What is Futures??

Futures is a tradable contract in the market between two parties where both parties agreed to buy or sell a particular asset of particular quantity called as lot size and at predetermined price.

These are bound to change everyday. To understand it in better way let us take a simple example :-

Suppose there is a farmer who plants vegetables. Now he is confused about selling price of vegetables that time so he agrees upon a fixed price with whole seller. Whatever the actual  vegetables price would be in future he will sale vegetables on dealt price.

So, Future is a contract to buy or sell the underlying asset for a specific price at a pre-determined time. If you buy a futures contract, it means that you promise to pay the price of the asset at a specified time. If you sell a future, you effectively make a promise to transfer the asset to the buyer of the future at a specified price at a particular time. Every futures contract has the following features:

• Buyer
• Seller
• Price
• Expiry

Some of the most popular assets on which futures contracts are available are equity stocks, indices, commodities and currency.

The difference between the price of the underlying asset in the spot market and the futures market is called 'Basis'. (As 'spot market' is a market for immediate delivery) The basis is usually negative, which means that the price of the asset in the futures market is more than the price in the spot market. This is because of the interest cost, storage cost, insurance premium etc., That is, if you buy the asset in the spot market, you will be incurring all these expenses, which are not needed if you buy a futures contract. This condition of basis being negative is called as 'Contango'.

Sometimes it is more profitable to hold the asset in physical form than in the form of futures. For eg: if you hold equity shares in your account you will receive dividends, whereas if you hold equity futures you will not be eligible for any dividend.

When these benefits overshadow the expenses associated with the holding of the asset, the basis becomes positive (i.e., the price of the asset in the spot market is more than in the futures market). This condition is called 'Backwardation'. Backwardation generally happens if the price of the asset is expected to fall.

It is common that, as the futures contract approaches maturity, the futures price and the spot price tend to close in the gap between them ie., the basis slowly becomes zero. 

For more information also follow 

https://www.google.co.in/amp/s/m.economictimes.com/definition/futures-contract/amp

Equity

Hello Friends

In this blog I am going to discuss equity in detail and in my upcoming blogs I'll discuss  other funds where you can invest like futures, index futures, options, commodities and forex. Which were discussed briefly in my previous blog 'Basics of Trading'. If you have something in your mind regarding equity then please share in comments. 

So What is Equity? Lets understand, what exactly Equity is all about

Equity is nothing but ownership; ownership in Business. For Ex. if you hold 10 shares of  XYZ Company out of total 1000 shares floated by the company – you are 1% owner in XYZ’s business. So if XYZ will make profit you will get your share from dividends and price appreciation but if company makes losses your capital will go down(that will be reflected in stock price). This situation is called dangerous drawdown.A general question – If we ask you to start your own new business, how much time do you think you would like to give before you start thinking whether its really worth it or not- 1 Week, 1 month, 1 year. You  must be thinking that we are joking. Ideally we should think for some long time when we enter in any legitimate business. But this common principle we don’t really apply when we invest in other’s business which can be done through shares/equities.

When we buy equities, we start looking at the price next day or next week. For many who call themselves investors, long run is 1 month. But do you think the management of the business of which we buy shares really looks at their business growth in such a short period.

In equities, the rule of Farming applies

This basic rules states that:-

1. You first have to sow a seed.

2. Keep watering it for it to grow.

3. Wait for some time with patience.

4. With passage of time, you will get fruits of your hard work and patience.

But when it comes to equities, we think that HAATHON MEIN HI SARSO UGTI HAI. We want good return in short time. How many of us really think of equities for long horizon.?We keep gold for generations. Grandparents go for bank fixed deposits for their grand children, but no one invests in share of banks, say HDFC Bank for their kid’s marriage. And, no one plans to invest in equity mutual fund for their retirement.

Fundamental Investing & Speculation

Equity give you two kind of return, one is speculative and another is fundamental growth. 95% of the investors in shares are here for speculative gain, that is gain  from the short term price movement of shares. They start TIMING THE MARKET rather giving TIME IN THE MARKET. This approach for short term gains is the real cause of loss. Investment for long run is not only rewarding but also beats inflation by a good margin and creates wealth. Now think of Indian business or Indian economy for next month, you will be clueless but think of it for next 5 years, 10 years. We know that you are aware of the answer.

Risk Involvement

Now people call equity risky. Unfortunately risk is not understood by many investors. In short run, risk is in volatility of price of underlying asset i.e., how much it can rise and fall given a period of time. But in long run risk is not volatility but the risk is to maintain the purchasing power of your money. Look at the price of petrol in last 30 years(in chart 1) and then compare it with your return in FDs, gold, Endowment or money back plans. 

Why people don’t make money in Equities?

looking at the graph above, it must be clear that equities do give returns. But the question still remains unanswered that if Equity gives returns, Why people don’t make money out of equities. The answer lies in their EMOTIONS. The two basic emotions Greed & Fear will make you feel comfortable when the markets are going up and feel disheartened when the market goes down, even though one really don’t need to sell at that time. Always remember that equities is a long term investment and after you invest if emotions are making you restless, think about forgetting this investment. Checking daily profit or loss and anticipating the future growth has no meaning and is futile exercise.

