High-Sea Sales is one of the best commercial transactions for the international trade of goods among the countries. It is applicable to both the transit in cargo as well as air transit. In this article, we will cover the basic details about the high sea sales and their benefits and drawbacks for the parties involved in the international trade.

Advantages and disadvantage of High Sea Sales:

High Sea Sale (HSS) means Sale Transaction happens when goods are actually in transit at High Sea i.e. during transit between the Loading and Discharge port. The date of transaction (agreement) should be between dispatch and arrival date of the vessel at the Port of delivery.

• High Sea Sales usually executed by Traders, who buy in a large quantity of good and then sells to other buyers at Destination Country in small quantity.

Mid man traders, (who buy the good, during transit, in large quantity from the county of origin and sell in small quantity to other traders in destination county) will get the prime benefit of the High Sea Sale, as they get the Tax exemption as the transaction happened outside the Jurisdiction of any of the county.

The Advantage of High Sea Sales:

• Goods can make available with a short period to the final buyer.
• For the final buyer, small quantities can be bought.
• The first buyer can get goods at reasonable/ cheaper prices in large quantities.
• Tax benefits to the mid-man traders.

The disadvantage of High Sea Sales:

• For High Sea sales, traders need to undergo cumbersome documentation and procedures.
• Loading of pricing of the goods for Customs assessment.

How an Indian customer can buy goods from foreign Manufactures.

There are money methods are followed by the Indian customers to purchase goods from foreign manufactures. Indian customers can choose any of the methods convenient for them as per their business plan and sales strategy followed.

Method 1: Direct order on Indian distributor in INR:

If customers need to buy the products from foreign manufacturers in INR who have an Indian representative company or the distributor of the manufacturer can support the services by importing the products and supply the products to the customer’s door step after all the formalities such as customs clearance, GST, etc.

• Indian Partner will get the service charge for these activities and the amount collected from customers for customs clearance and GST will be paid to appropriate agencies in the Government of India.

In case of any repair of the products which is under warranty period or customers experiences, any kind of non-compliance to the specification confirmed by the OEM ( Manufacturer ), then Indian distributor needs to take care of the to and fro of the shipment of the goods to abroad manufacturer and get it repaired and hand over back to the customer.

• Indian distributors need to take care of the repair charges if the product is under warranty.

Method 2: Direct order on Manufacturer in Foreign Currency:

Indian customers can place direct Purchase Orders to the foreign OEM’s and if that foreign OEM has an Indian distributor and customer can ask the Indian distributor to import the product to India. In those cases, Indian distributors need to do the necessary logistic coordination and take care of logistics to import the products to India.

• There are many Commercial terms, internationally followed for the intentional sales like Ex-Work, CIF, FOB, DDP, High-Sea Sales

Among all, Ex-Work is the best sales term for the international seller and DDP is the best term for the buyer. High-Sea Sales is one of the best commercial terms which is beneficial for both the buyer and the seller.

• In High sea sales, the liability of the international seller is limited and the buyer will get the tax benefit.

High Sea Sales terms:

High Sea Sales are a sale carried out over the sea, by the carrier document consignee to another buyer while the goods transit is on high seas or after dispatch of goods from the port of origin and before goods arrive at the port of destination.

• A High Sea Sales agreement signed after dispatch of goods from the port of origin & prior to their arrival at the destination port.
• The High Sea Sales agreement should be on stamp paper.

On concluding the High Sea Sales agreement, the bill of lading (B/L) should be endorsed in favor of the new buyer of the goods.

High Sea Sales for air shipment:

In respect of air shipment, the High Sea Sales seller should write to the airline agent informing that a High Sea Sales agreement has been established with the High Sea Sales buyer and that the carrier document should therefore be considered as sanctioned in favor of High Sea Sales buyer and the carrier should be file the Import General Manifest (IGM) in the name of the buyer of High Sea Sales.

• If the electronic data interchange (EDI) system allows the name of the High Sea buyer to be entered into the system, then there may not be any need to amend the Import General Manifest (IGM). In this case, the bill of entry/exchange (B/E) is filed in the name of the original exporter as the IGM is in this importer’s name. However, the bill of exchange (B/E) or bill of entry should show the name of the buyer of the High Sea sales in the B/E format under a separate head.
• If the system doesn’t have the provision for showing the name of the High Sea buyer on the B/E, then the IGM should be amended and B/E filed in the name of the High Sea buyer.

High Sea Sales for the cargo in freight:

In the case of High Sea Sales, the cargo in freight value for calculation of duty is taken to be the High Sea Sales value. It should further confirm that the buyer will bear the cost of clearance of goods and all the risks involved.

• The Agreement is normally prepared by the seller and the Buyer signs the same as a mark of acceptance. Anyone copy of the Bill of lading that is not marked as “not negotiable” can be endorsed.

The copy is first endorsed by Bank, then by the importer. Once the bill of lading is endorsed, all the import documents must be retired from Bank. Even the correspondence with Bank helps to establish the dates at times.

• In the acknowledgment, all the documents along with the original bill of lading duly endorsed should be handed over to the buyer.
• In fact, data is crucial. This date can be any date after the documents are retired and before the duty is assessed.

• There is no bar on the same goods being sold more than once on high seas. In such cases, the last High Sea Sales value is taken by customs for purposes of duty levying.

The last High Sea Sales agreement should give an indication of previous title transfers. The last High Sea buyer should also obtain copies of the previous High Sea Sales agreement as such documents may be called upon by the customs.

• High Sea Sales are also applicable to goods imported by air. In High Sea Sales, The word Sea which is appearing in it should not be constructed by its grammatical meaning.
• As long as the sale is formalized after dispatch from seller port and before reaching the airport at the destination, such sale is considered as High Sea Sales.

If the High Sea Sales does not mind disclosing original import values to the buyer of the High Sea sales; in such cases, it is better in the point of view of custom clearance for the seller to endorse the invoice, Bill of Lading, packing list in favor of the High Sea buyer.

• The endorsement should read “Transferred on High Sea Sales basis to M/S ________________ for a sales consideration of (currency and amount in that currency)”. Such endorsement should be signed and stamped by the High Sea Seller.

Tax Benefits of High Sea Sales:

High Sea Sales is considered as a sale process carried out outside the jurisdiction territorial of the county of the buyer. Accordingly, no sales tax is levied in respect of High Sea Sales.

The customs documents (B/E) are either filed in the name of the High Sea buyer or such Bill of Entry has an endorsement indicating the High Sea buyer’s name. The title of goods transfers to the buyer of High Sea sales, prior to entry of goods in jurisdiction territorial of the county of the buyer. The delivery from customs is therefore on account of High Sea buyer.

• The CENVAT (Central Value Added Tax) credit in respect of CVD (Counter Veiling Duty) paid on import is entitled to the High Sea buyers. High Sea Sales goods are entitled to classification, rates of duty, and all notification benefits as would be applicable to similar import goods on normal sale.

High-sea sale transactions or imports will attract Integrated Goods and Services Tax (IGST) only once at the hands of the last importer on the final price of the item.

Levy of GST on High Sea Sales:

The GST Council has already decided that IGST on high-sea sale transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation that is when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time.

Responsible person for the Payment of GST for High Sea Sales:

The last buyer in the chain of high sea sales would be required to furnish the entire chain of documents to the authority, such as original high-seas-sales-contract, invoice, details of charges paid, etc, to establish a link between all the contract and the transactions happened.

The final buyer is responsible for payment of GST and submission of the necessary documents required for the customs clearance of the goods in the destination county.

Conclusion:

As High Sea sales is carried out by the actual consignee to the buyer while the material or the goods are on transit in high seas or after goods dispatch from the port of loading and before the arrival at the port of discharge, it is more convenient and equally beneficial for both the parties involved in the transaction.

HSS goods are entitled to classification, all notification benefits and rates of duty would be applicable as a normal sale during the import of goods.

If you would like to add any further information, please comment on the comment line.

Content Contributor: Anish M.

For the improvement of business, we recommend reading the following articles on this site.

• 7 best business strategy books.
• 7 best business plan books.

Thanks & Regards.

MyMoneyBooks

A sales stage of the sales cycle shows the level of engagement of a customer or a prospect with you in the sales process. These stages are an indispensable foundation for every salesperson in the successful closing of the sales. Understand these sales stages, help a salesperson or a team to develop innovative ideas, business plan and improvising the engagement with the prospect for easy sales closing.

