What is security market?
Security market is a market where securities are issued and traded. It is the market for different types of securities namely: Debt, Equity and Derivatives. Equity market is divided into two parts : Primary market - Secondary market. Derivatives market is also divided into two parts: - Options market - Futures market.
Why are shares bought?
Money can be made in different ways from the purchase of shares: By receiving dividends; By the value of the shares increasing from the price at which they were first purchased. Then they can be sold at a higher price back to the stock market.
Where do I buy / sell stocks ?
Stocks can be bought or sold through stock exchanges. Always deal registered brokers and sub brokers. Orders can be placed by calling over the phone/ mobile trading / online trading.
Where do I find stock related information?
Always visit Stock exchange websites for any information. Bombay Stock Exchange (BSE) : www.bseindia.com National Stock Exchange (NSE) www.nseindia.com.
What is a rolling settlement ?
In a Rolling Settlement, trades executed during the day are settled based on the net obligations for the day. Presently the trades pertaining to the rolling settlement are settled on a T+2-day basis where T stands for the trade day. Hence, trades executed on a Monday are typically settled on the following Wednesday (considering 2 working days from the trade day).The funds and securities pay-in and pay-out are carried out on T+2-day.
What are corporate actions ?
Corporate Actions are for Bonus / Stock Split / Rights / Dividends / Interim Dividends. Bonus issues. Instead of cash dividends, investors receive dividends in the form of a stock. The investor receives more shares when a bonus issue is announced. For example, when there is a bonus issue in the ratio of 1:1, the number of shares owned by an investor would double in number. However, the market price of the share would decrease as well. At times the decrease might not be proportionate to the extent of the bonus because market players might push the price up if they view the bonus issue as a positive development. Some companies might announce bonus issues to bring the market price of their share to a more popular range and promote active trading by increasing the number of outstanding shares. Stock splits. Whenever a stock split occurs, the company ends up with more outstanding shares which will not only have a lower market price but also lower par value. Stock splits are prompted when the company thinks its stock price has risen to a level that is out of the "popular trading range". For example, X corporation has 1 million outstanding shares. The par value is Rs.10 and the current market price is Rs.1000 per share. If the management feels this price is resulting in a decrease in trading volumes, they can declare a 1-for-1 split. By doing this, there will be 2 million outstanding shares with a par value of Rs.5 and a theoretical market price of Rs.500 per share. Sometimes when the market price is very low, the company might announce a "reverse split" which has the opposite effect of the normal stock split. In the case of splits, there is no change in the reserves and surplus of the company unlike the bonus issue. Right Issues. Rights are issued to existing shareholders of the company. For Example, a company market price is Rs. 100/- right are issued in the ratio of 1:1 at Rs. 50/-. Dividends / Interim Dividends. Dividend is the payment made by corporation to its shareholder members. It is the portion of corporate profits paid out to shareholders to receive a dividend you must buy the stock before the ex-dividend date and hold the stock until at least the ex-dividend date. Ex-Date information is available on stock exchange websites in Corporate Actions.
What is bulk deal/ block deal ?
Bulk Deal - with a view to imparting transparency in Bulk Deal to prevent rumours speculation about deals causing volatility in the Security prices, disclosures shall be made with respect to all transactions in Security where total quantity of shares brought/sold is more than 0.5% of the number of equity shares of the company listed on the stock exchange. Block Deal - in order to facilitate execution of large trades, a separate trading window is provided. A trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore executed through a single transaction on this separate window of the stock exchange will constitute a Block Deal. The Stock Exchanges shall disseminate the information of Block Deal such as the name of the Security, name of the client, quantity of shares brought/sold, traded price, etc to the public on the same day, after the market hours.
What is offer for sale (OFS)?
Exchange(s) - the Exchange(s) where the Promoters decide to offload their holding. Sellers - (i) All promoter(s)/ promoter group entities of such companies that are eligible for trading and are required to increase public shareholding to meet the minimum public shareholding requirements. (ii) All promoter(s)/ promoter group entities of top 100 companies based on average market capitalization of the last completed quarter. Buyers - all investors registered with the brokers of the stock exchanges other than the promoter(s)/ promoter group entities.
What is offer for buy?
When company is buying back shares from the existing share holder through tender route. Shares are to be transferred to the broker. Broker then must submit bid at the exchange level platform.
What tools are used for stock analysis and forecasting?
The behaviour of the price movement of a stock is said to predict its future movement. One such approach is called technical analysis and is based on the historical movements of the individual stocks as well as the indices. Their belief is that by plotting the price movements over time, they can discern certain patterns which will help them to predict the future price movements of the stocks. On the other hand, we have "fundamental analysis", where the forecasting is done on the basis of economic, industry and company data. Technical analysis is used more as a supplement to fundamental analysis rather than in isolation.
Can I use same margin to trade in both Equity and Currency segment?
Yes, same margin can be used to trade in both Equity and Currency segment.
How are Currency Contracts settled?
All Currency contracts – Futures and Options on NSE are cash-settled.
What are the trade timings of Currency trading?
