You must have heard what Donald Trump has been doing over the past few weeks or from the time he became US President i.e. taking crazy decisions in the name of 'Let's make America great again'. We understand that he wants to help the steel and aluminum industry, and therefore he's announced plans for protective tariffs, claiming that "Trade wars are good and easy to win". He is also correct when he says that this has been a problem for decades.

However, while he has the right intentions and he took the decision which also looks right as well, yet he made the mistake which most of us do by 'thinking only at the first level'.

First level thinking talks about not diving deeper into the issues and not understanding the implications of our actions but taking the decisions on their face value. We will talk more about first order thinking, but let's first talk about 'US's tryst with Protectionism'.

Let's go back to the Second World War. During that era the US used to produce three-fourth of the steel worldwide and it was felt that the same situation will continue for a long time. However, after the World War, the US kept working with its old technologies and Europe & other countries moved to newer technologies which were 50 per cent cheaper than that employed by the US.

In 1959, the Congress felt that the US is losing its dominance and called for a meeting of all the big steel barons who said, "We have examined the production capabilities of other countries though they don't match up with the capabilities of the US firm."

In 1960s they finally realised their mistake, but were too late as the countries from Europe and other parts of the world had started dominating the steel space. But, there is a twist in the story. In the 1960s, a man named Ken Iverson started a steel business that became Nucor. Iverson started making steel using the electric arc process, building the first American facility in 1969. It began growing at an exponential rate, competing rather effectively with foreign producers, to say nothing of other American producers.

As other steel producers begged for protectionist policy, Iverson mocked the idea. In an interview in 1986, Iverson noted that protectionist measures already instituted hadn't had the desired effect. "As soon as prices began to rise and the steel companies began to be profitable, they stopped modernising," he said. "It's only under intense competitive pressure - both internally from the mini-mills, and externally from the Japanese and the Koreans - that the big steel companies have been forced to modernise."

Nucor has since become the nation's largest domestic steel producer. Yet, it has started to act like the Big Old Steel boys of US. After Trump announced the tariff, Nucor's CEO vigorously applauded the move, claiming it was long overdue.

But before Nucor joins the protectionist parade, it might want to recall the words of Iverson, who died in 2002, when his company was on the way to the top: "Unless you're under intense competitive pressure and it becomes a question of the survival of the business to do it, you're just going to lapse back into your old ways. There's no other answer."

The moral of the story is that if Trump had gone a bit deeper into the issue and looked at the trade restrictions imposed by his predecessors George W Bush and Barack Obama, he would have realised that trade restrictions end up doing more harm than good. Lightly informed economic adventurism by the US President is not good for the US and it is not good for the world.

Coming back to the second-order thinking, Howard Marks explains the concept as "First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in 'The outlook for the company is favourable, meaning the stock will go up'. Second-level thinking is deep, complex and convoluted."

Second-order thinkers take into account a lot of what we put into our decision journals. Things like what are the key variables and how do they interact? Where is the leverage? And if I take this action, what happens next?

First-order thinkers look for things that are simple, easy, and defendable. They fail to realise that they are dealing with complex systems, or if they do realise it, they mistake cause-and-effect relationships. They are incapable of thinking in terms of second and subsequent steps. And, more fundamentally, they are generally unaware of the need to think in terms of second steps.

Second-order thinkers, on the other hand, think in terms of interactions, time, and system dynamics. They are aware of iatrogenics (when a treatment causes more harm than benefit) and our bias toward intervention.

First-level thinkers all look alike. They think the same way other first-level thinkers do, and they usually reach the same conclusions. This is where things get interesting. Extraordinary performance comes from being different. It must be that way. Of course, below average performance comes from being different, too - on the downside. But the road to out-thinking people can't come from first-order thinking. It must come from second-order thinking.

So next time you need to think about something, do one of two things: First, start digging below the surface of people's opinions and ask them why they think what they think. And second, ask them to take the other side of the argument.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

First-level thinkers all look alike. They think the same way other first-level thinkers do, and they usually reach the same conclusions.