The prime quality of a salesperson is to ask the right questions at right time to open up the prospect mind. Once you’ve asked a question, listen carefully to their response rather than preparing what to ask next.

Sales stages will help you to prepare the right questions at the right stage for the right person. Each stage has its own prime questions to proceed the lead to the closure of the sale in our favour.

key benefits of knowing the sales stages of the sales cycle.

• Team structure can be optimized to support your sales cycle.
• Track the progress of sales for your business’s success.
• Effectively manage the team count and time for short-term and long-term goals of the business.
• Prepare well in advance to handle the sales objections and control the sales discussion.
• Help to understand, how each step of the sales cycle supports the next stage and to take the improvisation actions.
• Eliminate low ROI projects in the initial stage itself.
• Help salesperson to focus on the customers who give the most results.

The sales stage of the sales cycle help management to identify the current shortfalls and take corrective actions for more business. For example, If the team is excellent at identifying leads but unable to close them, then management can consider offering training on how to handle the objections salesperson is facing from the market.

Every salesperson should remember that sales are an ever continuation process, many sales will not be closed during the first meeting, it may take multiple levels of meeting and discussions. The products like complicated machines or large software can take multiple rounds of discussions and it may take months to identify the right person and to close the deal.

If you would like to improve your sales skills, we recommend you to select one book from the listed 7 best sales motivational book and read to follow it.

The sales cycle will be active until the sale is made or a prospect declines to proceed further, time is doesn’t matter. Below are the 7 sales stages of the sales cycle.

SALES STAGE 1: Discovery of Prospects.

We can call this stage as: 0% Sales Stage: Prospecting: Discovery of prospects: Cold Call: Lead generation: Unqualified:

The first step in the sales stages of the sales cycle process is called Prospecting. In this stage, you need to identify your target customer by checking their profiles in the online platform or getting the reference from your current customers. You need to identify your potential customer’s contact and request the best way to approach them, like a suitable time for discussion, meeting etc.

TIPS: Research your prospects thoroughly before your first approach to them, which help in better ROI.

Sales Prospecting Questions:

• We would like to present our product which will be beneficial to you?
• Is it possible for you to spare about 5-10 minutes this week or next week?
• What time you will be able to spare for us in your office for a short presentation/ meeting?
• In your organization, to whom we can present our products/ solution?
• Do you currently use any solution similar to our offering?
• Would you like to understand more benefits which you can get with our solution?
• Do you look for a more efficient and cost-effective alternative solution?
• Have you heard of us/ our solution before?

SALES STAGE 2: Pre-qualification.

We can call this stage as:  10% Sales Stage:  Pre-qualification of prospect: Initial contact:  Identifying Potential Customer:  Unqualified Sales stage: Lead Stage:

The second sales stages of the sales cycle are the Pre-qualification or Identifying Potential Customer from the listed prospecting customers. For the success of any sales, It’s critical for you to know to whom you’re contacting and why he is a Potential Customer.

To start with, first, you need to filter all the prospects with some qualification criteria to shortlist ideal Customer, To whom you can further discuss. During the process of identification of the potential customer, you will uncover new insights and it will help for the focus sales campaign. Qualification criteria can be decided on the basis of company standard, customer profile, previous experience etc.

TIPS: Select the customers, who offer you great value in terms of ROI and future potential.

Pre-qualification discussion Questions

• How do you manage your processes today?
• Is it possible for you to let us know, why did you choose that vendor?
• Do you have any problem with the current product?
• What is the problem you’re trying to solve?
• Do you interest to evaluate an innovative turnkey solution?

SALES STAGE 3: Qualification of Customer.

We can call this stage as:  25% Sales Stage: Qualification of prospect: Initial Qualification: Opportunity assessed: Lead Stage.

Qualification of the customer is the third stage of the sales cycle or the first stage of the vetting of the client on the basis of the evaluation during the first sales meeting or appointment.

This stage will help you to save your resources, by evaluating your point of contact. In this stage , you need to identify the decision-maker and your customers level of interest in your product or service.

• If your point of contact is not a decision-maker, you can explore with your POC to identify the decision-maker and the possibility of involving the decision-maker in the next level of the meeting.

In this stage of the sales cycle, you need to identify your customer exact requirement and list out what all are the customer buying criteria, concerns, and their pain points ( issue customer is facing).

TIPS: Prepare a customer map of your potential prospect on the basis of their position, like decisions maker, user, Finance, Purchase etc to make a strategy and sales plan to close the sales.

Qualification Questions:

• How does your company evaluate new services before deciding to buy them?
• Do you need a demo of the product or a presentation (online/offline) is fine?
• Who all are involved in the procurement decision process?
• What is your procurement process and cycle?
• How long are you using your current solution?
• How many systems do you have?
• What are your expectations?

SALES STAGE 4: Present your Solution/product.

We can call this stage as: 40% sales stage: Solution defines: Advantage explanation: Product Demonstration stage: Lead Stage:

Through the previous sales stages of the sales cycle, you identified your potential customer and their exact requirement.  Now in this stage, you need to present your product or solution as per the customer requirement to your point of contacts.

• You should present your products or services with good preparation to make sure that, customer should feel our solution will solve their pain points and help to improve their day-to-day operations.

During this presentation,

• You should understand more about their concern and educated them to identify and select the right solution.
• You should present the best possible solution by keeping your body language and mannerisms as they can influence the sale decision.
• Finally, present the package solution by considering their budget, challenges, and long-term goals.

TIPS: Present your offer relevant to the customer and it should be personalized to the needs of the customer.

Presentation questions:

• Do you feel this solution impact your daily work?
• How does this solution look like?
• Do you feel this solution will help you to improve your organization productivity?
• How do you think changing this process could make your job easier?
• Do you ever see this solution before?
• Do you feel our solution meets your requirements?

SALES STAGE 5: Objections Handling and Price Presentation.

We can call this stage as : 60% sales stage: Evaluation: Price presentation: Objections handling: Pipeline Stage:

Price presentation and Objections handling are the most important sales stages of the sales cycle.

Even if our prospect is attracted to our solution and our price offer is within their range, they will come up with the following most common objections.

• The offered price is too high!
• Your terms and conditions aren’t right!

To handle these objections, two things we need to do in advance.

Step 1: In Stage 4 of the sales cycle, do extra research regarding the customer budget and how much they are willing to pay and their previous vendors terms and conditions etc.

Step 2: Prepare an up-front comparison stating extra benefits and future returns customer will get from our solution with the cost of our offering.

Step 3: Discuss with the customer about the context to their objections and Present benefits in such a way that, the extra cost is negligible with respect to the extra benefits which they get with our solution and terms.

Tips: Listen to the customer objections patiently and understand their concerns and frame your sales pitch to overcome their concerns with benefits. Show the value of our offering as higher than the price which they need to pay.

Handling objections Questions:

• What price range do you offer for our solution?
• Is there anyone else, I should speak with / present the product?
• Who all are involved in the final decision-making process?
• Is budget is a barrier to take up our product?
• Do you realize the benefits you are going to get from our offering?
• Can you convince your boss, regarding our solution?
• What do I need to do further to support your organisation?
• Who are the Decision-Makers, and what is the Approval Process?
• Do you feel our solution benefits more than your current solution?

SALES STAGE 6: Handling Decision Maker.

We can call this stage as: 75% Sales stages: Presented to Decision Maker: Scope of work discussion: Forecast Stage:

Handling a Decision Maker is one of the important stages of the sales cycle, In this stage.

• We need to learn to read between the lines and respond accordingly to the decision-makers.
• We may not get a second chance to position our offering to the decision-makers.
• We should be well prepared to handle any type of rejections and clarification questions.
• We also are prepared to handle the situation of customers previous bad experiences related to our products from other vendors or other products from our offerings.

As in the previous stage, we shared our product information and pricing, Now, the control is with the customer side, hence we should respond with the patient, empathize with their concerns, never being rushed and never try to pressurize the customer.

As now we are in front of the decision-maker, don’t leave the meeting without clearing all the queries from the customer. If you are unaware to answer to any specific customer concern, never try to be smart, be professional and let them know, by when you can clarify their queries and make sure you get back to them with the best possible response within the specific date.

Once after all the objections are handled, it is time to move to the final stages of the sales cycle, don’t leave the meeting without setting the date for the next level of final discussion.

TIPS: Once you have the objection from the decision-maker, immediately after you explain your response, ask them to confirm that you’ve answered their queries.