In NSE for Currency Derivatives the trade timings are as follows: Trading Session- Monday to Friday- 9:00 AM to 5:00 PM Revise Timing will be Monday to Friday- 9:00 AM to 7:30 PM.
What is the date of expiry?
All Currency contracts expire two working days prior to the last business day of the expiry month at 12:30PM.
Who are the participants in Currency Trading?
Following are the participants in Currency Trading: Traders-Importers/Exporters, Hedgers, Arbitrageurs, Speculators.
How are currency futures & options contracts settled on exchange?
All currency futures & options contracts on exchange are net settled in cash in Indian Rupee. The final settlement price is the RBI Reference rate for each currency pair published on the last trading day for the expiry month.
What is margin to trade in Currency Derivatives ?
2% to 5% (of Contract Value)
What is the size of each contract of different currency pairs?
The size of each contract for different currency pairs on the exchange are as follows:
USDINR - USD 1000
EURINR - EUR 1000
GBPINR - GBP 1000
JPYINR - JPY 100,000
EURUSD (Cross-Currency Pair) - EUR 1000
GBPUSD (Cross-Currency Pair) - GBP 1000
USDJPY (Cross-Currency Pair) - USD 1000
Who is eligible to trade in Currency Derivatives?
All Resident Indians as defined in section 2(v) of the Foreign Exchange Management Act, 1999 (FEMA, Act 42 of 1999) are eligible to trade in the Currency Derivatives segment. For participation by regulated entities, concurrence from respective regulators should be obtained. Currently, trading facility in Currency Derivatives at I-Sec will be offered to all Resident Individuals / HUFs / eligible Corporate fulfilling the FEMA criteria.
What are Currency Derivatives?
Currency Derivatives are Future and Options contracts which you can buy or sell specific quantity of a particular currency pair at a future date. It is like the Stock Futures and Options but the underlying happens to be currency pair (i.e., USDINR, EURINR, JPYINR OR GBPINR) instead of Stocks. A future contract of USDINR of expiry 27th Jan 2016 will be represented by symbol ‘FUTCUR-USDINR-27JAN2016’. A call option contract of USDINR of expiry 27th Jan 2016 for Strike Price ‘66’ will be represented by symbol ‘OPTCUR-USDINR-27JAN2016-66-CE’.
Are there any circuit breakers in commodities like in equity markets?
Yes, like equity markets, commodity market has circuit breakers. Exchanges have circuit filters in place. The filters vary from commodity to commodity but the maximum individual commodity circuit filter is 6 per cent. The price of any commodity that fluctuates either way beyond its set price limit will fall in circuit breaker category.
What is rolling over of hedge positions?
Rolling over of hedge position means the closing out of existing position in the futures contract and simultaneously taking a new position in a futures contract with a later date of expiry.
What is due date rate?
It is the rate at which the contract is settled on the expiry date. Usually, it is the average of the spot prices of the last few trading days (as specified by the exchange) before the contract maturity.
What is meant by the term “tender period”?
The contract enters the tender period a few days before the expiry. This enables the members to express their intention whether to give or take delivery.
What is Mark-to-market (MTM)?
Mark-to-market margins (MTM or M2M) are payable based on closing prices at the end of each trading day. These margins will be paid by the buyer if the price declines and by the seller if the price rises. This margin is worked out on difference between the closing/clearing rate and the rate of the contract (if it is entered into on that day) or the previous day's clearing rate. The Exchange collects these margins from buyers if the prices decline and pays to the sellers and vice versa.
What is initial margin?
It is the minimum percentage of the contract value required to be deposited by the members/clients to the exchange before initiating any new buy or sell position. This must be maintained throughout the time their position is open and is returnable at delivery, exercise, expiry or closing out.
What is hedging?
Hedging means taking a position in the futures or options market that is opposite to a position in the physical market. It reduces or limits risks associated with unpredictable changes in price. The objective behind this mechanism is to offset a loss in one market with a gain in another.
What are the benefits of futures trading in commodities?
The biggest advantage of trading in commodity futures is price risk management and price discovery. Farmers can protect themselves against undesirable price movements and decide upon cropping pattern. The merchandisers avoid price risk. Processors keep control on raw material cost and decreasing inventory values. International traders also can lock in their prices.
What is the difference between spot market and futures market?
In a spot market, commodities are physically bought or sold usually on a negotiable basis resulting in delivery. While in the futures markets, commodities can be bought or sold irrespective of the physical possession of the underlying commodity. The futures market trades in standardised contractual agreements of the underlying asset with specific quality, quantity, and mode of delivery whose settlement is guaranteed by regulated commodity exchanges.
How many holders are allowed in mutual funds?
In mutual fund investment can be done with maximum three holders.
Will mutual fund have nomination facility?
Yes, mutual fund allows nomination. Some of the mutual funds allowed up to 3 nominees.
Are third party funds allowed?
Third party fund is allowed with declaration sign by investor.
Can I pay investment amount from any other bank account?
Investor can invest from any bank account where first investor name is there in bank account.
When will be SIP registered?
For registering SIP, it normally takes 21 working days. So, for SIP start date should be at least one month after of registration.
