What is Balance Sheet and the importance of it ?

If you are a share holder of a company, it is important that you understand how the balance sheet is structured, how to analyze it and how to read it.

What is Balance Sheet?
Balance Sheet is a financial statement of a company.

There are three segments summarizes in this Balance Sheet.
1.Company's Assets
2.Company's Liabilities
3.Share Holders Equity

Balance sheet always follows the following formula.

Asset=Liabilities+Share holder's equity

By using this Balance Sheet investors will get an idea as to what the company owns and owes as well as the amount invested by the share holders.
Assets

Assets are what a company uses to operate its business.

There are two types of assets.

1.Current Assets: Current Assets have a life span of one year or less,they can easily converted into cash.
They are
Cash: Non restricted bank accounts and checks.
Cash equivalents: These are very safe assets that can be readily converted into cash.
Accounts receivable:It consists of the short term obligations owed to the company by its clients.
Inventory:This represents the raw materials, work-in -progress goods and the company's finished goods.
2.Non-Current Assets: Non-current assets are assets that are not turned easily into cash.
They are
Tangible assets: machinery,computers,building and land.
Intangible Assets:Good will,patents or copy right.
In tangible assets: Good will,patents or copy right.

Liabilities

Liabilities are the financial obligations a company owes to outside parties.
There are two types of liabilities
Current liabilities: Current liabilities are the company's liabilities which will come due or must be paid, with in one year.
Example: Accounts payable, current portion of longer term borrowing such as the latest payment on a 10 year loan.
Long-term liabilities: These are debts and other non-debt financial obligations.

Share Holder's Equity 

Share holder's equity is the amount of money initially invested into the company plus any retained earnings.This is the source of funding for the business.This account represents a company's total net worth.

Value Investing and Its Advantages

Benjamin Graham was not only a widely respected author and expert on value investing; he is often credited with creating the foundation for modern fundamental analysis of stocks. Value Investing is an investment strategy used by some of the country’s more prominent investors, most notablyWarrenBuffett.

For value investing to work, the investor must find companies that are trading at a market price that is a discount to the intrinsic, or real, value. The difference between the market price and the intrinsic value of a stock is known as the ‘margin of safety’. The margin of safety protects the investor from both poor decisions and downturns in the market. Because true value is very difficult to accurately compute, the margin of safety gives the investor room to make a mistake.

So, value investing is an approach to investing that singles out specific investments; stocks or bonds that are undervalued in relation to similar companies. That is not the same as cheap, however. An undervalued investment may still have a high share price in relation to other stocks in the same category. What is important is the relative value of the stock using tools such as the P/E ratio, price to book ratios, and other tools of fundamental analysis.

For many investors who practice value investing, blue chip stocks are often a key ingredient in their portfolios. Blue chip stocks often epitomize what value investing is all about- companies that have a solid earnings history, strong financials, a history of dividends, and a sizeable market share.

Value investing is not only based on purchasing good companies at low prices, but holding for the long term.

How 'Warren Buffet' Made money in stock market?

7 Secrets of Winning The Stock Market Game

Humans have a natural tendency to follow the crowd, but when it comes to stock market investing, following the crowd can often result in losses.

Why replicate the mediocrity of the masses when you can clone the success of the World’s Greatest Investor?

The investment secrets of warren buffet have got unveiled here.

1) Look at quality businesses; not just the stocks

Warren Buffett said, “When I buy a stock, I think of it in terms of buying a whole company, just as if I were buying a store down the street.” Most investors don't analyse the businesses they invest in. They simply follow the symbols or brands of successful corporate houses.

If you are buying a shop, you will analyse about the products dealt by the shop, overall sales, consistency of sales, competition for the shop, competition strength of the shop, how the shop will manage the change in customer trends and so on. We need to apply a similar logic before choosing a stock. Don’t think that you are only buying a few shares of that company. Will you buy the whole company if you had enough money?

2) Are you willing to own a stock for 10 years? If no, then don’t own it even for 10 minutes.

Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years. In the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company. Looking at the short term opportunities in the stock market will not be a long term successful strategy. If you don't feel comfortable owning something for 10 years, then don't own it even for 10 minutes.

3) Check thousands of stocks and look for very high bargains

Avoid investing based on the stock tips or recommendation. Do your own research. Analyse thousands of stocks before choosing the right stock to invest. Once you have chosen a right stock, wait till the share is available at a very high bargain price. Buying a right stock at the right price is the key to investment success. Investors have the luxury of waiting for the “fat pitch”.