You must have heard what Donald Trump has been doing over the past few weeks or from the time he became US President i.e. taking crazy decisions in the name of 'Let's make America great again'. We understand that he wants to help the steel and aluminum industry, and therefore he's announced plans for protective tariffs, claiming that "Trade wars are good and easy to win". He is also correct when he says that this has been a problem for decades. However, while he has the right intentions and he took the decision which also looks right as well, yet he made the mistake which most of us do by 'thinking only at the first level'. First level thinking talks about not diving deeper into the issues and not understanding the implications of our actions but taking the decisions on their face value. We will talk more about first order thinking, but let's first talk about 'US's tryst with Protectionism'. Let's go back to the Second World War. During that era the US used to produce three-fourth of the steel worldwide and it was felt that the same situation will continue for a long time. However, after the World War, the US kept working with its old technologies and Europe & other countries moved to newer technologies which were 50 per cent cheaper than that employed by the US. In 1959, the Congress felt that the US is losing its dominance and called for a meeting of all the big steel barons who said, "We have examined the production capabilities of other countries though they don't match up with the capabilities of the US firm." In 1960s they finally realised their mistake, but were too late as the countries from Europe and other parts of the world had started dominating the steel space. But, there is a twist in the story. In the 1960s, a man named Ken Iverson started a steel business that became Nucor. Iverson started making steel using the electric arc process, building the first American facility in 1969. It began growing at an exponential rate, competing rather effectively with foreign producers, to say nothing of other American producers. As other steel producers begged for protectionist policy, Iverson mocked the idea. In an interview in 1986, Iverson noted that protectionist measures already instituted hadn't had the desired effect. "As soon as prices began to rise and the steel companies began to be profitable, they stopped modernising," he said. "It's only under intense competitive pressure - both internally from the mini-mills, and externally from the Japanese and the Koreans - that the big steel companies have been forced to modernise." Nucor has since become the nation's largest domestic steel producer. Yet, it has started to act like the Big Old Steel boys of US. After Trump announced the tariff, Nucor's CEO vigorously applauded the move, claiming it was long overdue. But before Nucor joins the protectionist parade, it might want to recall the words of Iverson, who died in 2002, when his company was on the way to the top: "Unless you're under intense competitive pressure and it becomes a question of the survival of the business to do it, you're just going to lapse back into your old ways. There's no other answer." The moral of the story is that if Trump had gone a bit deeper into the issue and looked at the trade restrictions imposed by his predecessors George W Bush and Barack Obama, he would have realised that trade restrictions end up doing more harm than good. Lightly informed economic adventurism by the US President is not good for the US and it is not good for the world. Coming back to the second-order thinking, Howard Marks explains the concept as "First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in 'The outlook for the company is favourable, meaning the stock will go up'. Second-level thinking is deep, complex and convoluted." Second-order thinkers take into account a lot of what we put into our decision journals. Things like what are the key variables and how do they interact? Where is the leverage? And if I take this action, what happens next? First-order thinkers look for things that are simple, easy, and defendable. They fail to realise that they are dealing with complex systems, or if they do realise it, they mistake cause-and-effect relationships. They are incapable of thinking in terms of second and subsequent steps. And, more fundamentally, they are generally unaware of the need to think in terms of second steps. Second-order thinkers, on the other hand, think in terms of interactions, time, and system dynamics. They are aware of iatrogenics (when a treatment causes more harm than benefit) and our bias toward intervention. First-level thinkers all look alike. They think the same way other first-level thinkers do, and they usually reach the same conclusions. This is where things get interesting. Extraordinary performance comes from being different. It must be that way. Of course, below average performance comes from being different, too - on the downside. But the road to out-thinking people can't come from first-order thinking. It must come from second-order thinking. So next time you need to think about something, do one of two things: First, start digging below the surface of people's opinions and ask them why they think what they think. And second, ask them to take the other side of the argument. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Donald Trump and the second order thinking

I was talking to my friend and he worried about the steep valuations with the Sensex touching 35798 and he was confused pertaining to the avenues where he can invest his money. I am sure there would be many who would in the same boat as my friend.

Most of us, the middle class, want to have the safety in terms of our principal while enjoying the high returns of the equity market.&nbsp;

Is this possible, if yes, then how?

The strategy involves investing in a less risky product and using its returns to invest in a SIP (Systematic investment plan) of an equity mutual fund. This is most suited for people who are worried about the high valuation and would like to have some safety as well.

In this structure, investors put money into a non-convertible debenture(NCD) or an equity savings or arbitrage mutual fund.&nbsp;

Interest or dividend or capital appreciation from them are then invested every month into an equity mutual fund SIP. Using this strategy, the capital is protected, and the investor earns a higher post-tax return at the end of the tenure. Simply using the interest earned, there is a possibility of generating higher post-tax returns with lower risk.