What is minimum investment by which investor can start?
In equity normally Rs. 5000 for Lumpsum and for SIP Rs. 1000 (Rs. 500 in some MF) per month investor can start investing.
What are charges of GEPL?
GEPL does not charge to investor; however, there are Transaction charges (Rs. 150 for First time and Rs. 100 for existing investor) are applicable if investor is investing in equity mutual fund which will be deducted from investment by mutual fund.
Is Demat account mandatory?
No, it is not mandatory to hold mutual fund units into Demat account.
What documents are required for investing in MF?
Investor (All holders) must comply to KRA for any MF investment. Investor along with cheque and application form can do investment.
What should be my policy sum assured for Term Insurance?
The approx. value should be 15 to 20 times your annual income plus you need to add all liabilities like loans etc.
Does the term plan cover all types of death?
Suicide is covered only after 365 days. All other types of death are covered.
In case of my death how long will it take my family to get the money?
After submission of all claim documents normally the money is received in 10 to 15 days.
Can I surrender my policy and what will I get back?
Yes. You can surrender the policy at any time. A term policy does not normally have any surrender value. Only death benefit is payable.
What benefit do I get from Motor insurance?
This is a compulsory insurance. Every claim free year the insured gets a no claim bonus which is deducted from the premium calculation at the time of renewal of the policy.
What are the add on covers for Motor insurance?
They are additional covers given by charging additional premium over and above the one charged and offered in the package policy. The popular ones are zero depreciation, engine protect, Key Replacement etc.
How many types of Motor insurance policies are there?
There are 2 types of policies. One is Third party / Liability only policy and the second is a package policy or comprehensive policy.
In case a tree or some object falls on my parked vehicle, will the same be payable?
What do I need to do in case of an accident?
Intimate the claim to insurance co.
How is the premium of my motor calculated?
The premium is calculated on the type of policy selected, type of usage commercial or private, the IDV and the add on covers selected.
What is not covered in Travel Insurance?
Any pre-existing illness that you may be suffering from before your date of travel and any planned surgery or treatment.
Where do I need to contact in case of a claim while travelling abroad?
You need to call on toll free no’s which are mentioned on the policy.
In case I need to extend my stay abroad what needs to be done?
You need to send an email to insurance company requesting for an extension for the number of days required , a self-declaration of good health and wiliness to pay the additional premium amount chargeable by email. On receiving the additional premium and underwriters’ approval your policy will get extended.
What is the amount of insurance I need for my travel policy?
The sum insured is dependent on the country and place of travel. Medical costs in Asia are cheaper than in Europe. Medical costs in USA are the most expensive so sum insured must be selected as per the country of travel.
Is Travel Insurance expensive?
No, it is a cheap insurance based on the number of days of travel and the country of travel.
What is covered in Travel Insurance?
Any hospitalisation due to sudden illness, accidents, personal liability whilst you are travelling abroad. It also covers loss of passport, flight cancellation and delay amongst other coverage.
Why do I need Travel Insurance?
Travel Insurance secures you from unforeseen accidents whilst you are travelling abroad.
Do I need to inform the insurance company of any changes to my assets?
It is your responsibility to update the insurance company if there are any additions / changes to your insured assets.
How do I select the sum insured?
The sum insured is determined by the costs of your assets.
Why do I need to insure my assets?
By taking insurance for your property /assets you are protecting yourself from financial risks should something happen to your assets.
What is the interest on application money on such bonds prior to the date on allotment?
In case of allotment the interest on application money is the respective coupon rate (subject to deduction of tax at source, as applicable), will be paid to the eligible investors from the date of realisation of subscription or 3 days from the date of banking application money (duly acknowledge by the banker to the issue) whichever is later, money up to one date prior to the Deemed Date of Allotment. In the case of refund of application Money. Interest on refund amount on application money will be 4% p.a. date of realisation of subscription money up to one date prior to the rejection.
Does this bond carry buyback options?
No. Neither "Put Option" shall be available to the Bondholder(s), nor would "Call Option" be available to the Company to redeem the Bonds prior to maturity.
Will the scanned copy of form be acceptable?
No, Scanned copy of the form will not be acceptable.
Are these bonds listed anywhere?
Yes. These bonds are listed on the F Group and Capital Market Segment at BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) respectively. BSE shall be the designated Stock Exchange.
Is there TDS on the interest on allotment of bonds?
There will be no deduction of tax at source from the interest on allotment of bonds.
Who will get the interest in case of joint application?
In the case of joint application, interest will be accounted to the first holder only, and will be credited to the bank account which is linked to the demat account.
Documentary requirement in case of application made under power of attorney
Notarized copy of POA must be attached with the original application and cheque.
Can cheque be signed by a person holding POA?
Cheque may be signed by the POA holder if the applicant`s bank clears the Cheque.
Can NRI apply by doing the direct transfer of funds to escrow account?
No, not allowed. Note: Only cheque from respective NRE/NRO account maintained with a RBI authorised dealer or a RBI authorised bank in India will be acceptable.
Can one apply in joint names?