It is really difficult for an individual investor to analyse thousands of stocks and finding out the right time to buy a stock. If this is the case, you can outsource this portfolio management to a professional financial planner or wealth manager. But you need to be careful in choosing a professional who is capable and at the same time customer centric.

4) Scrutinize how well management is using the resources.

Check how efficiently the management is using its resources like money, manpower and material. This management efficiency will in turn reflect in Return on Equity and Return on Capital.

5) Always stay away from “THE HOT STOCKS”

The hot stocks are those stocks which have some attention catching activity such as severe volatility in share prices, high trading volume or when the stock is in news. Stay away from these hot stocks.

Warren Buffett once said, “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”

6) How much money you will make?

Before investing in a stock calculate ‘how much money you will make’ in this investment. Of course, you need to make a few assumptions to do this calculation. But do calculate. Most often investors tend to ask the share is undervalued or overvalued. Identifying the intrinsic value of the stock is difficult and the various models available to calculate the intrinsic value are faulty. Warren Buffett wrote in a report “Unless we see a very high probability of at least 10% pre-tax returns, we will sit on the sidelines.”

7) Get rid of the weeds and water the flowers — not the other way around

People have this tendency of loss-aversion. That is when the share price has fallen down by 50%, they choose to wait. They convince themselves and others by saying “It will definitely come back”.

Also people will rush to book profit when their shares go up just by 10%. In effect investors tend to keep the loss making shares with themselves and they offload their profitable shares. Actually it needs to be the other way around.

These seven secrets properly applied in the stock market would be your roadmap to riches.

Reasons for the current melt down!!

Yes, the market is down for the past 2 years. What are the reasons for the current meltdown? The following reasons may be attributed to the current situation of the market!


1. The inactive Government

2. The 2G and other Scams

3. Higher Inflation

4. Global economy still in doldrums

5. Unfavorable RBI policies towards curbing the inflation

6. Lower GDP growth rate

7. FIIs afraid to invest in the Indian markets

8. Higher Oil price and commodity prices

9. Investors stay away from the Indian market



Whatever may the reason an investor should be happy about the present market condition as nearly 75% of the tradable securities are down by more than 30% from its 52 week peak price. Interestingly among them nearly 425 stocks are down by more than 70% from its 52 week peak price. Though not all the stocks are worth investing some of them may be a great find.

As an investor we can make use the opportunity thrown by the market and to borrow the quote of Warren Buffet “we should look at market fluctuations as our friend rather than our enemy; we should profit from folly rather than participate in it.” Tomorrow let us check which stocks have lost the most in the current meltdown.

Stock Investment

A good stock investing tip for the stock market is to never gamble all their money. This investing advice should be more particular for investors who have little comprehension of how the stock market really works. It is quite ideal to lose a tiny investment rather than a big one so start small. If you are new to the stock market, make sure to read through the beginners guide to investing and get some tips for smart investing for beginners.

There are some investment opportunities which seem attractive and alluring however it is important that investors dodge investing in them if they are not prepared to lose money. This is a good investing tip for the stock market. Irrespective of how anyone else thinks about the stock, if the investor has some qualms they should not invest in it.

Another good plan for the stock market is the “Trailing stop strategy”. This is a strategy usually utilized by stock market investing gurus. What these smart investors do is ride their stock high at the same time having an exit strategy in the event the situation gets out of hand. The liquidity of their investment is important to their business. Appreciating their liquidity so they can immediately convert it into cash is a crucial key to success with this investment method.

There are many online share tips that will help you to protect your money. Before you start investing, make sure you have a good understanding of the stock market investing basics then you can learn stock trading and begin making money trading stocks

Investing in Stock Specific

If , you see in our stock selection criteria we have many parameters that filter the risk of our investments in a particular stock. How ever we avoid risk in market the global economy have direct impact on our market. When the market come to a state of correction all stocks are tend to fluctuate as per market. Mainly the Blue-chip stocks will go down drastically. So we never recommend Blue chip companies in a high price. We used buy this stocks when we see the prices go's down below 50% from its year high. When we buy in dip we also analyze many factors, Like the sector/product the companies are involved in. We usually avoid Reality, Sugar industries and IT-stocks. We always intended to discover the stock, that become the blue chip company of the future course of time. So that, one can get maximum juice from it, like growth,bonus/stock split and dividend etc.The Power of compounding is what we really meant here. The company Like Reliance.Infosys,Wipro and so on, the Juice is already drunk by the investors who invested long ago.