For example, investors could put money into the NCD&rsquo;s of SREI Equipment finance, which are available for subscription from July 17. Investors can opt for the monthly income option to earn 9.5% for a tenure of 10 years. So, if an investor puts in 1.25 lakhs into this NCD, he earns a monthly interest of approximately 1000/-. This interest earned could be invested in the equity mutual fund SIP for 10 years and if it grows at 12%, the corpus could be worth Rs 2.3 lakhs. Adding the original principal and the growth in equity due to SIP, an investor could potentially get back Rs 3.55 lakh, which translates into a CAGR return of 11% per annum.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp;&nbsp;

&nbsp;

With the Sensex breaching 36,000 mark, many investors will be worried where to invest money.

I was talking to my friend and he worried about the steep valuations with the Sensex touching 35798 and he was confused pertaining to the avenues where he can invest his money. I am sure there would be many who would in the same boat as my friend. Most of us, the middle class, want to have the safety in terms of our principal while enjoying the high returns of the equity market. Is this possible, if yes, then how? The strategy involves investing in a less risky product and using its returns to invest in a SIP (Systematic investment plan) of an equity mutual fund. This is most suited for people who are worried about the high valuation and would like to have some safety as well. In this structure, investors put money into a non-convertible debenture(NCD) or an equity savings or arbitrage mutual fund. Interest or dividend or capital appreciation from them are then invested every month into an equity mutual fund SIP. Using this strategy, the capital is protected, and the investor earns a higher post-tax return at the end of the tenure. Simply using the interest earned, there is a possibility of generating higher post-tax returns with lower risk. For example, investors could put money into the NCD’s of SREI Equipment finance, which are available for subscription from July 17. Investors can opt for the monthly income option to earn 9.5% for a tenure of 10 years. So, if an investor puts in 1.25 lakhs into this NCD, he earns a monthly interest of approximately 1000/-. This interest earned could be invested in the equity mutual fund SIP for 10 years and if it grows at 12%, the corpus could be worth Rs 2.3 lakhs. Adding the original principal and the growth in equity due to SIP, an investor could potentially get back Rs 3.55 lakh, which translates into a CAGR return of 11% per annum. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: How to invest safely and ensure high returns

Different people look at the budget differently. Politicians give their views based on their party&rsquo;s stand and market participants try to discuss it based on the industry they belong to. This causes a lot of information overload for the common man.&nbsp;

Therefore, here are the five aspects of the budget 2018 which could have an impact on your finances in this year:

Corporate Tax Rate

Finance Minister Arun Jaitley on Thursday proposed to cut the corporate income tax rate to 25 per cent for companies with a turnover of up to Rs 250 crore, meeting a key demand of the corporate world that has been seeking lower tax payouts to enable greater investment and jobs creation.

&ldquo;This will benefit 99 percent of the companies that file taxes&rdquo;, Jaitley said, &ldquo;adding that mini, micro, small and medium enterprises will gain the most&rdquo;.

How it affects you: If you are running an enterprise or planning to start one, then it would be a great news for you because now you will pay 25% instead of 30%.

A lot of things will turn costlier, and few will become cheaper

Finance Minister has reduced the basic excise duty on the Petrol and Diesel by Rs 2 and abolished the additional excise duty of Rs 6, however, he introduced a new road cess of Rs 8 per litre, which means prices of petrol and diesel will remain unchanged.&nbsp;

In this budget, they have also increased the customs duty on the imported cars, bikes, mobile phones, TVs, perfumes, watches and wearables, thus, making all these items expensive to buy. Cigarettes, too, will become costlier.

But tiles, cashew nuts, solar-tempered glass and solar cells will become cheaper.

How it affects you: If you had been planning on buying some electronic item or some accessories to gift to your loved ones, then it would be wiser to buy a product which is &lsquo;Made in India&rsquo;.&nbsp;

LTCG

This move again surprised most of the analyst, including me, as we were expecting either a change of the definition of &quot;Long Term&quot; to 2 or 3 years or else securities transaction tax (STT) to be abolished if LTCG is introduced again.

However, Jaitley introduced the LTCG of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. He also said that &ldquo;All the gains till the 31st January 2018 will be grandfathered and short-term capital gains remain unchanged at 15 percent&rdquo;.