Yes, Applications may be made in single or joint names (not exceeding three). In the case of joint Applications, all refunds/ interests/ redemption amounts will be made out in favour of the first Applicant. All communications will be addressed to the first named Applicant whose name appears in the Application Form at the address mentioned therein. Names in the Application Form should be identical to those appearing in the account details in the Depositories. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depositories.
Documents required along with NRI application?
Application form in original cheque from respective bank account-NRE/NRO Notarized copy of POA if Application under POA.
Is there a separate form for NRI?
There is no separate form for NRIs, the form for residents and NRIs are same.
Can a NRI apply for bonds in Physical mode?
No. NRI cannot apply for physical mode.
Can person who has foreign citizenship and having PIO card apply in NHAI Issue?
If I’m an NRI, can I invest in these bonds?
Yes. NRI’s can invest in bonds through- Repatriable as well as non-Repatriable basis.
What is the face value of each bond?
Minimum Investment Size? Rs. 1,000/- per Bond. Minimum 50 Bonds, Minimum Investment Size-Rs. 50000 (in multiples of 1 bond)
Can an NRI avail benefit under DTAA?
Yes. The provisions of DTAA override the general provisions of the tax law of a country. If there is a DTAA between India and the country in which NRI resides, the NRI has an option of choosing to be taxed either by the provisions of DTAA or the provisions of the Indian Income Tax Act, whichever is more beneficial. As regards procedure, each designated bank branch has its own process and documentation to be followed for availing benefit under DTAA of respective countries. These documents are for a specific period only and have to be executed every financial year with the designated bank to continue enjoying benefits.
What is a Double Tax Avoidance Agreement (DTAA) / Tax Treaties / Tax Convention?
DTAA is a bilateral agreement between Governments of two different countries for avoidance of double taxation and for prevention of fiscal evasion. Double taxation occurs when taxing jurisdiction overlap and a transaction, asset or income is subject to taxation in both jurisdictions. The purpose of DTAA is to avoid such double taxation to the extent agreed upon. In effect, the respective jurisdiction is so identified that a particular income is taxed in one country only or, in case it is taxed in both the countries, suitable relief is provided in one country to mitigate the hardship caused by taxation in another jurisdiction.
Will an NRI get certificate for deduction of tax at source?
Yes. A certificate in prescribed format, mentioning details of the transaction and the tax deducted, will be issued by designated bank branch or fund house, as the case may be. As per current law, this certificate is issued on quarterly basis.
Is tax deducted at source (TDS)?
Yes. The tax on capital gains at applicable rates is deducted at source (withholding tax). The tax is calculated on the amount of gain (sell price - buy price). There will be no TDS in case of loss. In the case of Shares, the tax will be deducted by designated bank branch where PIS account is held. In the case of Mutual Fund, the tax will be deducted by the respective fund house.
How is dividend income taxed?
The dividend income is exempt in the hands of the investor. However, respective Company or Fund House is charged with dividend distribution tax. The rates of taxation are as follows (Note 3): Asset Class Tax on Dividend Income(Payable by Investor) Dividend Distribution Tax(Payable by Company / Fund House) Equity Shares Nil 15% Mutual Funds Equity Nil Nil
Is tax deducted on Gains made from redemption of Mutual Fund Investments?
Yes. The tax, at applicable rates, is deducted at source by fund house prior to crediting sale proceeds in the bank account.
Can an NRI repatriate money on redemption of Mutual Fund Investments?
If the investment is made on repatriation basis, the redemption proceeds along with dividend income can be repatriated outside India. If the investment is made on non-repatriation basis, the redemption proceeds cannot be repatriated outside India. However, dividend income qualifies for full repatriation.
Is nomination allowed in Mutual Funds?
Yes. Nomination is allowed. An NRI can nominate either a Resident Indian or an NRI for his investments. Nomination can also be changed after investments are made by an application in prescribed format to the AMC.
Is tax payable by NRIs on gains from sale of shares / units of mutual fund?
Yes. As per the current Indian Income Tax Law, tax is payable on gains arising from sale of shares/units of mutual fund. Depending on the tenure of investment in shares, these gains are classified into: Short Term: If the holding period is 1 year or less, the resultant gain from sale of shares/units is termed as Short Term Capital Gains. Long Term: If the holding period is more than 1 year, the resultant gain from sale of shares/units is termed as Long Term Capital Gains.
What is financial planning?
Financial planning is a step-by-step approach to meet one’s life goals. A financial plan acts as a guide as you go through life’s journey. Essentially, it helps you be in control of your income, expenses, and investments such that you can manage your money and achieve your goals.
What is covered under financial and investment planning?
Financial Planning is an ongoing process to help you make sensible decisions about money that can help you achieve your goals in life; it’s not just about buying products. Our services cover various aspects of planning:
• Risk Profiling
• Review of existing assets and liabilities
• Counselling for removing unproductive assets
• Assessment of Financial Goals (retirement, child education, home purchase, etc.)