One more facts they say is “The Elephant can not fly” The blue-chip companies are like an elephant and which can not fly high. Only eagles can go up and fly high. Our selected stocks many times gone up beyond 600% within a year.The selection of our stocks used to be a Virgin stock .We are also, very particular about the Products/Sectors the companies are involved in.We do a through products life cycle analysis.The products are only going to yield the profit for the company and that is what going to be shared with the shareholders. What ever products it may be,the investors need to foresee the future demands/prospects.

For example-The Food processing industry has bright future prospects.We recommended the 'Jubliant Food' long ago now it is trading more than 300% level from our buying cast.The other such "Industry is Power' Producers.

A investor, who has long vision of creating wealth can buy the stocks recommended by us, and hold it for the future without any hussels.One need not to worry about the day to day market up's and down's. Once bought the scrip,Just hold it for the target or hold it even ten years or beyond.That will give you a massive return for your small investments.Just go through our power point presentation. Which has all the facts about stock investing and creating wealth for your self. If you have not received our ‘PPT’ just mail us to get the same. Let us be together to make many millionaires in our nation that is our vision.

Retire Young

10 Things To Do Before You Retire

Don’t put off today what you can’t afford to do tomorrow. In spite of the world wide pension crisis and a growing acceptance that we must plan and save for our retirement, the harsh reality is we are actually not saving enough. Research reports reveal that only 15% of the individuals are saving sufficiently for their retired life. Here are a few tips on things to do before you retire so that your retired life is more comfortable and enjoyable.

Get Rid of All Your DebtsIf you are taking a housing loan, personal loan, car loan or any other loan make sure that you will be repaying them on or before your retirement. You need to choose the term of the loan in accordance with your retirement age. You can enjoy your retired life when you have 100% financial freedom, not when you have to repay your loans.

Protect Your Emergency fund

Emergency expenses can happen any time. But the possibility goes up during the old age. So we need to enhance the emergency reserve year on year based on the inflation and change in your expense levels. Emergency fund will give you a sense of security and also you need not touch your other investments during emergency where you need to pay pre-closure penalty. Also don’t forget to refill the emergency fund once you met an expense out of emergency fund.

Establish a Retirement Budget

You need to visualize your retired life well in advance and need to create a budget for your retirement. That is you will not be going to office. So the expenses on transport and clothes may come down. Also you will have more time to spend. You may need to spend more on leisure travel and health care.

Examine Your Cash Flow

Take a close look at your cash inflow as well as outflow. Is there going to be any income after retirement? Like rent, royalty…. Would there be any unwanted outflow during retired life? Like paying life insurance, or SIP. At times during your beginning of the career , you could have taken a policy where you need to pay premium up to the age of 60. But now you may plan to retire at 55 itself. So you need to realign your existing policy and other investments in sync with your retirement age.

Grow Your Retirement Corpus

Find out how much corpus you need to have when you retire so that you will be having complete financial freedom. A professional financial planner will of great assistance to you in this regard.

Develop a withdrawal strategy

How are you planning to withdraw your cash outflow during retirement from the retirement corpus? Monthly, quarterly, half yearly or annually? Through Sytematic Withdrawal plan in mutual funds or by way of dividend or interest. All these will have a great impact on the corpus you need to accumulate. So you need to decide in advance.

Minimize taxes

Your retirement corpus and retirement income need to be tax efficient. You need to pay taxes as and when the fixed deposits matures irrespective of that you withdraw interest or reinvest under a cumulative option. But you need to pay interest only when you withdraw from the mutual funds. Careful selection of investment vehicle can reduce your tax during the retired life.

Get Sufficient Mediclaim coverage

The moment you retire, your employer will stop covering you under the group mediclaim. So you need to plan for your individual medical cover well in advance. At old age the medical expenses are inevitable. If you have not planned it properly the all your retirement plan will become a mess.Consider Inflation adjusted annuities. The monthly income you need when you retire is not going to be the same even after 5 years of your retirement. Inflation will increase your retirement expenses year after year. So year after year your retirement income needs to go up.

Oversee estate planning

How your fixed assets and financial assets need to be distributed to your legal heirs? Create a WILL. You can avoid creating relationship problems to your next generation because your left out wealth.
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