Credclub

2021-06-08 15:28:55 Nithin Kamath along with his brother, Nikhil, founded Zerodha in 2010. Widely credited as a disruptive force in the Indian Broking industry, Zerodha has become the largest broking firm in the country. Valued at over $1 billion, it now accounts for more than 15% of the daily exchange turnover with a client base of over 3 million.
The most fascinating part? Zerodha is completely bootstrapped.

Watch as we get an insider’s look into the story of what is arguably a unicorn among unicorns.

Nithin Kamath in conversation with Kunal Shah:


Open / Comment

2021-06-04 15:45:15 Should you Apply for Every IPO?

IPOs are appealing to investors as they can profit from the potential of increased success of such companies in the future.

Don’t jump the gun –

Rather than investing in every IPO listed on stock exchanges, pause to consider the following.
1. Overvaluation brought on by promoters generating hype about the IPOs.
2. Discounted stock is a strong possibility when the IPO is finally listed on exchanges as a result of waning interest by the public.
3. Limited information pertaining to the company can prove to be an added risk as the company may end up concealing its negative attributes.

We recommend:

1. Read the company prospectus to understand its business model and the industry it operates within.
2. Consider individual investment priorities and gauge risk appetite, funds allocated towards the investment and financial goals.

IPO Trends:

India has over a dozen IPOs yet to be released this year indicative of their growing popularity. Thus far, 22 IPOs worth $2.6bn have already been released in the first quarter of this year amounting to almost double the IPOs listed this time last year. Open / Comment

2021-06-01 16:44:13 Missed a Rallying Stock? Now What?

While investors and traders alike might experience major FOMO at the prospect of missing out on a rallying stock, they shouldn’t despair should they miss out.

Fools rush in - Rather than rushing in enticed by the potential gains still likely, investors should pace themselves. Stick with chosen asset allocation and use a systematic approach to rebuild presence in the asset class under consideration.

Consider valuations – While it might have been easier to pick stocks while the market, in general, was seeing an upturn, it is now more prudent to have stock purchases be governed by market valuations. Professional opinions on what stocks to invest in are recommended.

Dynamic asset allocation funds – Making use of valuation metrics, these funds allow investors to get equity exposure and alter funds allocated to equities based on market conditions. Investors here are saved from having to make decisions pertaining to how to invest and when to do so.

Systematic investment plans – These are a good idea however if they have just been started, investing in a lump-sum amount amounting to 3 to 4 SIPs initially and then adding on more each month is ideal. Provided these funds aren’t touched for 3 to 5 years they can rake in generous returns.

Investors should be wary of closed-ended funds and not get complacent with them as they are liable to have enhanced risks in comparison to open-ended funds. Open / Comment

2021-05-31 14:56:43 ELSS Funds for The Uninitiated. They’re Not Just for Tax Saving

An Equity Linked Savings Scheme (or ELSS) is a form of a mutual fund that helps individuals reduce the amount of money they spend on taxes (Section 80C of the Income Tax Act). Tax deductions permissible can amount to up to ₹1.5 lakhs permitting savings of up to ₹46,800 in a year.

Features and Benefits

- Those who avail of this scheme can take advantage of the capital appreciation it allows for.
- As open-ended investments, over 65% of the funds provided are invested in equities.
- Funds provided are locked in for a period of three years active from the date of units being provided and cannot be retrieved during this time.
- Returns on offer under ELSS’s tend to be comparatively better than other plans.
- There are no limits on the amount an individual can invest in an ELSS.
- A fund manager is responsible for managing money rather than the investors themselves.

Clearing Misconceptions

Investors can choose to have their funds allocated towards dividends in which case they are paid the same. Else, funds can be allocated towards growth where money is reinvested to generate funds until redemption. Open / Comment

2021-05-25 17:07:17 What are Retrospective Taxes?

The government taxes certain products, items, or services and deals made by companies pertaining to a time prior to the date on which the law taxing them was passed.

Why are These Taxes Enacted?

These taxes are introduced by countries if the authorities feel their tax policies were taken advantage of by certain companies. Think of it as a policy change caused by second thoughts.

Retrospective amendments are at times added to taxation laws by governments to clear any room for doubts pertaining to them, however, this can end up being detrimental to companies who interpret said tax rules in a different light. This alternate interpretation could knowingly or unknowingly take advantage of the loophole available.

Retrospective taxes have most notably been applied to Vodafone who bought a majority stake in Hutchison Whampoa in 2007 in India. Open / Comment

2021-05-24 16:32:38 Liquid funds vs savings account: Who wins the battle of better returns?

Liquid funds are debt mutual funds that deliberately have a small investment time frame. They aim to safeguard your capital while offering liquidity. These funds invest in premium debt instruments which include government-issued treasury bills (essentially debt guaranteed by the government) or commercial papers (debt raised by blue-chip companies with stellar performance) or certificate of deposits (term deposits offered by banks). All in all, liquids funds make for low risk, low return instruments.

Liquid funds offer more bang for the buck as your funds earn 7-8% compared to your savings account which pays 4-5%. But liquid funds are subject to capital gains taxation, while savings interest is exempt upto INR 10,000.

When it comes to risk, liquid funds have low risk but they still carry risk. The company in whose commercial paper your liquid fund manager has invested may suddenly go broke tomorrow.

Between the two, who wins this battle for you? Open / Comment

2021-05-22 15:47:59 Amalner is a sleepy little town in northern Maharashtra whose sole claim to fame is that its residents hold Wipro shares worth Rs 3,000 crore. Many of these shareholders are those who invested sums varying from Rs 100 to Rs 10,000 in the 70s and the 80s and forgot about their investments. After a few decades, they or in some cases their grandchildren woke up to the investment left behind and realised that they had become millionaires by virtue of being Wipro shareholders.

Such incredible appreciation was possible for Amalner residents because of corporate actions like stock split and issuance of bonus shares which keeps increasing shareholder wealth over the long term. Additionally, dividends generated by shareholding are redirected into purchasing new shares which keep bumping up your wealth in the long run. Open / Comment

2021-05-22 15:46:43 The buy and hold strategy

What does it entail?

Investors who follow this strategy believe in picking out undervalued stocks with reliable management and strong fundamentals. Those who subscribe to this style often ignore the short-term noise and negative news emanating from the markets as long as it doesn’t concern or raise questions about the company’s fundamentals. Open / Comment

2021-05-21 13:59:04 *Feel as though there’s more air in that bag of chips than chips?*

Well, you might not be the only one complaining. Shrinkflation is when companies start cutting back on the size or quantity of the goods sold but hold the prices at the same level or inflate it.

- In July 2020, Cadbury was under fire from its loyal customers on Twitter for shrinking the size of many of its popular UK products without shrinking the price.

- In 2020, Toblerone reduced chocolate per unit by increasing the space between its chocolate triangle.

- Doritos reduced the chips per unit to 180 grams from 200 grams.

- In 2021, Nutella pulled down the size of its 400 grams jar to 350 grams jar in the UK.

Noticed any instances of shrinkflation in India? Tell us the last time you felt you had received less bang for the buck. Open / Comment