• Prioritization of Financial Goals
• Goal Affordability
• Goal-based Investment Advice
• Customized Asset Allocation
• Emergency/Liquidity Planning
• Detailed Investment Plan (including mutual funds, and other products)
• Review of Existing Life Insurance products; Review of existing Health and Disability Insurance
• Insurance Adequacy Assessment
What are the benefits of financial planning?
There are numerous practical benefits to financial planning. It helps you to:
• Increase your savings: It may be possible to save money without having a financial plan. But it may not be the most efficient way to go about it. When you create a financial plan, you get a good deal of insight into your income and expenses. You can track and cut down your costs consciously. This automatically increases your savings in the long run.
• Enjoy a better standard of living: Most people assume that they would have to sacrifice their standard of living if their monthly bills and EMI repayments are to be addressed. On the contrary, with a good financial plan, you would not need to compromise your lifestyle. It is possible to achieve your goals while living in relative comfort.
• Be prepared for emergencies: Creating an emergency fund is a critical aspect of financial planning. Here, you need to ensure that you have a fund that is equal to at least 6 months of your monthly salary. This way, you don’t have to worry about procuring funds in case of a family emergency or a job loss. The emergency fund can help you pay for varied expenses on time.
• Attain peace of mind: With adequate funds at hand, you can cover your monthly expenses, invest for your future goals and splurge a little for yourself and your family, without worry. Financial planning helps you manage your money efficiently and enjoy peace of mind. Don’t worry if you have not yet reached this stage. If you are on the path of financial planning, the destination of financial peace is not very far away.
What are my responsibilities as a client?
Your responsibilities as a client are:
• To communicate clearly and honestly with your advisor so they understand your financial circumstances, investment objectives and experience.
• To ask questions about investment matters that you do not understand.
• Be realistic in your expectations
• To track & monitor your investments based on your changing needs
What different products I can expect advice on – Stocks, real estate, bonds, mutual funds etc.? and how much return can financial planning generate?
Financial planners’ advice on your financial life and the proper asset allocation as per your risk profile. They will discuss on the different asset classes be it equity, debt, real estate, and gold and also advice you on products suitable for your profile. They may or may not advice on all product category, but they can surely guide you on what is best for your personal finances.
Financial planners don’t run after returns but they focus on your goals. Infact they want their clients also to focus on goals only. With a regular review of the investments and rebalancing the asset allocation they help in generating the optimal returns required to achieve your goals and keep the volatility in line with your risk profile.
What is global investing?
It is a unique offering for the customers to invest in the US stock market directly. Investors aspiring to invest in some of the leading global companies like Apple, Microsoft etc. can seamlessly do so and leverage the benefit of geographical diversification in their portfolio.
Why should I invest in global markets?
Investing in global markets will offer you host of opportunities. Some of which are:
• Diversify your portfolio - You can diversify your wealth by investing in the deepest and widest stock market in the world.
• Risk diversification - US stocks are truly global corporations, thereby giving you a more diversified and risk adjusted exposure.
• Better performance - US stock market has outperformed the Indian stock market over the last 10 years in dollar terms.
• Invest in innovative companies - You can own shares in known companies like Google, Amazon, Apple, Microsoft, Netflix, etc.
Can I legally invest in US markets?
Yes. Vested follows the RBI’s Liberalized Remittance Scheme (LRS) guidelines. Instituted by RBI, the LRS is a set of policies that governs the maximum amount and purposes of remittance. Under the LRS, an Indian resident can send up to USD $250,000 abroad annually without seeking approval from RBI. The LRS has made it easier for Indian residents to study abroad, travel, and make investments in other countries.
How do I withdraw money from my account?
You can withdraw money from your account any time. All you must do is initiate the withdrawal process from the ‘Withdrawal’ tab on the platform. The money will be wired directly to your bank account in India. It may take 3 – 5 business days for the wire to come through.
Do I need to compulsory have an account with GEPL Capital?
Yes. To open your account, click here.
What is Portfolio Management Service?
Portfolio Management Service (PMS) is a facility offered by a portfolio manager with the intent to achieve the required rate of return within the desired level of risk. An investment portfolio can be a mix of stocks, fixed income, commodities, real estate, other structured products, and cash. A portfolio manager is a licensed investment professional who specializes in analyzing the investment objectives of the investor and has a vast knowledge of the various instruments in the market. The portfolio manager is better positioned to make informed decisions for investments in securities as opposed to a layman.
PMS is a customized service offered to High Net-worth Individuals (HNI) clients. The service is tailored as per the investor’s return requirements and the ability and willingness to assume the risk. An Investment Policy Statement (IPS) is drafted by a PMS to understand the financial position and needs of the client. The portfolio manager ensures that the return requirements coincide with the risk profile. Before executing the optimum portfolio, PMS also studies the various constraints such as time horizon, tax applicability, liquidity, and other unique considerations of the client.
What are the types of Portfolio Management Services?
Active Portfolio Management: This form of portfolio management aims at beating the performance of a market index such as Nifty. An active portfolio manager will take different positions than that of the tracking index, actively buy and sell securities as per institutional research to create more returns than the index. However, to generate an excess return, the strategy undertakes a higher level of risk.