How it affects you: If you are an investor, you now have to stipulate the LTCG before calculating your returns on the investment. This means, until Jan 2018, if you had kept a stock for a time period longer than one year then there was no tax payable on it.

However, from now onwards whatever gain you have over the 1 lakh for the financial year 2018-2019 you have to pay 10% LTCG on it.

In long run, it can also impediment the entry of new investors, as now their returns would also need to adjust the 10% LTCG before calculating their final returns.

Standard Deduction &amp; Education Cess

Budget 2018 proposes to provide a standard deduction of Rs 40,000 from salary income to employees but also proposes to take away transport allowance, medical reimbursement and other allowances.&nbsp;

Considering the above factors, the net income exempted from tax after setting off the gain and loss is Rs 5800 only.&nbsp;

Moreover, it would also depend upon your tax bracket. The saving in tax would be Rs 290 for those currently paying 5% tax on this income; Rs 1160 for those paying 20% tax on this income; and Rs 1740 for those paying 30% tax on this income.&nbsp;

However, these savings would be nullified in most cases, except in the case of income up to Rs 5 lakh, due to increase in the cess payable from current 3% to 4% on the rest of the income tax payable by the individual. Therefore, individuals with income above Rs 5 lakh would end up shelling out more tax after taking into account the standard deduction, the removal of the allowances and the increase in cess.&nbsp;

However, it would be a big relief for pension people as they were not given the exemptions like the salaried employees.

How it affects you: The impact would be neutral in most cases if you are a salaried employee because while you are not going to get any relief if you earn above 5 lakhs, however, the &lsquo;increase in tax amount&rsquo; is not steep after all. However, it&rsquo;s good news for you if you are a pensioner, as now you will benefit from higher deduction against health insurance premium.

Cryptocurrency

Arun Jaitley clearly stated in the budget speech that this government doesn&rsquo;t consider Bitcoin a legal tender and it will discourage its use. However, he mentioned that the government will look at the utilisation of the blockchain technology.

Therefore, we would suggest staying away from investing in cryptocurrency else invest only with the money which you are ready to lose.

How it affects you: The announcement can have negative impacts as it will become difficult to trade in cryptocurrency, thus, bringing down the prices of them and your investment if you have invested in the same.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp;&nbsp;

&nbsp;

Here are the five aspects of the budget 2018 which could have an impact on your finances in this year