Closing Questions with decision-makers:

• How will the decision-making process work?
• What points might get stuck in the way of this moving forward in the final decision?
• What range of budget do you have for this current project?
• What are your concerns about making a change?
• Any questions do you have in your mind, that I haven’t answered yet?

SALES STAGE 7: Final Negotiation and Closing.

We can call this stage as :  90% Sales stage: Negotiation and Closing: Scope of work finalization and agreement discussion: Forecast Stage

This is the prime and last stage of the sales cycle. As a salesperson, you should never expect, the customer will close the sales themselves, even for a perfect prospect, who is really interested in your product or solution. You should trigger them with suitable questions to take them to the final decision stages of the sales cycle. It will help you to close the sales in favour of you.

The salesperson needs to play different approaches in closing a sale, based on the preceding stages of customer Performance, Preference and Attitude.

Case 1: If the customer has eagerly listened to your offer and you could able to establish a good connection, you can use a direct closer:

• You can negotiate and discuss non-important factors first like, your delivery date, and after-sales support and close the deal with the best possible terms and conditions suit for the customer. Once the customer is in the agreeing mode and made his mind for purchase, you can discuss non-negotiable terms like Price and close the sale.
• You will get a long term customer.

Case 2: If the customer is less enthusiastic and still not listening to your offer and the solution, you can use a nuanced approach for closure:

• Step 1: You can start the negotiation discussion with all the previously discussed points which are favourable to the customer in the previous stages of the sales cycle. It will help you to develop a further connection with the customer.
• Step 2:Once the customer start listening to you, start the discussion with the least important negotiation point for you like after-sales support, standard warrant coverage etc and agree in favour of the customer. Ask more questions to make the customer open in the discussion. It will help you to make the customer in a comfortable position for an open discussion.
• Step 3:Once the customer reaches into an open discussion mode, we can negotiate on the prime factor like price, terms and conditions etc, which we can’t compromise. As we had agreed to most of the previous points, the customer will feel more comfortable in agreeing to our terms.

After the negotiation, still, your prospect is hesitant to take the final decision, follow with them with questions like “Do you have any questions or what else we need to do for you to make the final decision”. You will get a clear step or action with this question and proceed accordingly in the stages of the sales cycle.

• Once after you closed the deal, ask them, “do we need to clarify anything further ?” and set the clear next action plan and write a thanksgiving and concise confirmation mail which cover the scope of work and all the point of discussion.

Tips: Negotiation is given and takes: First give/ agree for non-important terms and take important terms in our favour.

Negotiation triggering Questions:

• Shall we do the “Scope of work” reconfirmation?
• When do you want to start?
• What’s the next step and by whenwe can we finalize the deal?
• Are you happy with the features and specification of our product or solution offering?
• Shall we start to prepare the final terms and condition for the order acknowledgement?
• Would you like to go ahead and sign up now?

FINAL SALES STAGE: Asking Referral.

We can call this stage as: 100% sales stage: Referral stage: Agreement signed: After-sales stage:

Once the order is signed, It is the right time to ask for referrals for new customers. Your new customer will be an ideal referrer for your future funnel. Don’t feel shy to ask your new customer about their colleagues or co-team who may get benefited from your service.

Referrals will help you to grow your business and the relationship with your new customer. The referral will also help to shorten the sales stages of the sales cycle to the new referred customer. Also, you can use this stage to identify, why this new customer purchased from you. As a salesperson, we can use this information to replicate the success with other customers.

Tips: As referrals will help the salesperson to shorten the sales cycle, even if our prospect objected to our proposal, don’t forget to ask for a referral. Nothing to lose, by asking referral.

Referral questions:

• Could you please let us know the future development plans?
• What made you think to buy from us in the first place?
• What’s one thing we did better than others, make you do business with?
• What’s one thing we need to improve in our service for better support?
• Could you refer us to other customers or to your colleagues?
• To your knowledge, who will be the other customers get benefited from our solution?

Conclusion:

Each sales process is unique based on the customer, product, technology, application etc, however, the sales cycle remains the same for all. For some sales stages of the sales cycle, 2 or 3 stages can be covered in a single meeting or as short as a few minutes and for some other sales, these process may last for a few days or months, but in general, every sales cycle goes through all the seven sales stages mentioned above.

Each stage of the sales cycle can be named differently by different companies as per their process. Understanding and practising the sales stages of the sales cycle help you to prepare and sharpen your skills and techniques, which will help you to close the sales smoothly and grow your business.

If you would like to improve your business development skills, we recommend the 7 best business motivational books to read.

In addition, for the development of your business, we suggest you check the 7 best business strategy books.

Thanks & Regards

MyMoneyBooks

Everyone who lives in this world is in some way related to politics, either directly or indirectly.

Most of the time, it’s hard for a common man to keep track of the world of politics and understand it and we never know who’s telling empty promises or who’s saying the truth.

To become a good citizen, it is necessary to know the basic fundamentals of politics. Here we are offering the 7 best political books based on different principles of political thoughts, and most of them are, the base of the influential political parties around the world.

As a comprehensive list, will be difficult to follow, hence we shorten it to 7 best books, which will be a great starting point for those who want to learn more about political theories, concepts, and history.

These 7 best political books represent some of the most influential books each had an impact on the way we understand politics and our governance. Below is the list of authors, who contributed to the 7 best political books.

• Karl Marx
• Aristotle.
• Thomas Paine.
• Plato Greek philosopher.
• Jean-Jacque Rosseau.
• Václav Havel.
• Eitan Hersh

This list is a shortlist of classic founding political theory books, which will help you to understand beyond what might be considered traditionally. Principles in these books play a major role in today’s political discourse.

Even if you just want to keep up updated with the current political affairs best option is to read some of the best political books that will help you to understand stay informed.

https://www.youtube.com/watch?v=k86yO5fLFNo

Here are 7 top recommendations: If you would like to buy from Amazon, please click on the respective title.

BOOK 1: The Communist Manifesto by Karl Marx.

 Author:

Karl Marx was born in Trier on May 5, 1818, in a middle-class Jewish family. He is an economist, philosopher, journalist, sociologist, and revolutionary communist. He got his Ph.D. in April 1841. Marx and Engels published the great political pamphlet, The Communist Manifesto, which summarizing their theories about the nature of society and politics, in 1848. On March 14, 1883, at the age of 64, Marx died in London.

 Content:

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 The best political book, The Communist Manifesto by Karl Marx, is one of the world’s most important political documents. This monumental text continues to remain widely read and is highly influential.

The Communist Manifesto, outlining all the theories of communism. Marx and Engels, through this political document, explain their theories and their ideas of how in due course socialism would replace the capitalist society. This political book is based on the material conception of history and presents its ideologies in a simple way.

The Communist Manifesto discusses the relationship between the bourgeoisie and the proletarians, The Communists and the proletarians, and other opposition parties.

The monumental political text, The Communist Manifesto by Karl Marx and Friedrich Engels continues to remain influential and widely in the current time and it is considered as one of the most important political documents of the world.

Book 2: The Politics by Aristotle.

Author:

Aristotle was born in Stagira, Chalcidice, Northern Greece in 384 BC. He is an ancient Greek philosopher, scientist, metaphysician, psychologist, moralist, and pioneer of formal logic. At the age of seventeen, he moved to Athens. He spent almost twenty years in Plato’s Academy, as a pupil, teacher, and writer. Aristotle continues to be a notable intellectual all-time figure of Western history.

Content:

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 One of the best political books, The Politics, by Aristotle is a ground-breaking work from the best intellectual minds, and in the history of political thought, this book remains a significant must-read book for all sorts of people.

In Aristotle, treatise “The politics”, he answers many of the following common questions, which come into the mind of citizens.

• Is it possible for a government to creates the utmost happiness for its citizens, I.e. an ideal state of governance?
• Is a democracy, is the best form of government?
• Finally, why have a government at all, to rule the country?

The best political book, The Politics begins with a discussion on the purpose of a city, then lays down the inner workings of the political system to the readers. This book offering an insightful and sympathetic study of faulty governance.

Finally, this book brilliantly comments on the fact that how far they are from the ideal government needed for a state.

Book 3: The Rights of Man by Thomas Paine. 

Author:

Thomas Paine was born on February 9, 1737. He was an English-born American philosopher, political theorist, and activist, and revolutionary of his time. He authored Common Sense and The American Crisis,  which are considered the two most influential pamphlets of the American Revolution, and inspire the patriots to declare the independence of America from Great Britain.

