5 Mistakes that You Must Avoid When Investing in Stock Markets

Many investors keep making the same mistakes without realizing what went wrong. The reason is simple - they lack a basic understanding of how investments work, and most importantly they do not have someone to guide them. In this blog post, we discuss some of the common mistakes that most investors make and ways to help you tackle these problems.

1. Lack of Proper Planning

“Failing to plan in planning to fail”. It’s your hard earned money and you can’t just lose it like that, and therefore, the most important thing to do, before you start investing, is to have a proper plan. Work with a financial advisor to discuss your investment goals, limitations, time horizon and more to get a realistic picture of what returns you can expect. Advance planning can also help you stay prepared for any untoward incidence, for instance, if the markets started crashing you will be in a position to take calculated decisions, instead of just randomly buying and selling stocks.

2. Getting Impatient, Too Early

Though people start investing with a long term view in mind such as their child’s education, their retirement, for buying a house, they often start getting restless when the stock markets behave erratic. People who invest in stock markets with a long term view of 10, 15, 20 or more years in mind should not be concerned about how the markets are performing in the near term. Historically, the stock markets have always delivered better returns as compared to most investment options, and therefore it is advisable to stay calm if the markets are not performing well in the near term.

3. Using too Much Margin

While the margin money (usually the money one borrows from the broker) can help you make more money, the downside is that it can also wipe out a substantial amount of your money, if the markets don’t move in the direction, you thought they would. You should use margin only if you have the time and knowledge to closely monitor your positions, or if you are sure that you will be able to repay the borrowed amount to broker in case an emergency occurs, and you afford selling your positions at losses.

4. Making Investments Based on Tax Consequences

Though you should be smart enough to keep yourself updated about the various tax benefits that the government has to offer, you should not base your investments on tax consequences alone. Instead, it’s more important for you to invest basis the underlying value of the stock. Similarly, while you must be concerned about the advisory fees and commissions, as they can eat into your profits, you must stop bothering about them and try to explore opportunities of cheaper broking services, once you think you are getting a good enough deal.

5. Failing to Diversify

You must have heard the saying “Don’t put all your eggs in one basket.” It means do not risk everything on the outcome of one option. Failing to diversify, however, is one of the biggest mistakes investors make. They invest in a single stock or sector hoping that they will be able to maximize their returns, but when the markets move against their position, they have to suffer huge losses. It is, therefore, recommended that you must diversify their portfolio even if that means investing in a few stocks that give lower returns. This will help you create a well-diversified balanced portfolio that gives you far better results than most of the other asset classes.

Last Few Words

Most investors due to lack of knowledge and time prefer hiring the services of a professional advisor. If you are also planning to hire a professional advisor the best option is to go with a multi family office firm that has been trusted by some of the biggest and wealthiest investors. These multi family office firms usually cater to Family owned businesses, Senior Corporate Heads, various entrepreneurs in India and others.

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The Importance of Professional Asset Tracking Services to Business

Defining Asset Tracking

The value of the assets that an organization holds at any given time plays a major role in determining its market valuation. Businesses should, therefore, take pro-active steps to monitor their assets to regulate performance, and take measures in time if they feel that the asset valuation is dipping at an abnormal speed. Businesses can count on professionals providing asset tracking solutions in India for monitoring assets movements. Businesses can then focus on their core activities.

The Need for Asset Tracking Services

Availing professional services helps businesses plan their processes smoothly and in-detail. Some of the other benefits of seeking expert services are;

1. Lower Administrative Costs

Businesses hiring the services of a professional asset manager, usually report a dip in their administrative costs as employees no longer need to track assets. A lot of man hours are freed, which the administrative team can invest in core activities or organizing other revenue-generating functions. An efficient plan also helps avoid wastage and losses.

2. Get More Accurate Results

Businesses can track their assets with the click of a button if they instal asset tracking software instead of using excel sheets to generate results. Using specialized tools also helps in streamlining the entire process to save time. Moreover, results generated by automated systems are more accurate than those which depend on humans to feed data.