In the end, invest in equities, but as a long term investor and partner the Indian Growth Story.

The Richest King In Babylon P3

Hello Friends

In my blog 'The Richest King of Babylon' I talked about how alkmish became rich and he told his secrets to argadh. So let's move forward with that and let's know that how argadh implemented these secrets in his life. 

Argadh told his friends that I started saving 10% of every earning and Surprisingly, it was not much harder to do this. I adjusted and saved for a year. Then alkmish came back asked, that how are your savings going on? I told him, pretty good. He asked me what have you done with what you saved? I told him that I gave that money to one of my friend who will go to another country and buy expensive jewelry cheaply and we will make more money by selling those ornaments expensively in Babylon. Alkmish said good, but he has any knowledge about jewelry? Does he work as a jeweler? I said,  no, he is a house builder. Alkmish got angry and said, you made a big mistake. How can you expect that a house builder keeps good knowledge about jewelry? If you want to gather information regarding stars definitely you will visit an astrologer not a bakery shopkeeper. So you should have given this work to a jeweller. Anyhow, To err is human. Now again start saving money and he left. Alkmish was right. My friend, whom I sent to buy jewelry in other countries, had become a fool. He bought fake ornaments.

After some years passed, alkmish came again to me to see that what am I doing with my money. I told him, this time I purchased copper and gave it to pots and utensils maker. Who give me profits after every two months. Alkmish told,what do you do with that profit? I said, I buy expensive cloths, rarest of wine and soon I'll buy a horse cart. Alkmish laughed and said, you are cutting your tree even before it grows.

If you will keep on doing this, you will reach at place from where you have started. You are eating the children of your money. You should invest profit again which you gained from your previous savings. You should do this as long as you earn enough money to expend on anything you want to,without reducing your earnings.

Again after two years alkmish came back to me and I told him that now I am not earning much but yes, my investments are making more money even children of my investments are making more money. Alkmish was pleased after listening it and he made me his partner. Now my friends you know at which position I am. I have told you all the secrets and thought behind my success. I hope you will also implement these secrets in your life.

So friends, we have learned 3 keys of success in this story:-
1) Pay to ourselves:- we should pay at least 10% of our earnings to ourselves.
2) Seek advice from experts:- Before investing ask people who are competent to give it rather you ask your relatives or friends who do not have any knowledge regarding investments.
3) Make your gold work for you:- keep reinvesting your investments until you make enough money to spends on anything without reducing your wealth.

So friends, we all should also adopt these laws in our lives. Please tell me in comments that how did you find it? And give your views also.

Thanks
Happy Savings

Basics of Trading

Hi Friends,

People now days are getting interested in Trading. Even people are making career in stock market or in Trading. As it might be the faster way of becoming rich. Guys I am going to tell you very basic things of about Trading. If you wish to invest in Trading or in stocks you can start with these things. But before starting gain some knowledge regarding Trading that where and when we should invest. So lets start guys with very basic things for beginners.

I often listen people saying that we should invest in real estate. But I suggest you stock market. As to invest in real estate you need you always need a big amount. Where as you can start Trading with a minimum amount. Before starting investment in stocks you need to ask three questions to yourself. Those are:-
why? What? When?

Why? Of course for money. Every person likes more and more money.

What?  How much amount to invest and in which scheme to invest?
So you can start with a very little amount i.e 1000/- and there are many schemes,  yes i'll say schemes in which you can start Trading.
There is equity market, Futures, Index Futures, Commodities, options and Forex. So these are the schemes where you can invest. I'll not tell you in detail that how to invest in these, how indexes under schemes are maintained etc. But i'll give you an overview. Remember terms which I use because these would be beneficial in future. I'll tell in detail in my up coming blogs. Because this is for beginners.

In equity if you invest 1 Rs. then you can buy 1 Rs. Stock.
In futures if you invest 1 Rs. then you can buy 5 Rs. Stocks means you get leverage of 4 more Rs. (leverage=investing with borrowed money as a way to amplify potential gains).
In index futures if you invest 1 Rs. then you can get leverage of 10 Rs.
In commodities if you invest 1 Rs. then you get leverage of Rs. 20 means you can buy 20 Rs. Stocks.
In options you get 50 Rs. Leverage on investing 1 Rs.
And in Forex you get 400 Rs. Leverage on investing 1 Rs.

I sounds good to buy 400 Rs. Products on investing 1 Rs. But I suggest you to never start with Forex if you are a naive trader. You are new to Trading. As in Forex there is a high risk of loss, you are not an expert. You will 100% lose.
So always start with equities for at least 4 to 6 years. If you invest for this duration you will definitely gain profit. If you got some knowledge then come to futures then come to index future then on commodities and so on.

When? When to invest? Is there any specific time? Yes. Try to invest in stocks just before when new budget is going to implement.

So start Trading or investing in stock market with a positive thinking. Sone people think it is gambling. This is not a gambling. If you have some knowledge then you can make it your profession as well.