Different people look at the budget differently. Politicians give their views based on their party’s stand and market participants try to discuss it based on the industry they belong to. This causes a lot of information overload for the common man. Therefore, here are the five aspects of the budget 2018 which could have an impact on your finances in this year: Corporate Tax Rate Finance Minister Arun Jaitley on Thursday proposed to cut the corporate income tax rate to 25 per cent for companies with a turnover of up to Rs 250 crore, meeting a key demand of the corporate world that has been seeking lower tax payouts to enable greater investment and jobs creation. “This will benefit 99 percent of the companies that file taxes”, Jaitley said, “adding that mini, micro, small and medium enterprises will gain the most”. How it affects you: If you are running an enterprise or planning to start one, then it would be a great news for you because now you will pay 25% instead of 30%. A lot of things will turn costlier, and few will become cheaper Finance Minister has reduced the basic excise duty on the Petrol and Diesel by Rs 2 and abolished the additional excise duty of Rs 6, however, he introduced a new road cess of Rs 8 per litre, which means prices of petrol and diesel will remain unchanged. In this budget, they have also increased the customs duty on the imported cars, bikes, mobile phones, TVs, perfumes, watches and wearables, thus, making all these items expensive to buy. Cigarettes, too, will become costlier. But tiles, cashew nuts, solar-tempered glass and solar cells will become cheaper. How it affects you: If you had been planning on buying some electronic item or some accessories to gift to your loved ones, then it would be wiser to buy a product which is ‘Made in India’. LTCG This move again surprised most of the analyst, including me, as we were expecting either a change of the definition of "Long Term" to 2 or 3 years or else securities transaction tax (STT) to be abolished if LTCG is introduced again. However, Jaitley introduced the LTCG of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. He also said that “All the gains till the 31st January 2018 will be grandfathered and short-term capital gains remain unchanged at 15 percent”. How it affects you: If you are an investor, you now have to stipulate the LTCG before calculating your returns on the investment. This means, until Jan 2018, if you had kept a stock for a time period longer than one year then there was no tax payable on it. However, from now onwards whatever gain you have over the 1 lakh for the financial year 2018-2019 you have to pay 10% LTCG on it. In long run, it can also impediment the entry of new investors, as now their returns would also need to adjust the 10% LTCG before calculating their final returns. Standard Deduction & Education Cess Budget 2018 proposes to provide a standard deduction of Rs 40,000 from salary income to employees but also proposes to take away transport allowance, medical reimbursement and other allowances. Considering the above factors, the net income exempted from tax after setting off the gain and loss is Rs 5800 only. Moreover, it would also depend upon your tax bracket. The saving in tax would be Rs 290 for those currently paying 5% tax on this income; Rs 1160 for those paying 20% tax on this income; and Rs 1740 for those paying 30% tax on this income. However, these savings would be nullified in most cases, except in the case of income up to Rs 5 lakh, due to increase in the cess payable from current 3% to 4% on the rest of the income tax payable by the individual. Therefore, individuals with income above Rs 5 lakh would end up shelling out more tax after taking into account the standard deduction, the removal of the allowances and the increase in cess. However, it would be a big relief for pension people as they were not given the exemptions like the salaried employees. How it affects you: The impact would be neutral in most cases if you are a salaried employee because while you are not going to get any relief if you earn above 5 lakhs, however, the ‘increase in tax amount’ is not steep after all. However, it’s good news for you if you are a pensioner, as now you will benefit from higher deduction against health insurance premium. Cryptocurrency Arun Jaitley clearly stated in the budget speech that this government doesn’t consider Bitcoin a legal tender and it will discourage its use. However, he mentioned that the government will look at the utilisation of the blockchain technology. Therefore, we would suggest staying away from investing in cryptocurrency else invest only with the money which you are ready to lose. How it affects you: The announcement can have negative impacts as it will become difficult to trade in cryptocurrency, thus, bringing down the prices of them and your investment if you have invested in the same. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: How does the Union Budget affect YOU?

On February 01, 2018, the Finance Minister Arun Jaitley will unveil the Union Budget 2018-19. This budget is very significant for the Modi government, as it is the first budget post-GST and the last full budget before the general election in 2019. To appease the voters, the government may announce some populist schemes. However, the government may not want to shatter the image of a reformist government. Therefore, we expect Budget 2018-19 to be a right mix of populism and reforms.

One such reform is LTCG (Long Term Capital Gain) Tax. For almost 13 years now, the issue of reinstating the long-term capital gains tax on listed equity shares pops up with unerring accuracy weeks before the Union Budget presentation. This year is no exception.

This time the rumour returned on the strength of a reported proposal by BSE Ltd. that the tax be reintroduced. Capital market and tax experts are divided on whether the tax ought to make a comeback.

When and why it was removed

Back in 2014, while presenting the Union Budget 2004-05, the then Finance Minister P Chidambaram had abolished LTCG tax on listed equities i.e. gains arising from sale on a stock exchange of equity shares held for more than a year.

But, he introduced the Security Service tax. The whole point of abolishing it was to encourage more people to get into the financial system and to bring the simplicity to the system through the Security Service Tax which you need to pay whether there is profit or loss and this system has stood for many years.

How this time the rumor started

On 24 December 2016, none other than Prime Minister Narendra Modi help restart the rumour when he mentioned it at an event hosted by the Securities Exchange Board of India.

&ldquo;For various reasons, the contribution of tax from those who make money on the markets has been low.... To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income. We should consider methods for increasing it in a fair, efficient and transparent way.&rdquo;

Therefore, this time as the rumour is started by none other the Prime Minister himself, therefore, there is a huge chance that LTCG will resurface in some form or the other. Moreover, one of the main aims of abolishing it was to get more participant in the equity market and currently the retail participation is at its highest peak.

In what form could it be introduced

The Finance Minister may think of putting some concessional rate on the long-term capital gains but maybe an exception could be made for small investors and STT could be abolished.

If this happens, it would be a great decision as then more retail participation will happen and Government would also be able to fetch more tax from the big bulls of the stock market without dampening the mood of the small retail investor.

By Retail Investors, I mean someone who makes a gain of Rs 2-3 lakh a year on Long-term Capital Gains.