Content:

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One of the best political books, Rights of Man, by Thomas Paine, including 31 articles, posits that, when the government does not safeguard the natural rights of its citizen, Political revolution is permissible.

This book first published in 1791, sparked a direct condemnation of the French uprising and reflections on the Revolution in France (1790).

• This book argues that revolution is legitimate if the government fails to protect its people and their essential rights.

An extremely influential political book develops a critique of authoritarian governments and this remains relevant today.

Book 4: The Republic, By Plato Greek philosopher.

Author:

Plato is a Greek philosopher, who is a pupil and friend of Socrates. Plato founded near the ancient world’s most influential school, Athens, the Academy, where he taught until death. He studies and taught cover mathematics, natural science, and technical philosophic problems.

Content:

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The best political book, The Republic by Plato is a philosophical dialogue about the order and character of the city-state and the just individual, and its nature of justice.

Through Plato’s intellectually and historically influential, political book of philosophy and political theory, he discusses the following.

• The theory of forms.
• The immortality of the soul.
• The roles of the philosopher and of poetry in society.

The dialogues in the book cover the dialog among Socrates and foreigners and various Athenians. They discuss the meaning of justice and examine whether the man is happier than the unjust man, by proposing a society ruled by philosopher-kings.

Book 5 : The Social Contract By Jean-Jacque Rosseau.

Author:

Jean-Jacques Rousseau was bone in 28 June 1712. He was a Genevan writer and a philosopher. His Discourse on Social Contract and Inequality are cornerstones in social thoughts and modern politics. During French Revolution, Rousseau was the most popular philosopher among Jacobin Club members. In 1794 he was interred as a national hero of Panthéon in Paris.

Content:

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The best political book, The Social Contract by Jean-Jacques Rousseau theorizes that the ability to coerce is not a legitimate power. In this desired social contract, everyone will be free as all forfeit the same number of duties and rights.

• Jean-Jacques Rousseau states that it is absurd for a citizen to surrender his freedom, thus, everyone must have a right to choose the laws under which they live.

The Social Contract, inspire the political reforms or revolutions in France and many other parts of Europe.

The Social Contract,

• Argued against the idea that monarchs were empowered to legislate and he asserts that only the sovereign people have all-powerful rights.
• Argues that freedom can best flourish in small city-states in the form of a nation.

Book 6: The Power Of The Powerless: Citizens Against The State In Central Eastern Europe By Vaclav Havel.

Author:

Vaclav Havel bone on 5th October 1936. He was a writer, Czech statesman, and former dissident. He served as the last President of Czechoslovakia until the dissolution in 1992 and then in 1993, he becomes the first President of the Czech Republic. He is considered, one of the most important intellectuals of the 20th century.

Content:

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The political book, The power of the powerless by Vaclav Havel is of great political insight and always outlives the time of publishing.

This book is written shortly after the formation of Charter 77. The essays in this book are from the collection of the most original and compelling pieces of the political writing of the post-war period.

• Title for this book is provided from Vaclav Havel’s essays. The contributors to this book responded to the question Vaclav Havel raises, about the potential power of the powerless.

The book explains the limits of Soviet-type totalitarian systems and anti-democratic features.

This best political book discusses,

• Concepts as ideology, civil liberty, and democracy from a perspective that is radically different from liberal western democracies.
• The prospects for democratic change of Soviet-type totalitarian conditions.

The author, Vaclav Havel represents a broad spectrum of democratic opinion, including conservative, liberal, and socialist.

Book 7: Politics Is For Power By Eitan Hersh

Author:

Eitan Hersh received a Ph.D. in 2011 from Harvard University. Before becoming a tenured associate professor at Tufts University in political science, he served as assistant professor of political science at Yale University and a resident fellow of the Institution for Social and Policy Studies. His articles have been published in many major political science journals.

Content:

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 The best political book, The Politics is for power, opens the mind of ordinary citizens with good intentions having a question, Who to blame for broken politics?

• The book, Politics Is for Power, contains pioneering and brilliant analyst data that shows us a way to more effective political participation.

We vote and sometimes attend a rally or sign a petition, but we engage by consuming politics as if it’s a sport. We soak political gossip and we tweet and post and share political news, follow political statistics about who’s down and up, and spend our time on politics as a pastime.

• This best political book, Politics Is for Power, make us think, instead of seeing politics as a pastime, we should be spending the time in building political organizations, with a long-term vision for our town, and getting to know and make the relation for the support with our neighbors, who can solve hard problems.

We should accumulate power so that, when we have an opportunity to make a difference, we will be ready. But most of us focused inward, choosing roles and activities for our short-term pleasure. We are repelled by the slow-and-steady activities that serve the common good of the city.

By political theory, history, and remarkable stories of ordinary citizens, this best political book, Politics is for Power, shows us how to channel our effort and energy to empowering our values and make our life more effective.

CONCLUSION:

Even though we are aware a list of the 7 best political books will never cover all the great political books available globally, however, it will be a starting point.

This list of the 7 best political books, gives you a start, and hopefully, these must-read books help you to understand some of the political issues we face and fundamental concepts which we can follow.

1. The communist manifesto by Karl Marx
2. The politics by Aristotle.
3. The rights of man by Thomas Paine.
4. The republic, by Plato Greek philosopher.
5. The social contract by Jean-Jacque Rosseau.
6. The power of the powerless by Vaclav Havel.
7. Politics is for power by Eitan Hersh

Interested in more?

Check out these more politically relevant more books on Amazon.

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If you would like to list more books on this top list of best political books, comment on the name of the book in the comment box below.

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MyMoneyBooks

It will be an opportunity for an investor to take a trade if they know the future price of a share before they purchase it. Fundamental analysis helps to predict the future price of any share.

Investors can book profits, if they can purchase the undervalued shares on the basis of fundamental analysis and then wait for the market to reach the correct value price, to sell it.

• Fundamental analysis is the process of analyzing the current performance of a company on the basis of financial statements and industry trends.
• Fundamental analysis is a method of evaluating the fundamental performance of the company to predict the future share price.

Fundamental analysis includes the analysis of business financial statements, operational health, product competency, and market opportunity.

Below are the fundamental analysis tools or factors need to consider for an investment decision and the favorable conditions for an investor.

Market Capitalization          : Higher is the capitalization, safer for investment.

Face-Book-Market Value         : Higher Market value compared to book value, the stock may be overvalued or stock has higher potential.

EPS (TTM) -Earnings per Share  : Higher the value, good for the investor.

Price to Earning Ration (P/E)  : Lower the value, good for investors.

Industry P/E   : Lower P/E compared to industry P/E, good for investors.

Dividend Yield : Higher dividend yield is good for investors.

Deliverable    : Higher deliverable is good for investors.

Promoters      : Higher promoter's credibility is good for investors.

Through the fundamental analysis, an investor can understand the true value of the share and take the once of the following action. This true value on the base of analysis is called the intrinsic value.

If the intrinsic value <   Market price  = Buy the share.

If the intrinsic value =   Market price  = Need to hold the share.

If the intrinsic value >   Market price  = Need to sell the shares.

Below listed fundamental analysis details help an investor to identify the suitable stock to invest in. Fundamental analysis is an important factor, which helps to avoid the investment financial misatake.

Market Capitalization.

The total market value of a company’s outstanding shares is called Market capitalization. It is calculated as below.

Market capitalization ( market cap) = (Total number of a company’s outstanding shares) X (current market price of one share).

Market capitalization in the simple terms we can say as the total market value of all outstanding shares. Companies are typically divided into 3 categories on the basis of market capitalization:

• Large-cap  (Capitalization morethan Rs.20,000 crores) 
• Mid-cap     (5000 crores and less than Rs.20000 crores.)
• Small-cap  (Less than5000 crores)

Small-cap 

Small-cap are the companies having relatively small market capitalization.

• In India, companies with a market capitalization of less than5000 crores are classified as small-cap companies.

Mid-cap 

Mid-cap are the companies having medium-level market capitalization.

• In India, companies with a market capitalization above Rs.5000 crores and less than Rs.20000 crores are considered mid-cap companies.

Large-cap 

Large-cap companies are the companies having large market capitalization.

• In India, company’s with a market capitalization greater than Rs.20,000 crores is classified as Large-cap companies.