3. Enhanced Accountability

Businesses run the risk of losing assets over time if they fail to manage them professionally. Putting together an asset management program helps the organization allocate assets optimally, and also makes it possible to keep a track of such allocation, increasing accountability of the system. In a nutshell, businesses can track losses as soon as they occur and also have better control over employee behavior, as they will think twice before misusing the organization’s assets.

4. Improved Overall Efficiency

An asset tracking program generates useful and actionable data which helps organizations optimize use of physical space available to them as an enterprise. The system also forecasts future trends to help business plan different processes in advance.

Conclusion

Investing in an asset tracking program should not be seen as a short term investment. The decision can yield favorable results for your business for many years, and also help prepare well in advance to meet future challenges and uncertainties. For best results, organizations should always look to the services of professionals specializing in providing private banking services in Gurgaon, Mumbai, Bangalore, and other cities.

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Common Mistakes People Make at the Time of Estate Planning

Estate planning is still at a developing stage in India. This is mainly due to the lack of awareness about the importance of estate planning. There is a common notion that only people, who have an abundance of assets can make a will, and their assets will be equally divided among their heirs. On the other hand, there are others, who procrastinate their estate planning thinking that they will do it at a later stage. In this post, we would discuss some common mistakes people that make when it comes to estate planning.

Mistakes People Usually Make

As mentioned earlier, a common notion people have that estate planning or making a will is only for wealthy families in India. While this may have been the case in the past, it isn’t necessarily same today. As India has been witnessing a thriving economy over the past decade, an increasing number of people are looking to make diversified investments and create wealth for themselves and their families. This is why estate planning is important so that assets can be transferred to your family seamlessly in the future.


Not Considering the “What If” Scenarios

People often feel that their financial situations are good enough, and don’t have to plan in advance. They commit the mistake of not considering different scenarios that may crop up in the future such as property disputes, health issues, bankruptcy and others. These circumstances are also a reminder that making a will is essential since your financial situation is likely to get affected by them. 

Putting it off for later

“Better late than never” is often used as a motivational phrase. Sadly, this does not hold true in the case of estate planning. Preparing for the worst case scenarios is essential for people, who have dependents. Keeping that in mind, it is recommended that you spend some time in evaluating your assets and then making a decision about how you want to allocate them equally with the minimum tax consequences. 

Overlooking Digital Asset Allocation

In today’s tech-savvy world, not just those from wealthy families in India, but others too have an online presence. Whether it’s in the form of your cloud-based bank accounts, or your digital assets, you should plan out well in advance to share the passwords and other important details with your spouse or your business partners, after you are gone.

Failing to Plan for Own Future
Planning for the future is not just limited to making a last will and testament to passing on the assets to your heirs. It is also equally important to ensure that in the case of any contingency, for example, health issues or otherwise so that your assets can be used for your own treatment and rehabilitation. This way there will not be any financial burden on your caregivers to pay back.

Last Few Words
Wealth creation shouldn’t be the only goal of property owners. Effectively managing wealth is an ideal way of ensuring future. Contingencies come up when you least expect them. Being prepared keeping an eye in the future is the best way to deal with it. This way, not only you take the financial burden off your family’s shoulders, but also get to decide how exactly you want your estate managed.

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Do You Know How ‘Power of Compounding’ Can Multiply Your Investment?

Very few investors realize that they can create a good corpus with as less as 10% - 12% annual returns. All it needs is a little bit of patience and a strong belief in the power of compounding. Simply put, gaining from compounding interests involve reinvestment of income and the principal, year after year. To get a better understanding of how compounding interest helps substantially increase the returns by a marginal increase in the rate of returns, we have this table listed below. It shows the difference in return if an amount of one lakh is invested at different rates (8, 10, 12, 15 percent) for tenures of 10, 15, 20, 25, and 30 years.

 Magic of Compounding

	Return on Investment (In Lacs)
Tenure (years)	8%	10%	12%	15%
10	2.16	2.59	3.10	4.04
15	3.17	4.17	5.47	8.13
20	4.66	6.72	9.64	16.36
25	6.84	10.83	17.00	32.91
30	10.06	17.44	29.95	66.21

As you can see an amount of 1 lakh if invested at 8% p.a. for 30 years yields a cumulative return of around 10 lakh, whereas the same amount if invested for a similar tenure at 12% and 15% yields a return of around 30 and 66 lakhs respectively, which are almost three to six times of what one would have gained at 8%. Therefore, a wise decision would be to invest in an asset class that gives you an average 12%-15% of return, and let it compound year on year for great returns.