Passive Portfolio Management: Such a PMS strategy aims to mimic the performance of an index by investing in the same securities with similar weights. This is known as indexing or index investing. The transaction costs, resulting from securities turnover, are low as compared to active management as the portfolio churning is at a minimum. However, incurring transaction costs leads to an overall return being lower than the tracking index. The returns of the portfolio are pegged to the market returns. Therefore, the variance in returns is low.
Discretionary Portfolio Management: The portfolio manager is given complete control of the portfolio and is free to adopt any strategy which is suitable to the IPS. Such PMS demand higher involvement for decision making justifying higher fees associated with discretionary portfolio management. This is the best option for clients with limited time and knowledge of investing.
Non-discretionary Portfolio Management: The PMS will only suggest investment ideas while the investor will be responsible for choosing the recommendation and timing. This employs PMS in an advisory capacity as the final call rests with the investor instead of the portfolio manager.
What feature to look for in a PMS?
- PMSes have model portfolios that they furnish when soliciting clients. The PMS model portfolio may be assessed fora track record of company selection and overall performance against the market index.
- The performance of the portfolio is solely dependent on the manager’s ability to outperform the market. Therefore, a crucial aspect of selecting PMS is conducting due diligence of the portfolio manager. A portfolio manager’s educational background and experience ultimately point to the competency and expertise that they bring to the fund.
- The investment strategy is another parameter that can give PMS an upper hand over other schemes available in the market. It makes sense for the investor to understand the strategy before committing funds. If the strategies are complex, the viability of such strategies over the long-term should be outlined transparently.
- Customer support and transparency are valued by investors, especially for discretionary portfolios. PMSes appraising portfolio performance frequently benefits from customer engagement and establish a long-standing agreement.
What is PMS equity?
Portfolio Management Services that focus only on portfolios that invest in equity are generally referred to as PMS equity.
Who is an ideal PMS investor?
Individuals and corporate entities with a high net-worth, who are looking for customized investment solutions that are designed to satisfy their needs and requirements are ideal PMS investors.
What is Wealth Management?
Wealth management is an investment advisory service that combines other financial services to address the needs of affluent clients. Using a consultative process, the advisor gleans information about the client’s wants and specific situation, then tailors a personalized strategy that uses a range of financial products and services.
Often, a holistic approach is taken within wealth management. To meet the complex needs of a client, a broad range of services—such as investment advice, estate planning, accounting, retirement, and tax services—may be provided. While fee structures vary across comprehensive wealth management services, typically, fees are based on a client’s assets under management.
Why would someone need wealth management?
Clients may engage in a wealth management relationship for several different reasons. Some choose to do so because they need help planning for certain goals, or need guidance around estate planning, protecting wealth, retirement planning, or ways to manage their tax obligations. Others choose wealth management because they don’t have the time or the desire to manage their own portfolios or simply value the input of a financial professional, who can act as a sounding board.
What is the difference between wealth management and financial planning?
Wealth management is a broad term that usually includes financial planning. Financial planning usually refers to guidance in which a financial professional helps you identify your goals and works with you to design a clear path forward. Wealth management is broader and may include this and other services.
What is tax-efficient investing?
Tax-efficient investing refers to the practice of taking the impact of taxes into consideration when making investment decisions. For instance, reviewing a portfolio for tax-loss harvesting opportunities or considering the tax status of an account before withdrawing money from it are examples of tax-efficient investing practices.
What is a demat account?
A demat account is like a bank account for your shares and stocks in which the shares/stocks are held in an electronic format. Demat accounts make it much easier to own and trade stocks, shares, mutual funds, ETFs by eliminating the hassles of lengthy paperwork. Demats have streamlined the process of owning and holding shares.
What is the difference between Demat and Trading account
Note that a demat account and trading account are not the same. A demat account is usually accompanied by a trading account, which is required for purchasing and selling stocks in the share market. So, a trading account is used to buy and sell shares while a demat account is used to hold them. Like a bank account, where money is debited and credited, shares are debited and credited from a Demat account.
What are the facilities you can avail by opening a demat account?
- Share Transfer: Demat accounts are used to transfer the share holdings of an investor.
- Loan Facility: If you hold securities in your demat account, you have access to loan facilities. Securities function as collateral.
- Dematerialisation and Re-materialisation: With an active demat account, conversion of securities into different forms is an easy task. You can convert physical shares into electronic ones or vice versa.
- Availing Corporate Benefits: With demat accounts, you can avail of the benefits associated with holding securities. For example, when a company provides dividends, interests or refunds to its investors, demat account holders can access these benefits immediately.
How to Open a Demat Account?
- Choose a Depository Participant (DP)* with whom you would like to open an account.
- Fill the account opening form. Carry all your original documents with you.
- The DP will provide you a copy of all the terms and conditions and the charges that will be levied for the services.
- After the form is processed, you will be given an account number/client ID and a password by the DP. These details would be required to access the demat account online.
- You can operate your demat account without holding any securities. Also, there is no hassle of maintaining a minimum balance either.
What are the Documents Needed in Order to Open a Demat Account?