Higher the market capitalization more secure for an investor to invest. As the company's business is already large, the probability of the share price goes up will be more.

Face-Book-Market Value of the company

Face Value, Market Value, and book value are the three valuations of the shares of the companies. On the basis of these values, an investor can decide the valuation of the companies share price. First, this blog will explain, what each value is and then will share, the significance of each value on the buy or sell decision.

Face Value

Face value is the nominal or the original value of a security, stated by its issuer at the time of issue. For stocks, the face value is the listed value of a share in the certificate.

• A companies stock’s face value is the initial value of the unit share, which is indicated on the certificate at the time of the initial issue.
• The face value of a share remains the same until the company declares the stock split.

Market value

The market value, of a share, is determined based on principles of demand and supply of the company’s share in the market. It is defined as the price at which an investor is willing to buy or sell a particular share, in a stock exchange at a specific market time.

• The actual market value of a stock is always influenced by the forces of supply and demand.
• If demand increases, market value will go up, and if supply increases, market value will go down.

Book Value

The book value means the value of a share of a company which reflected on its financial statements. Book value is the price that investors would get per share if the company decides to liquidate the company and sold all the assets and paid all its liabilities and obligations.

• Book value is the net value of a company in its balance sheet.
• Book value is roughly equal to the amount per share all shareholders will get if the company gets liqudated.
• Book value is the net asset value investors get by holding a share as it is the actual current value of a share.

In general, market value tends to be higher than book value, since the market value is influenced by the profitability and future growth prospects of a company.

If the market value is much higher, it means that the company has higher potential growth, so investors can invest in that company. If the market value is lower than the book value, it can be a positive or a negative situation for the buying decisions. Hence  Price-to-book ratio is a critical factor for an investment decision.

Price-to-book (P/B)

P/B ratio is a popular way to compare the market and book value of a company.

Price-to-book (P/B) = Market value / Book value

• A lower ratio indicates it can be an ideal time for an investor to buy more shares as the current market price is near to book value.

If an investor purchases a share at a low market value, and later the company decided to liquidate, the investor will get more money as per the book value of that company.

If the market value is lower than the book valve, it is ideal to buy, but there may be a reason for lower market value, hence need to explore the following fundamental analysis, before making and buying decision. 

EPS (TTM):-Earnings Per Share

EPS   means  Earnings per Share 

TTM  means  Trailing Twelve Months.

EPS (TTM) means the total profits a company has made over the last 12 months divided by the outstanding total shares, I.e. earnings made per share. TTM can be any last consecutive 12 months, it is not necessary the company’s last financial year. Below is the earnings per share calculation formula.

EPS = Total profit in last 12 months / Total no of shares.

 Earnings per Share= (Net Income − Preferred Dividends ) / End-of-Period Common  Outstanding Shares of the company.

 Consider the below example:

The company's net profit in last 12 months is: 1000 crores

The number of shares outstanding is: 100 Crores 

EPS = 1000 crores/ 100 Crores = 10

 EPS indicates the company’s profitability. The higher EPS value of the company represents the company is under the more profitable condition.

• EPS shows, how much money an organization makes for each share.
• EPS is widely used to estimate the companies corporate value. Higher the EPS, the more the value.

For an investor, if the companies EPS is higher, it is ideal for an investor to make a buying decision, as the profitability of the company is more.

P/E:-Price-to-Earnings Ratio

The price-to-earnings ratio (P/E ratio) is the ratio that indicates the value of a company, it is measured by dividing the current share price by its earnings-per-share (EPS). P/E ratios are used by investors to determine the relative value of a company’s shares.

P/E Ratio= Current market price of share / EPS of the company.​

• P/E ratio shows whether a company’s stock price is undervalued or overvalued.
• The Price-to-earnings ratio indicates how much cash an investor needs to invest in a company in order to earn one rupee profit from that company’s earnings.

I.e. P/E of 5 indicates that investors need to pay 5 INR to earn one INR in a year.

Lower the value of the P/E is good for the investor to make a buying decision, as it gives more return on investment.

A high P/E ratio means either of below

• Either the company’s stock is over-valued or the Investors are expecting high growth rates in the near

A low P/E might indicate either of below

• Either the current companies stock price is undervalued or the Investors are expecting low-growth rates in the near

P/E ratio indicates the price which investors are willing to pay for a stock of companies, based on its future and past earnings.

Two kinds of P/E ratios are derived

• Forward P/E:- Calculate based on the forecast earnings.
• Trailing P/E:- Calculated based on the past performance.

Industry P/E

PE ratios could depend upon the industry performance.

The industry P/E is calculated by taking the median of P/E of all the companies in the industry or sector.

• Industry P/E performance is decided on the basis of the historical P/E average of all the companies in the industry.

If the P/E of a company is a lower value compared to the industry P/E, that means, the performance of that particular company is better than the average industry performance. I.e. it is ideal to invest in that company.

Dividend Yield

The dividend yield is the ratio of total dividends paid to shareholders to the market value per share. The dividend is a corporate action and the dividend yield is expressed in a percentage.

Dividend yield = (Annual dividend per share / Current share price ) X 100.

The dividend yield is also calculated by dividing the company’s total annual dividend payout by the total market capitalization.

As the higher value of dividend yield indicates, investors will get more money as dividends, for the shares they are holding. It is advisable to buy and hold more shares

Deliverable

Deliverable is the percentage of the number of shares taking delivery into Demat or selling from Demat account, out of the total quantity traded in a day in the trading account.

Below is the example shows the deliverable quantity to traded quantity.

The total traded quantity of a Stock of a company in a day is 100 lakh. In that 80 lakh quantity is for Intraday trading and remaining quantity of 20 lakh are the delivery order, these 20 lakhs of share is called the deliverable quantity. It is represented in percentage, hence the deliverable is 20%.

Deliverable = ((Total trade quantity - Total Intraday quantity) / Total trade quantity ) X 100.

• If the Deliverable percentage increases, it means, more investors are taking the delivery for holding it, which in turn means, the stock is bullish.
• If more buyers are coming, automatically demand will increase, and prices will increase. If Deliverables reducing, the price will reduce.

If the deliverable is increasing, it is advisable to buy and hold more shares as the chance of the market price getting increase is more.

Promoters.

A corporate promoter is a firm or person who worked for the formation of a company.  A promoter is a person who played a major role in making the business plan, raising capital from various sources to start the business and incorporate a company. promoters’ duties and liabilities are endless and their efficiency and capability decide the companies future performance.

A promoter can be referred to as the founder of a business.

• If the credibility of the promoter is more, investors can invest in the company with more confidence as the chance of getting a return will be more.

As per SEBI rules, promoters’ shareholding in listed companies should be a maximum of 75% of the total no of shares. If the holding is more than 75 percent, the promoter needs to bring down the holding below 75% within three years from the date of listing.

Investors can invest in a company with confidence if the credibility of the promoter is more.

CONCLUSION:

Fundamental analysts are concerned with a stock’s valuation and the price at which it is trading. Technical analysis is concerned with the performance of the stock price movement on the basis of stock’s supply and demand. If an investor chooses a stock that is fundamentally strong, which will in-turn gives a guaranteed return in the long run. It is ideal to select a fundamentally strong stock for meeting the financial goals in the long run.

This article covers the basic fundamental analysis techniques and the following article will cover the Fundamental analysis vs Technical analysis. There are many share market learning books available in the market which covers the Technical analysis and charts, fundamental analysis methods, and tools in detail.

Thanks & Regards.

MyMoneyBooks.

As there are 100’s of discounts and full-service brokers are available around us, it will be a difficult task for the newcomers to select a suitable broker.

Your success and profitability always based on the service, brokerage, and other charges which your broker charges for trade. It is ideal to select a broker who will align with your investing goals and provides the educational and support needs. As there is no guarantee that the stock which we make the entry will provide us the returns, but we will have better returns if we choose a broker who suits us, provides us the right recommendation, affordable brokerage, and other charges.

In this article, we will cover, eight general self questions which we can ask ourselves before selecting the broker and 15 key things newcomers should consider in selecting an ideal broker for investment and trading. Below is the list of things needs to consider in the selection of a broker.