Guys please share your knowledge on Trading in comments. As I am also a learner. I wish to learn from you also. So please share your thoughts, knowledge and views.

Thanks
Happy Trading

The Richest King In Babylon P2

Hello Everyone

Moving forward with 'The Richest King In Babylon'. Argadh said,  i worked for all the night and when alkmish returned next day then I said him that I have completed your work. Now please tell me the secret of becoming rich. Alkmish said, all right I will tell you. He said, you should always keep some part of your income for you only. You pay to the tailor for making your clothes, you pay for your shoes. But have you ever paid yourself?  Alkmish smiled and said, this is the secret which made me from sheepman to money lander. So tell me how much have you paid yourself from last month's income or from last year? you should pay at least small amount your income to yourself. Not much but 10% at least of whatever you earn.

Alkmish said,  remember argadh if you save a coin for you that would be like your slave which will make more coins for you. So which coins you earn with that one coin, these should also make more money. If you want to become rich then your saving should make more earnings.

Alkmish said, you know argadh?  Wealth is like a tree and your first saved coin is like a seed of that tree. This seed will make more wealth for you. So save 10% of your money for you from every income you will earn. It will be like watering the seed and sooner you will start doing it, you can rest under this tree.

So as I always say, whatever you save invest that and make money from that investment. Tell me guys how did you find this story? Please give your views in comments. This is not the end of story. Still many more to come.

Tips to save money

Hello Friends

In this blog I am going to tell you five small tips to save your money. We earn money by working hard, but we never think to spend money that where and how we should spend money.

So lets start.

1) Make a monthly budget:- First of all you should make a monthly budget. Make it a habit that after every month you should make a budget. Write down your domestic expenses, electricity bill, mobile bill etc. Then you will be able to conclude that what exactly are you earning and spending and where do you need to reduce the expenses. There are many apps in play store to plan monthly budget. You can download and install in your phone or use traditional way with a pen and a diary.

2) Setting saving goals:- Now if you have made your monthly budget now it is clear from that how much are your expenses and how much are your savings. Now what you have saved set a saving goal for that money. What you need to do with saved money, ofcourse saved money should be invested. There are many investment schemes in market where you can invest like in mutual funds, stocks, etc. Understand this thing that always people work for money but now change your thinking and let the money work for you. What you have earned from investments again invest and earn. So every month set a goal that at least you save a particular amount.

3) Spend to save money:- Spend to save money. What does it mean?  It means cheaper buyers get bad meat. Yes,  it means if you buy something from market like smart phone, Air conditioner, T.V, fridge etc. that should be a quality thing. Always buy products of good brands. Because these would be durable and you will have not to pay again and again for the same product.

4) Decide your priorities:- Always buy that thing you need. Don't waste your money on things which attracts you but you don't need. Suppose if you are interested in photography and you wish to make your career in that profession then save money and buy a camera. Don't waste your money in things you don't need. If you will keep wasting your money that you will not be able to buy a camera. Moreover photography will become your profession and you will start earning with that. So always decide your priorities.

5)  Ask for discount:- Last but not the least always ask for discount whenever you buy something. If you purchase online then there are many websites which provides you coupons. Just type website  name and type coupons with that. Suppose if you book a room in a hotel from make my trip app or website then type 'make my trip coupons' this will show many links where you might have a free coupon.

So guys these are some simple tips by which you can save your money.

Thanks. 

How to Register For GST: A Step-By-Step Guide

GST or Goods and Services Tax, which the government implemented from July 1, 2017, is likely to benefit the entire country by widening the tax net and by providing seamless credit of input tax. However, for the successful implementation of GST across the country all existing Central Excise and Service Tax assesses need to migrate to GST by doing their enrolment on the GST portal. Those who have a turnover of more than Rs 20 lakh (Rs 10 lakh for North East states) in a financial year need to do their enrolment under GST. Those who do inter-state supply or sell products through e-commerce sites must mandatorily register for GST. No threshold limit is applicable to these tax payers.

Here is a guide on how to register for GST:

1) All eligible assesses have been provided with a provisional ID and password by the Central Board of Excise and Customs, which they need to log on to the GST common Portal where they would be required to fill and submit Form 20 along with necessary supporting documents. Log on to ACES portal using the existing ACES User ID and Password.

2) Either follow the link to obtain the Provisional ID and Password OR navigate using the Menu.

3) Make a note of the Provisional ID and password that is provided. In case a provisional ID is not provided, please refer the Next Step section. In case of further doubt please contact the CBEC Helpdesk at either 1800-1200-232 or email at cbecmitra.helpdesk@icegate.gov.in.

Once you have obtained the Provisional ID and Password, log on to the GST Common Portal using this ID and Password. The GST Common Portal has made available a manual on how to fill the Form-20. It is available on www.gst.gov.in.

Registering under GST will allow the assessee to claim input tax credit. This means, at the time of paying GST collected on sales, assessee can reduce the GST they have paid on inputs used for their business. If you are unregistered, businesses to which you supply will have to do compliance on your behalf, which may discourage them to deal with you, the tax department said.