• Proof of Income: Photocopy of Income Tax Return (ITR) Acknowledgment slip, salary slip, certificate of net worth are accepted as proof of income.
• Proof of Identity: PAN card, Aadhar, Voter ID, Driving License, Passport are all accepted. Identity cards issued by the Central/State Governments, statutory bodies, public sector undertakings, etc. are also accepted.
• Proof of Address: Passport, Voter Identity Card, Registered Lease or Sale of Agreement of Residence, Driving License, Bank Statement not older than 3 months, etc. The address provided in the name of the spouse is accepted as well.
Can I open more than one account?
There is no restriction on the number of accounts you can open.
Do I have to keep any minimum balance of securities in my account?
No. The depository does not prescribe any minimum balance. You can have zero balance in your account.
Can someone else operate my account on my behalf on the basis of a power of attorney?
Yes. If you authorise any person to operate your account by executing a power of attorney and submit it to your DP, that person can operate the account on your behalf.
Why are shares bought?
Money can be made in different ways from the purchase of shares: By receiving dividends; By the value of the shares increasing from the price at which they were first purchased. Then they can be sold at a higher price back to the stock market.
What are advisory services?
We engage business owners and senior managers in an intensive, collaborative process to identify and resolve any issues and challenges that may be preventing your organization from achieving its fullest potential. We provide comprehensive financial planning and investment advisory services for individuals and HUFs.
What are the services that you provide?
We provide comprehensive financial planning and investment advisory services for individuals and HUFs. We offer a range of service plans tailored for various needs. Our planning and advice is customized and individualized.
How do you work with your client during the planning process?
We start by collecting a set of inputs from you. These cover many aspects of your financial situation. We use the inputs to develop a draft plan. We review the plan with you, include your feedback and develop the next draft. We finalize the plan after you have understood the plan and are able to execute it.
What are the tools and software used during the planning process?
We use a combination of open-source tools and customized calculators to analyse the inputs and create a comprehensive plan.
The tools are one of the factors that affect the quality of the plan. The process used to create the plan, customization to your requirements, and the knowledge of the planner are other major factors that contribute to the quality of the plan.
What are the core benefits of advisory services?
This is the place to Fix Your Finances, forever. You get to handle your investments and insurance with the greatest ease because we are doing all the hard work of sifting and selecting for you. The main problem with financial products is lack of accountability. The agent, the distributor or the wealth manager may sell you a product that looks good today and carries a lot of promises but may not deliver. Mutual funds lose a lot of value, insurance claims are not met, corporate fixed deposits not being returned and so on. If you follow our recommendations, you can stay out of harmful financial products sold to you through false promises and deception and grow you wealth peacefully.
I am an NRI. Can I join?
Yes, you can. Indeed, this service would be of great benefit to you, if you wish to buy Indian financial products.
What is Interest Rate Future (IRF)
An interest rate future is a futures contract with an underlying instrument that pays interest. The contract is an agreement between the buyer and seller for the future delivery of any interest-bearing asset.
The interest rate futures contract allows the buyer and seller to lock in the price of the interest-bearing asset for a future date.
Understanding Interest Rate Futures
An interest rate future can be based on underlying instruments such as Treasury bills in the case of Treasury bill futures traded on the CME or Treasury bonds in the case of Treasury bond futures traded on the CBOT, which is a division of the CME. Other products such as CDs, Treasury notes, and Ginnie Mae securities are also available to trade as underlying assets of an interest rate future. The most popular interest rate futures are the 30-year, 10-year, five-year, and two-year Treasuries, as well as the Eurodollar.
How do Interest Rate Futures (IRF) work?
Interest rate futures as mentioned before can have any interest-bearing security as the underlying asset. These futures contracts are a legal agreement to either deliver the interest-bearing security at expiration or settle the contract in cash. Most often, futures are cash-settled. Interest rate futures are traded on centralized exchanges and have a few specific components.
- Underlying asset – the interest-bearing security the value of the interest rate future is dependent on
- Expiration date – the date in which the contract will be settled, either through physical delivery or if it is cash settled, this will be the last cash settlement
- Size – the total nominal amount of the contract
- Margin requirement – For cash-settled futures, this is the initial amount needed to enter into the futures contract, as well as the maintenance margin that the initial margin will need to stay above
There are a number of different types of interest rate futures, depending on the underlying instrument. These futures can also be short-term or long-term. Short-term interest rate futures have an underlying instrument with a maturity of less than one year, while long-term interest rate futures have an underlying instrument with a maturity of over one year.
What are the benefits of IRF?
- It is a good hedging mechanism. In India, interest rates are high due to high inflation. However, at some stage, they could go down too. It may be a good idea to protect your borrowing costs against future movements in interest rates.
- There is no Securities Transaction Tax (STT). This makes hedging a reasonably efficient process.
- The real-time dissemination of prices means there is greater transparency in trading.
Why should you apply for an IPO?
- Initial Public offering is an excellent source of income for a company that helps in its expansion. If you are an informed investor where you are aware of the fundamentals of the company, then investing in IPO would be a great opportunity for you.