1. Years of service
2. Type
3. Applications
4. Speed
5. Stock Recommendation.
6. Account Opening Charges
7. AMC
8. Leverage& Margin
9. Brokerage
10. Auto square
11. Mutual fund & SIP
12. Market closing timing
13. Customer care
14. Bank to trading account fund transfer
15. Account closing

Open Demat Account

LIST OF FEW SEBI REGISTERED INDIAN TOP STOCK BROKERS

We can categorize the brokers as full service and discount service. Below listed stockbrokers allow customers to trade in both BSE and NSE stock exchanges. Now, most of the full-service brokers are coming up with discount brokerage plans to acquire more customers.

The most popular full-service brokers.

• ICICI Direct.
• Sharekhan.
• HDFC Securities.
• Angel Broking
• Axis Bank.
• Kotak Securities.

The most popular discount stock brokers

• Angel Broking.
• Zerodha.
• 5paisa.
• Upstox.

QUESTIONS NEED TO CONSIDER WHEN CHOOSING THE BROKER.

Now trade and investments are made easy and inexpensive through the online trading platforms of brokers. In General, the selection of a broker should be based on your mode of investment, which you want to follow, like active or passive. For active investors, ideal to select a discount broker, and for passive investors, the full-service broker will be an ideal choice.

• For Intraday traders, discount brokers will be ideal and for long-term and short-term investors, full-service brokers will suit more.
• If you’re just starting out, It is ideal to select a broker who provides online or offline support.
• If you have the experience, select a low brokerage broker who provides a sophisticated trading platform and basic support service.
• It is ideal to select a broker who provides professional fundamental and technical analysts data for the customers.
• Need to select a broker who provides maximum features in the trading platform.

Below are the minimum features every trader and investor needs to look at in a trading platform.

• Advanced real-time charting capabilities.
• Conditional order options.
• Trading options in derivatives, commodities, and fixed-income securities, as well as stocks.
• Easy option to invest in different mutual funds and SIP.
• Stock and Mutual fund performance analysis and recommendations.

Be honest with yourself in the matter of your knowledge in the investment journey and where you want to go in the future. Below is the list of questions you can ask yourself to gauge your knowledge level, before selecting a suitable broker. Once you have the answer, you can select a suitable broker on the basis of your need.

1. What type of trades do you want to execute, Intraday, or Deliver?
2. Do you need a broker who provides a broader range of technical and fundamental resources which help you to identify suitable opportunities?
3. Do you in need of leverage and margin trading facilities?
4. Do you need conditional order and automated trading options for trading?
5. Do you need customer support from the broker to execute the trade?
6. Do you in need of study materials from the broker?
7. Are you confident of using the online platforms of the brokers to take the trade?
8. Do you in need of call and trade options for trading?

15 KEY THINGS TO CONSIDER IN SELECTING THE BROKER

Below are the 15 things a trader or an investor needs to consider about a broker in the selection process. Need to select the broker on the basis of your financial goals and based on your knowledge in the domain of trading and investment. It will be difficult to get a broker who meets all the below-mentioned selection criteria, but you can select a broker who can meet the most.

Years of service:

• If a broker is in this field for a long period of time, investors can confidently select the service from them.
• Also, investors can choose a broker on the basis of the credibility of the promoters, if it is a new broker.
• SEBI will allow only the brokers who meet the Eligibility Criteria to become Stock Broker, hence we can ideally trust all the listed brokers.

Type:

• Select the discount or full-service broker as per our financial goals and knowledge in the domain.
• If we are confident of doing ourselves, it is ideal to select a discount broker, if not better to select a full-service broker, as they provide handholding support to the customers in trading.

Application :

• Need to select the broker on the basis of our application of trading and Demat account.
• If only planning for the investment, select the broker who provides the least brokerage for the delivery order.
• If Planning for Intraday trading, select the broker who has flat brokerage.
• Need to select a broker who provides the Best stock trading app for beginners.

Speed:

• The speed of the trading platform of the brokers is an important factor need to consider.
• Select the broker with an advanced and Best trading platform, with higher speed.
• If the plan is for Intraday trading, speed of order execution is a critical criterion. For delivery orders, speed is not so critical, however need to select a broker who provides a trading platform, which will not hang during the peak trading time.

Stock Recommendations:

• For newcomers, recommendations from the broker will be an advantage for their trading career.
• Few brokers provide the stock recommendation free of charge and others charge nominal fees for these services.
• Better to select a broker, who can provide basic stock commendation free of charge.

Account opening charges:

• Different brokers charge different account opening charges, some brokers provide free account opening and a few provide free account opening offers.
• Once we select a broker, we can negotiate with some brokers for the account opening charges.
• Select a broker who can support us to meet our investment goals, account opening charges, which we can consider as secondary for those brokers.

AMC :

• AMC is the annual maintenance charges of the brokers, for the service which they offer to us.
• Some brokers, provide the first year free AMC.
• Select the broker who has the least AMC as yearly we need to pay this cost, even if we are not trading using the account.

Leverage & Margin :

• Leverage and Margin are the amounts which broker loan to the customers for trading.
• Leverage is the amount that brokers provide for Intraday trading. Select the broker who provides the maximum leverage.
• Margin is the loan amount for the delivery order. Brokers charge interest on the loan amount. Select the broker who provides maximum leverage and the least interest.

Brokerage :

• In general, the brokerage will be charged in the percentage of trade value or on the basis of a flat rate for a trade.
• Ideal to select the broker, who charges the least brokerage for delivery order and Intraday.
• If our goal is for only investing, we can select a broker who provides the least brokerage for delivery orders.
• Discount brokers usually charge flat charges for each trade.

Auto square off:

• Auto square off is the process of automatically squaring off the trade position after the market hour if the open position trader is not squared off by the trader.
• Some brokers charge a nominal charge for the auto square off service.
• Ideal to select a broker, who provide this service free of charge.

Mutual fund & SIP :

• Most of the brokers provide Mutual fund & SIPinvestment options in their trading platform.
• Always better to select a broker who provides these services at a nominal charge.

Market closing timing :

• Some broker closes their trading time in their portal earlier than the normal market closing time.
• Ideal to select a broker who provides maximum trading time to the customers.

Customer care :

• Some brokers provide dedicated relationship managers to handhold the customers for trading and investment.
• Some brokers provide customer care support only at the trading time and some provide customer service for extended hours.
• It is ideal to select a broker who provides quality customer care service for extended hours.

Charges for Bank to trading account transfer :

• Some brokers provide a 3-in-1 account, which means, the bank account will provide along with the trading and Demat account and some will provide only the trading and Demat account and customers can link it with any Bank account.
• Most of the brokers provide free transaction charges between the trading account and the linked bank account and very few brokers charge nominal fees for transferring an amount from a third-party bank account.
• Ideal to select a broker who provides these services free of charge.

Account closing :

• Some brokers, allow customers to close the account online and some brokers demand customers to submit the physically filled account closing form in their office to close the account.
• Always better to select a broker who allows the customers to close the account very easily and provide the support to transfer the balance holdings to another account.

CONCLUSION:

It is difficult to get a broker, who matches all the above-mentioned selection criteria. It is ideal to select a broker who matches the maximum criteria and who can support us to meet our financial goals. An investor should put their time, energy, and effort into the selection of the right broker as they put it for the investment planning, as service and support of a broker is a critical factor, in achieving goals.

To become an investor or a successful trader, it is ideal to just start with where you are right now and move on to the next step of an investment learning curve.

Before you click on any broker account opening link, take a moment to think about your financial goals and what are the important criteria which you need to consider for a broker. Take thought to our decision and select a broker who can matches more.

Thanks & Regards

MyMoneyBooks.

For the newbie earners, share market investment through mutual funds is a complicated subject, but once it understood and identify the advantages, it will be a convenient and easy investment option.

A mutual fund is an open-end investment instrument that is managed by professional fund managers who pool the money from different investors to purchase securities, bonds, equities, etc. The holdings in Mutual funds is called the portfolio of mutual funds.

Mutual funds provide many advantages to the investors which include professional fund management, dividend reinvestment, reduced risk compared to equity direct investment and it is convenient and easy to start with.  In this article, we will cover the various advantages of the mutual fund investment and things to consider before starting investing in MF for the newbie earners who would like to create wealth from the world of the share market.

How do Mutual Funds work?

• Mutual funds are formed by the asset management company’s or the Independent Fund Managers who pools investments from various institutional investors or from an individual with investment objectives.
• A fund manager manages the pooled investments with his in-depth understanding of markets, financial knowledge, and professional skills and generates maximum returns for the investors.
• The fund houses charge an annual maintenance fee(AMC) for the service of managing the investments of individuals and it is called the expense ratio. These charges will vary from fund to fund and between different fund houses
• The investors make money from the mutual funds through the receipt of dividends and capital gains of the stocks in the portfolio of the mutual funds.
• An investor can either choose to reinvest the capital gains and compound the investments or earn a steady income by way of a dividend option by investing in mutual funds.