Definition of Long Term

Currently, any investment kept for more than a year is considered to be a long-term and anything less than that, is considered to be short-term and the Government imposes 15% taxes on the short-term capital Gain. Finance Minister in this budget may increase the Long-Term definition to 2 or 3 years.

If this happens, it would bring some pain to the retail investors, who liked to keep the stock for a short duration before selling but would not hamper the long-term investors a lot. However, the real winner would be our economy as we would see more investors sticking for longer periods.&nbsp;

At last, I would just say that irrespective of what the decision is, it should not just be based on the financial numbers but should still take care of the Retail Participants, as the whole removal of LTCG tax happened to enhance retail participation and we should not stop it when it is at its peak.

Moreover, whatever the policy is &ndash; It should be simple to understand i.e. the taxpayer should not be put under any undue burden of calculating the taxes.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp;&nbsp;

&nbsp;

Finance Minister may think of putting some concessional rate on the long-term capital gains but maybe an exception could be made for small investors.

On February 01, 2018, the Finance Minister Arun Jaitley will unveil the Union Budget 2018-19. This budget is very significant for the Modi government, as it is the first budget post-GST and the last full budget before the general election in 2019. To appease the voters, the government may announce some populist schemes. However, the government may not want to shatter the image of a reformist government. Therefore, we expect Budget 2018-19 to be a right mix of populism and reforms. One such reform is LTCG (Long Term Capital Gain) Tax. For almost 13 years now, the issue of reinstating the long-term capital gains tax on listed equity shares pops up with unerring accuracy weeks before the Union Budget presentation. This year is no exception. This time the rumour returned on the strength of a reported proposal by BSE Ltd. that the tax be reintroduced. Capital market and tax experts are divided on whether the tax ought to make a comeback. When and why it was removed Back in 2014, while presenting the Union Budget 2004-05, the then Finance Minister P Chidambaram had abolished LTCG tax on listed equities i.e. gains arising from sale on a stock exchange of equity shares held for more than a year. But, he introduced the Security Service tax. The whole point of abolishing it was to encourage more people to get into the financial system and to bring the simplicity to the system through the Security Service Tax which you need to pay whether there is profit or loss and this system has stood for many years. How this time the rumor started On 24 December 2016, none other than Prime Minister Narendra Modi help restart the rumour when he mentioned it at an event hosted by the Securities Exchange Board of India. “For various reasons, the contribution of tax from those who make money on the markets has been low.... To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income. We should consider methods for increasing it in a fair, efficient and transparent way.” Therefore, this time as the rumour is started by none other the Prime Minister himself, therefore, there is a huge chance that LTCG will resurface in some form or the other. Moreover, one of the main aims of abolishing it was to get more participant in the equity market and currently the retail participation is at its highest peak. In what form could it be introduced The Finance Minister may think of putting some concessional rate on the long-term capital gains but maybe an exception could be made for small investors and STT could be abolished. If this happens, it would be a great decision as then more retail participation will happen and Government would also be able to fetch more tax from the big bulls of the stock market without dampening the mood of the small retail investor. By Retail Investors, I mean someone who makes a gain of Rs 2-3 lakh a year on Long-term Capital Gains. Definition of Long Term Currently, any investment kept for more than a year is considered to be a long-term and anything less than that, is considered to be short-term and the Government imposes 15% taxes on the short-term capital Gain. Finance Minister in this budget may increase the Long-Term definition to 2 or 3 years. If this happens, it would bring some pain to the retail investors, who liked to keep the stock for a short duration before selling but would not hamper the long-term investors a lot. However, the real winner would be our economy as we would see more investors sticking for longer periods. At last, I would just say that irrespective of what the decision is, it should not just be based on the financial numbers but should still take care of the Retail Participants, as the whole removal of LTCG tax happened to enhance retail participation and we should not stop it when it is at its peak. Moreover, whatever the policy is – It should be simple to understand i.e. the taxpayer should not be put under any undue burden of calculating the taxes. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Union Budget should ensure long-term investment to boost Indian economy

The Ministry of Heavy Industry and Public Enterprises, Government of India released the National Electric Mobility Mission Plan, 2020. The Plan came the with a view to enhance national energy security, mitigate adverse environmental impacts, including CO2, from road transport vehicles and boost domestic manufacturing capabilities for electric vehicles.&nbsp;

&nbsp;