- With the few easy steps and with multiple payment methods you can easily apply for the IPOs.
What are the types of IPOs?
There are two types of IPOs - Book building IPO and Fixed price issue. Investors participating in Fixed price issue, must ensure that, when making the application, they pay the full price of the shares. A book-building issue is a comparatively new notion in India. There is no fixed price, but a price band or range. The lowest and highest price is referred to as 'floor price' and 'cap price'. You should bid for the shares you would like to pay at the desired amount. After reviewing the bids, the price of the stock is then set. After each day, when the book is constructed, the demand for the share is known.
Why Do Companies Have IPOs?
Although an initial public offering (IPO) is the first time the public can acquire shares in a company, it's crucial to remember that one of the aims of an IPO is to allow early investors in the company to cash out their assets.
Consider an IPO to represent the conclusion of one stage in a company's life cycle and the commencement of another—many of the initial investors want to cash out on a new venture or start-up. Investors in more established private companies that are going public, on the other hand, may prefer the option to sell some or all their shares.
Who can invest in IPO?
When it comes to an IPO, there are 4 types of investors who can bid, as per SEBI guidelines. They are –
• Qualified institutional investors (QIIs)
• Anchor investors
• Retail investors and
• High net-worth individuals (HNIs)/Non-institutional investors (NII).
What is IPO subscription period?
The IPO subscription period is the time during which investors can commit to buying shares of a security that will be released as an initial public offering (IPO).
What is Currency Market?
- Stocks and share trading are well-known concepts. However, the majority of people are unaware of a high-potential sector. Currency trading is the name for this route. Allowing foreign currency trades offers you the ability to prosper if you can find the right opportunity and use it to your advantage.
- Participants from all over the world participate in the international currency market. They trade in a variety of currencies. Banks, companies, central banks (such as the RBI in India), investment management firms, hedge funds, retail forex brokers, and individual investors all participate in currency trading. Forex trading is a legal means of earning money.
A glance at the Indian currency market
- In India, currency futures are settled in cash. This means that currency trade in India is not physically resolved, meaning that the currency is not delivered on expiry. When you inquire about the nature of currency trading, you are most likely referring to currency futures trading.
- Currency futures are exchanged on platforms provided by exchanges such as the NSE, BSE, and MCX-SX. Typically, currency trading takes place from 9:00 a.m. to 5:00 p.m. To trade in the live currency market, you must first open a forex trading account with a broker. You can open a Demat account if you want to. GEPL Capital is a licensed currency broker on the NSE, BSE, and MCX.
Things required for currency trading
- You may need a currency trading account to trade in currency in India.
- Follow the Customer KYC (Know Your Customer) guidelines.
- Make a deposit for the necessary margin.
- To begin, obtain the required access credentials from your broker.
Types of Currency Market
- There are two types of currency markets in the world. The first is the spot market, also known as the cash market. The second is the futures market, which trades currency futures. Futures are the preferred method of trading in the Indian currency market.
When to Buy or Sell Currency Pair?
- The currency pair value is usually denoting the market’s opinion on the current and future health of the economy. If we buy USD/INR future we are betting that the US economy is currently doing well and going forward will get much better.
- This is also similar to buying a share in the US market. On the other hand, if we are selling USD/INR we are betting that the Indian economy is currently doing well and can outperform the US market.
Can NRIs invest in the Indian Stock Market?
Yes, NRI can directly invest in the Indian stock market. Returns in the stock market have historically been far higher than debt products. Good equity portfolios make for great investment plans for NRIs.
Requirements for investment:
Any NRI who has a Portfolio Investment Scheme (PIS account), an NRE/NRO account, a Demat account, and a trading account can invest in the Indian stock market.
Note: Equity markets can be volatile and you should do your due diligence before you invest.
Can NRI invest in mutual funds in India?
YES! As an NRI, you can invest directly in mutual fund schemes. Mutual Funds (MFs) can be an important part of investment plans for NRIs. Mutual Funds offer a wide range of investment options, from debt to equity as well as a hybrid segment. You have to carefully choose schemes that can deliver good returns.
To invest, you need an NRE or NRO account as you can only invest in Indian rupees. The returns depend on the type of funds you have invested in, like debt, equity, or hybrid. You are liable to pay capital gains on the returns you earn from mutual funds which are normally deducted as TDS.
Can NRI invest in PPF (Public Provident Fund)?
No, NRIs are not allowed to invest in PPF. However, if a NRI has opened a PPF account before becoming a NRI, he can continue it until its maturity. In case he wants to withdraw the investment before maturity, then he can do so after five years from the date of account opening.
Can NRI invest in NPS?
Yes, NRIs can invest in NPS. The National Pension Scheme allows NRIs to invest in the scheme. But Persons of Indian Origin or PIO and Overseas Citizen of India or OCI are not permitted to invest in NPS.
Is nomination allowed in the Indian Capital Market?
Yes, nomination is allowed. An NRI can nominate either a Resident Indian or an NRI for his investments. Nomination can also be changed after investments are made by an application in prescribed format to the respective account.