Demat Account Opening link

How to Invest in Mutual funds?

There are 2 ways a newbie earner can invest money into mutual funds. As per the convenience of the investors, newbie investors can select either SIP mode or the lump-sum mode of investment. Units of Mutual funds are termed as Net asset value (NAV), it is the price at which investors can purchase or sell each unit of the mutual funds. All mutual fund transactions happen on the basis of the value of the NAV which updated daily after business hours. Investors can purchase the mutual fund units on the current NAV price either SIP monthly installments or investing as a lump-sum amount.

Lump-sum Investment Plan

In a lump-sum investment, mode investor can invest a significant amount of money at a time, on a particular mutual fund scheme by purchasing the mutual fund units at current NAV value. In  Lump-sum investment, an investor is investing the total amount of money in one go. In terms of returns, if the market goes up after the investment, the higher the amount of investment the better is the growth. A lump sum investment is an excellent way of investing for long-term investments.

Lump-sum investment is ideal for the investments considered for a period of more than 5 years. If a newbie earner gets into the market at right time, investors can make a huge profit from the lump-sum investment. An investor must invest based on their investment goals and the risk appetite which they can take.

SIP – Systematic Investment Plan

If a newbie earner is not confident in handling large amounts of money and doesn’t want to risk it, it is ideal to opt for a systematic investment plan. Through a SIP, a newbie earner can stagger the investments over time horizon by investing a fixed sum at regular intervals like weekly, monthly, quarterly, or half-yearly, as per the convenience of the investor. SIP investment can be considered as open-ended, I.e. it can be started or terminated at any time. Some fund houses also provide an option to the investors to pause the SIP for a while and continue whenever feel good to continue. Some fund houses will not levy any penalties for terminating the SIP before the minimum lock-in period.

By paying the installment of SIP, an investor is purchasing few more new units of the funds at the prevailing NAV. When an investor continues the SIP installments, over time, the cost of purchase of fund units averages out as when the markets are down, the investor purchase more fund units and vice versa. Through the SIP investment and investors get the benefit of both surging and falling markets and no need of worrying about the market movements.

Even-though as long as paying the installments, the invested amount gets rupee cost averaged, it will help to accumulate a large number of units of funds. Once investors stop the installments and wait for some time for the market growth, it will give a higher return on the base of market performance as NAV also increases correspondingly.

Advantage of SIP investment 

There are many advantages of the SIP mode of investment for the newbie investors, Few of them are listed below.

Financial goals:

Due to the Rupee cost averaging of the invested amount, investors fund is safe, even in marker downfall.

Wealth creation:

Due to the installment mode of payment, it helps newbie investors to develop the habit of discipline in financial matters. As disciplined Saving & power of starting early is the secret of the wealth creation, it helps the newbie earners to create wealth in the early ages.

Diversification:

In the SIP mode of investment in mutual funds, fund investment will be diversified to different domains or sectors of the market. Due to diversification, if one sector goes down, some other sector in the portfolio will help to maintain the asset value of the fund.

Able to invest in large funds:

In SIP mode and newbie, investors can start investing with a minimum of Rs. 100 per month, as these funds are used to purchase the bonds, equities, and stocks of the large companies, it will give an opportunity for the investors to invest in large firms with a small amount.

No worry about market movements:

As SIP investment can be started at any time and continue, newbie earners, need not worry about the right time to enter into the market due to the advantage of rupee cost averaging the market movement will not affect the fund. SIP investment always minimizes the risk of equity fluctuations.

Convenience:

A newbie investor can instruct the bank to facilitate the auto-debits option for the payment for the SIP premium. An investor can start and stop whenever they feel to do so, for the funds other than, funds had a minimum lock-in period. SIP investments are easy to monitor, liquidity if needed.

Fund managers:

In a SIP mutual fund investment, fund management companies assign a qualified fund manager to manage the overall fund, hence newbie investors will get a qualified fund manager to manage their assets, at a lower cost.

Compounding:

In SIP mutual funds, as our funds grow corresponding to the growth of the assets in the portfolio, it will give us a compounding fund growth effect. In addition, investors will get bonus shares and dividends, which will also work as compounding.

Easy to understand:

For newbie earners, no need to do a deep study about the share market and its movements for investing. Only need to understand the average growth, charges, and rules and regulations of the SIP which they are selecting. Newbie investors do not need to strain their head on the daily finances.

Better returns:

Even-though the SIP investment is subjected to market risks: Most of the SIP investment funds can grow exponentially after the completion of the installment period of the SIP.

Advantages of Mutual Funds?

Mutual funds are easy to start, investment instrument, which is professionally managed and will compound the invested amount over a long term. Mutual funds help the newbie earners to get an entry into the equity market, without having much knowledge in it. Below is the list of advantages of the mutual fund investment.

1. Professional management

For every mutual fund, there will be a qualified professional fund manager, who will conduct the research, make an investment decision and keep a track of the fund’s performance.  As investment decisions are done by professionals, investors can be assured that money is in the right hands and they will get the guaranteed returns.

2. Diversification

As mutual funds diversify the portfolio by investing the amount in a wide range of asset classes and stocks, mutual funds reduce the risk and offer a higher return. Therefore, even if one asset is not performing well, it will offer the returns as other funds perform well in the portfolio.

3. Higher returns

As mutual funds are invested in a variety of instruments that offers higher returns like bonds, blue-chip companies, etc, investors can get a higher return on the invested amount. Mutual funds also offer higher returns with lower risk as the fund is invested in different instruments.

4. Disciplined investing

Systematic Investment Plan (SIP) is a facility offered by Mutual funds companies that allow investors to invest small amounts regularly, which can be weekly, monthly, or quarterly to the Mutual funds. An auto-debit option of the SIP offers an excellent way of disciplined investment as the investments are happening regularly automatically from the linked account.

5. Convenience

Investing in mutual funds is easy and it can be started just with a few clicks in the portals of the fund managing companies. In online we can select the funds of our choice and monitor the performance. For Mutual funds, the KYC process can be completed in few minutes and it is very easy.

6. Low cost

Starting cost of Mutual fund investment is as low as 500 rupees for the Systematic Investment Plan ( SIP ) mode and 5,000 rupees for the lump sum mode of investment. For the Direct Plan mutual fund, an investor can start without paying any additional commission to the agents.

Things to consider as a first-time investor in mutual funds

Before start investing in a mutual fund, there are many factors that need to consider about the fund selection and the amount which need to invest in specific funds. For newbie earners, it will be risky, if start investing in a fund which they don’t know about the portfolio and the fund manager’s capability. The main points that need to consider are as below.

Identify your financial goals :

Select the fund according to the base of annual growth rate which meets the financial goals.

Decide on your investment amount :

For newbie earners, 10-15% of earnings in a year is an ideal amount to invest in MF.

Seek advice from the fund manager :

Discuss with mutual fund experts to get an idea about better investment choices.

Diversify your portfolio :

Select Funds from different domains like Index Funds, equity funds, and hybrid funds, etc.

Pick SIP (Systematic Investment Plans):

For a salaried person, it is ideal to select the SIP investment option instead of making lump-sum investments.

Why mutual funds are bad?

For newbie earners, a Mutual fund is the safe and easy investment option. However, Mutual funds investment can be considered as a bad investment when compared to direct investments in stocks, bonds, and commodities, if the investor has knowledge of these instruments.

Negative factors of mutual fund investments.

• High expense ratios charged for fund management
• Various hidden front-end and back-end charges.
• Lack of control over investment decisions.

What is Blue Chip Fund?

A blue-chip mutual fund is a fund that invests only in the stocks or shares, of companies that are well-established. These companies will have excellent overall financial performance, hence it is called blue-chip companies.

CONCLUSION:

A mutual fund is a fund managed by a professional fund manager in a company who pools money from different investors and invests it in different stocks, bonds, etc. The performance of the mutual fund is based on the performance of the holding in the mutual funds.

For newbie earners before investing in a mutual fund, it is necessary to understand the difference between the SIP and Lump-sum investments and its advantages to select a suitable option that meets their financial goals. As Mutual fund investment offers different advantages to the investors, it is better to select a suitable fund as early as possible and start investing in it.