Let’s take a look at some asset classes that have a historical record of yielding average returns of 12% and more.

Real Estate

The expectations that most people have from this asset class is sky high, and that’s because real estate has always delivered great returns when invested for longer periods. A study in 2013 showed how some areas in Delhi/NCR rose by 600% in a period of 7 years, the annual rate of return being a whopping 32%. Many people are not clear as to how gains from real estate investments are taxable, and this is why they delay their decision of buying and selling a property. In such a case investors should consult an established taxation services firm in India to clear their doubts.

Equity

There are periods when investments in stocks yield a return of more than 20%, and therefore, expecting a return between 12% and 15% is not unrealistic. Research suggested that any investment in equity for a period of seven years has a 64% probability of earning more than 15% and a 74% probability of earning more than 12%. All you need to do is not panic even if there are prolonged periods of no return.

Last Few Words

Now that you are aware of the power of compounding and the asset classes that you need to invest in to create a corpus for yourself start investing. However, before you invest it is advisable to consult a tax expert from any of the reputed taxation services firms in India to get an idea of the taxes that you will have to pay on your returns.

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Private Wealth Management: An Essential for Affluent Individuals and Families

Private wealth management provides an investment plan that incorporates portfolio management via an asset tracking solution, financial planning and many other services for high-net-worth individuals and families. Under private wealth management, a wealth manager handles the financial situation of clients to help them achieve their short-term and long-term financial goals. Wealth managers help them maintain their finances, plan an investment strategy, and guide them regarding the benefits of private wealth management.

1. Personalized Financial Plan

Wealth managers help you to manage your assets by creating an investment plan strategies exclusively for your benefit according to the available resources, risk tolerance, desired rate of return coupled with other lifetime and financial objectives.

2. Asset Identification

Wealth management program helps you to know the difference between the productive and nonproductive assets. Wealth managers ensure that your valuable assets support the quality of your life and isolate assets that pay you money instead of non-productive assets costing you money. The proper management of the wealth also helps to manage your portfolio in a productive way.

3. Financial Plan Review

Wealth managers keep a check of your assets and review your financial plan often and also examine them for change if required such as market conditions, tax liabilities, income, asset performance and spending and purchase options.

4. Target Return

An individual or an entrepreneur, besides wealth management, expects a term-based target return. Wealth manager suggests you various several target return based plans and keeps a record of your asset with the help of an asset tracking solution.

Directional Benefits

Families or Individuals

Educating the clients regarding the investment plans to secure their wealth is the primary objective of the wealth managers. Wealth managers focus on the importance of family or individual insurance protection. They help you to decide an investment plan such as Life insurance, disability insurance or long-term care insurance and provide you with an annual review to maintain your lifestyle.

Professionals and Entrepreneurs

Time and energy are required for an entrepreneur or a professional to start a successful business. Wealth managers make sure that your assets are protected and help you with various business succession plans. Financial advisers educate and assist entrepreneurs regarding their assets, retirement plans, portfolio and group health insurance strategies. Wealth managers, manage your accounts and assets in a proper way, in return provide you rewards and benefits.

Conclusion

Wealth advisers help over the financial goals that the client would like to attain. Wealth manager maintains a record of an investment plan and puts together an investment strategy to help their client to achieve their goals. Financial advisers manage the assets and invest the money in the products that make sense for the client.

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Taxation Services in India

Introduction

The Central government is responsible for levying taxes in India.  The Constitution of India gives Central and State Government the authority to levy tax. Article 265 of the Indian Constitution is an important restriction on this power. It states that “No Tax” shall be collected or levied except by the authority of law. Each collected or levied tax is backed by a law known as an accompanying law, which is passed either by Parliament or by the State legislature.

