concerned with their comission they will get if you follow their instructions (espically the LIC agents).
Later we discuss in this Blog what is Poor, Middle Class, Rich and Ultra Rich.

Investment

Q. What is INVESTMENT ?
Ans. Money that is invested with an expectation of profit in future is called INVESTMENT.

Terms you must know before start investing.
Q.What is an INCOME ?
Ans. Money received on a regular basis by work or through investment is called INCOME.
INCOME are of two types
                                      ----------------INCOME-----------------
                    ACTIVE INCOME                                    PASSIVE INCOME

Active Income : Income from salary, wages, tips, commissions and activities in which the person himself materially participates or in other words active income needs yours physical presence in particular work to generate money.
Passive Income :  Income derived from business investments in which the individual is not actively involved or in other words passive income no needs your physical presence in work or in business to generate money.                 

Q. What is EXPENSES ?
Ans. A thing on which one is required to spend money is called EXPENSES.

Q. What is LIABALITY ?
Ans. A thing for which someone is responsible is called LIBALITY.

Q. What  is DEBT ?
Ans. A state of owing money is called debt.
DEBTS are of two types,
                                     -----------------DEBT-----------------
                           GOOD DEBT                                       BAD DEBT
Good debt : Owing money to gain Assets is called good debt.
Bad debt : Owing money to gain liabilities is called bad debt.

What is money and where it comes from.

Money is used on daily basis for economic transactions. But ever we think that what is money and where does come from. Unfortunately mostly people did not know the answer of this simple question. Today I try explain that what is money and where it comes from.
I found this video on youtube.com and I hope its explain everything in detail about money and where it comes from.

Introduction

Hi,
I am Pankaj, 31 years MBA, I took retirement after working 11 years in Merchant Shipping  business and now  I am here to share my experiences which I gained through travelling around more than 14 countries during my job in Merchant Navy. I started my career as a Deck Cadet and 4 year sailed as a Master.
At present i decided to take a rest for a while (may be 2 to 3 years) than may be I continue my current job.