Thanks & Regards

Harry

For the newbie earners, investment into the share market will be a complicated subject, but to start with, mutual funds will be an easy option.

A mutual fund is a professionally managed investment instrument that pools money from investors to purchase securities, bonds, and other assets.  Retail investors or institutional investors can invest in mutual funds with easy monthly payments. The combined holdings of financial instruments like securities, bonds, etc in a mutual fund are known as portfolios of the mutual funds. Investors can invest in mutual funds by purchasing the units of this portfolio either in SIP mode or in Lump sum mode.

Mutual funds are managed by professional fund managers, who pool money from different investors, prepare the portfolio by selecting suitable investment instruments, and manages the portfolio on the basis of the performance. The performance of the Mutual Fund is denoted by NAV ( Net Asset Value ). The NAV is calculated by dividing the market value of the overall securities in the portfolio by the total number of units on any particular date.

Are Mutual Funds are a safe investment?

Mutual funds are a safe investment if choose the right mutual fund from an established fund managing company. Mutual funds investments should be for the long term like a minimum of 5 years, should not be worried about the short-term fluctuations in market movements. Before investing, the investor needs to select suitable funds that sync with investment goals and should have a performance history.

Best Mutual Funds in 2021: Top Listed Mutual Fund To Investment.

The below chart showing the top listed different types of mutual funds and Their average returns for the different time periods.  These mutual funds are managed by fund manages in Mutual Fund company, who pools the money from various retail investors and invests in various asset classes like equities, bonds, etc.

What is the minimum period for mutual funds?

A Mutual fund investment can do even for a day. Most of the mutual fund investments will set a fixed lock-in period, however, funds can be broken any time by paying a small additional penalty charge, for some funds it will be free. The maximum tenure of a Mutual fund is perpetual. It is ideal to continue a Mutual fund for a minimum period of 5 years to get suitable growth and returns.

How to open a Mutual fund Account?

The mutual fund account opening process is very easy if the investor is aware of the process involved. A newbie earner can invest in a Mutual fund mainly in 3 ways.

• Register with an AMC (Asset management company).
• Through Demat account.
• Register with Independent Fund Managers.

A newbie investor can open the account through the online or offline method, both the process is simple. Before investing, first thing is to understand the different Asset management company and independent fund managers and their charges and annual performance in the last few years. Once selected the asset management company, an investor need to select a suitable fund with which to invest as per our investment goals.

Mutual Fund investment through AMC (Asset Management Company):

Through the AMC- Asset Management Company, a newbie investor can invest online or offline, most of the AMC encourages the online process and their websites usually highly user-friendly and also they will provide clear steps by step process involved in the investments.

Step 1: Open the AMC website & select suitable Mutual funds.

Step 2: Fill in the personal and investment details like total amount, SIP or Lump-sum, tenure, etc.

Step 3: Complete the Bank Details, KYC details and upload the required documents.

Step 4: Make a payment or Standing instruction if SIP.

Step 5: Account will be ready in few hours, based on their standard operating time.

Mutual Funds investment through a Demat account

A Demat account helps to hold all your investments in one place, In India, either with NSDL and CDSL a newbie earner can open the Demat account through a broker. Investing through a Demat account is more secure and easy than any other form of investment. The process of Demat account opening is very simple and we can complete it in a day and now most of the reliable depository participants ( Brokers like Angel broking, Upstocx…) made the process simple and free. As we are getting a trading account from brokers along with the Demat Account, Mutual fund investment can do in few clicks in the portal.

Step 1: If you don’t have a Demat account, open it with any reliable brokers.

Step 2: Once the Demat account is opened, select one among the mutual funds they support as per our investment goal.

Step 3: Make a payment or provide the standing instruction if SIP.

Step 4: Mutual fund investment will ready in few minutes, based on their standard operating time.

Open Demat Account

Mutual Fund investment with independent players

Most of the independent mutual fund managers have long-term investment knowledge and they will provide a sophisticated and easy-to-use type online platform for the users and also provides in-depth analysis, and comparison data among the different mutual fund schemes. Now, most of the independent players are ready to waive off the transaction charges to get an upfront market positioning.

Step 1: Go to the website of the service provider & create an account with them.

Step 2: Fill in the personal details like KYC and upload the required documents like PAN and get login portal details, where we can select the suitable investments and monitor the performance daily.

Step 3: Select the fund and provide the investment details like total amount, SIP or Lump-sum, tenure, etc.

Step 4: Make a payment online or Standing instruction if SIP.

Step 5: Account will be ready in few seconds, based on their standard operating time.

What are the different types of Mutual Funds?

There are fundamentally four types of mutual funds available on the basis of asset investment, in addition, there are other 4 types usually available for the investors which are derived from the fundamental types.

• Equity (stocks)funds,
• Fixed-income (bonds)
• Money market funds ( Short term low-risk investment instruments)
• Balanced or hybrid funds(both stocks and bonds).

Currently, considering 4 fundamental and 4 derived funds total of 8 common types of mutual funds are available to the investors, which are mentioned below.

1. Equity Mutual Funds

The performance of these funds is fully based on the performance of the equities in the portfolio of the mutual funds. The full amount is invested directly in good performing equities by the fund managers. There are different types of equity funds that specialize in different sectors and performance like value stocks, large-cap stocks, mid-cap stocks, small-cap stocks, etc.

2. Fixed income Mutual Funds

These funds are invested in financial instruments like bonds and so it provides fixed returns. Financial Instruments like government and corporate bonds provide high-yield than fixed deposits and they guaranteed regular fixed growth.

3. Money market Mutual Funds

These funds are invested in short-term, low-risk financial instruments like securities, bonds, treasury bills, commercial paper, certificates, etc. These funds guaranteed a fixed income within a short period of time. Money Maker mutual funds are generally a safer investment, but with a lower potential growth instrument.

4. Balanced Mutual Funds

In Balance funds, total capital will split among the different types of investment instruments. A portion of these funds will invest in equities and other portions in fixed income securities. These funds balance the aim of achieving higher returns with lower risk than pure equity funds. On the basis of the aggressiveness of the fund managers, they decide the percentage of investment in equities and bonds.

5. Index Mutual Funds

These funds are basically invested on the stock holdings of a specific index like NIFTY, SENSEX, Bank NIFTY, etc. The performance of these funds based on the performance of the INDEX, I.e the value will go up or down as the index moves. The overhead cost of the Index funds is typically lower. The portfolio manager doesn’t need to do much research in selecting the equities, they will pick the stock from the INDEX and invest.

6. Fund-of-funds Mutual Funds

These funds invest in other mutual funds that are performing well. Fund of Funds make asset allocation and diversification like balanced funds and it makes it easier for the investor. The returns of the fund-of-funds tend to be higher than normal mutual funds.

7. Specialty Mutual Funds

The Specialty funds will invest in specialized mandates such as commodities and real estate. Mostly these funds also select the stocks which are socially responsible. I.e. companies that support environmental stewardship and human rights. Socially responsible funds avoid companies involved in the business of alcohol, tobacco, etc.

8. ELSS Fund-Equity Linked Savings Scheme Mutual Funds

ELSS funds are equity funds I.e. about 80% of the corpus of these funds are invested into equity or equity-related instruments. ELSS funds are called tax saving schemes since they offer tax exemption under Section 80C of income tax act up to Rs. 150,000 in a Financial year. ELSS fund has a mandatory lock-in period of three years and taxpayers can avail of tax benefits in this time frame. The income that an investor earns under ELSS at the end of the maturity tenure will be considered as Long Term Capital Gain (LTCG).

CONCLUSION:

A mutual fund is a fund managed by a company that pools money from investors and invests it in securities such as stocks, bonds, etc. The holdings of the mutual fund are called the portfolio. The performance of the mutual fund is fully based on the overall performance of the holdings in the portfolio. Each investor in a Mutual fund owns shares of the overall funds, which represent a part of holdings.

For newbie earners before investing in a mutual fund, it is necessary to understand the different funds and select a fund on the basis of investment goals.  It is always advisable to discuss with financial advisors to make a better choice of the funds.

As Mutual funds are subjected to market risk, it is ideal to go for 10-15% of yearly earnings into the mutual funds. To start investing in mutual funds a newbie earner can select either the option of a Lump sum or the SIP as per convenience.

Thanks & Regards

Harry