Scheme of taxation established by the Constitution

Distribution of the legislative powers is given in Article 246 of the Indian Constitution, including taxation between State Legislature and the Parliament of India. List of issues enumerated in Schedule VII is as follows:

•    List - I: Areas  under which only the Parliament is competent to make laws.
•    List - II: Areas under which only the State Legislature is competent to make laws.
•    List - III: Areas on which laws can be accomplished by both, Parliament as well as the State Legislature.

Income Tax Department

The Income Tax Department works under the Ministry of Finance (Department of Revenue). It is responsible for various Taxation services India and Acts of direct taxation passed by Parliament.

•    Wealth Tax Act
•    Income Tax Act
•    Gift Tax Act
•    Interest Tax Act
•    Expenditure Tax Act
•    Various Finance Act

Central Board of Direct Taxes

It is a part of the Ministry of Finance and provides essential inputs in planning and policy formulation regarding direct taxes. It is also responsible for direct tax administration under the Central Board of Revenue. Initially, it was responsible for direct as well as indirect taxes before the board was split into two, namely the Central board of Excise and Customs, and the Central Board of Direct Taxes. Members of the Central Board of Direct Taxes are selected from the Indian Revenue Service (IRS), whose members constitute the topmost management of the Income Tax Department.

Service Tax

Service Tax is levied by the Central Government of India. There are many Service Tax Providers India giving you access to professional and affordable services. The rate of service tax is going up this year, as from the 1st June 2015. The Service Tax is consolidated as the secondary higher education cess and as education cess.

Conclusion

Taxation in India is provided for under various taxation laws. Although the laws are clear, the territory can be daunting for a layman. This is why there are several professional and experienced taxation service providers to take care of your requirements and give you the best advice. they can also help you resolve any disagreements and discrepancies.

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Managing Brands For Success: The Basics

In economics, luxury brands are those brands whose demand increases proportionally as incomes rise. They can also be defined as being the contrast to  "necessity goods": demand increases less in proportion to income.  Luxury brands constitute the majority of luxury products. The term 'luxury brand' is synonymous with high prices, luxury, and high quality. They are often referred to as Veblen or Superior goods. The expenditure towards advertisement for the average luxury brand is about 5-15 percent of sales revenue. This rises to about 25 percent with the inclusion of other communication expenses for efforts such as public relations, sponsorships and promotional events.

Market Characteristics

Luxury brands in India are said to have high income elasticity of demand. This is because as people become wealthier, they purchase more luxury goods. A decrease in incomes will also see a proportionate drop in demand. The elasticity is not constant at all levels, and some changes may occur at different levels of income. With time, a luxury good may become an inferior good or a normal good, depending on income levels. Luxury products are Veblen goods, with negative price elasticity of demand, for example; making an expensive perfume can increase its perceived value to such an extent that, as a luxury good, sales can go high enough, rather than down.

Market Trends

The three common trends in the global luxury goods market are consolidation, globalization and diversification. Consolidation is used to define the involvement of the ownership of brands and growth of big companies across multiple segments of luxury products. Globalization is a result of an increase in availability of these goods, tourism and additional luxury brands. Some examples include Armani, Burberry and L’Oreal, which dominate the market in areas ranging from luxury fashion to cosmetics. Leading global consumer companies also attract industry, to avail profits in the consumer goods market.

Certain brands are considered to be premium brands in India, as people believe they are of a high quality and worth every Rupee. The big question is why people are willing to pay a high price for a product when there are cheaper alternatives? There are specific tangible and intangible attributes that give this class of products such a  status:

Sensual: They arouse the senses and make people feel indulgent.

Rare: They represent an uncommon choice and draw attention.

Confident: They boost the customer's confidence level.

Quality: They are consistent and attract obsessive attention.

Conclusion 

Managing a brand is the most difficult challenge in the field of marketing. Like any other business, brands must also pursue and seek growth strategies. Unlike many businesses, brands must present themselves in such a way that their images don't dilute customers' sense of pride and exclusivity. Some strategies are off-limits in this pursuit. Brand managers must know when it is best for the brand to ignore short-term opportunities and how to brush-up the brand's long-term health.

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