Urban transport planning in India has to address numerous challenges which include deteriorating air quality, rising greenhouse gas emissions, and adverse energy security risks. There is an increasing consensus among planners that a range of additional measures will be required, beyond the existing policies, to mitigate the adverse impacts of transport on these sustainability indicators. Electric vehicles (EVs) offer alternate mobility options that can help to redress these adverse impacts.&nbsp;

&nbsp;

EVs so far have remained on the fringe. However, technology and battery advancements are making EVs more attractive to the consumer due to convenience and affordability. The transport sector, which is amongst the largest energy consuming sectors, is globally overly dependent on liquid fossil fuels. 93% of all the fuel used in transport sector was oil based in 2010. The sector is also a major source of GHG emissions and accounts for 22 % of total global energy-related CO2 emissions.

&nbsp;

Transport sector energy demand and CO2 emissions would increase at a rapid rate over the next few decades. Realising the threat it poses, emission mitigation and reducing energy consumption in the transport sector have been at the centre of national as well as global energy and environmental policy debates in the recent years.

&nbsp;

One of the key ways in which future emissions can be avoided is through the development and use of low carbon technologies. In the context of decarbonising transport, Electric Vehicles (EVs) are one such option for CO2 mitigation from light-duty vehicle fleet.

&nbsp;

However, the big question is &lsquo;Would India be EV ready by 2030&rsquo;?

&nbsp;

The Indian Government wants to achieve the mission by 2030 and replace all the ICE(Internal Combustion Engine) with Electric Vehicles. However, Currently EV&rsquo;s have less than 1% market share and 95% of this market is constituted by Electric Scooters.

&nbsp;

In numbers, we have currently around 2000 EV&rsquo;s while the number of Petrol or Diesel Cars is 30,46,727. We have only one manufacturer producing Electric Vehicle i.e. Mahindra, and the cost of its electric cars comes around Rs 6 lakhs to Rs 11 lakhs with a mileage of around 140 km on a full charge.

&nbsp;

If we talk about the charging stations, India currently has around 500 charging stations. To make it scalable, however, Delhi alone will need around 3 lakh charging stations to make the EV&rsquo;s a true success.

&nbsp;

If we do a fact check with other countries, India has set a timeline of 2030 for the new ICE, Scotland has set it to be 2032, France and England have set the deadline to be 2040.

&nbsp;

Which clearly shows that India has definitely set itself against a hugely ambitious target.

&nbsp;

Will it be able to achieve it?

&nbsp;

According to Mr Amitabh Kant, the CEO of Niti Aayog, &ldquo;despite all these challenges, India has an advantage, per capita usage of cars in India is 20 per 1000 people while the same number for America is 800 per 1000 person, thus we will need to tweak our infrastructure at a very small scale in comparison to what the U.S. has to do&rdquo;

&nbsp;

Moreover, in India, 80% of the transportation happens within 5 km radius. Therefore, the first impetus of government would be to bring change in the public transport. According to him, in 2026, prices of EV&rsquo;s will be equivalent to cars running on diesel or petrol.

&nbsp;

So, while the current scenario gives a grim picture of Electric Vehicles and, on the other hand, the government has made big promises, Amitabh Kant of Niti Aayog believes that India stands at an advantage point when it comes to accepting EV&rsquo;s.

&nbsp;

Then, What are the challenges which manufacturers are facing currently?

&nbsp;

Roadmap for EV: We still need a clear Roadmap for EV in terms of whether we are moving with the Battery Swapping or Charging stations.

&nbsp;

Fiscal Incentive: Mahindra has a long-pending request for subsidy for its Electric Vehicle, however, Government is not in any mood for a subsidy and wants automobile manufacturer to figure it out.

&nbsp;

We need to realise that China has become the 2nd biggest EV&rsquo;s manufacturer in 2 years is because of its clear roadmap and the subsidy it provided for the Electric Vehicles.

&nbsp;

Tax Parity: Currently, the Hybrid is taxed at 28%, EV are taxed at 12% and batteries are taxed at 28%. Therefore, if a manufacturer moves towards a battery swapping model then they have to pay 12% tax on car and separate 28% tax on the batteries and battery being a major component of EV&rsquo;s, it will increase the cost drastically for the consumer.

&nbsp;

Irrespective of, whatever happens, we should learn from our CNG experience and should not create a situation, where all the cars are standing in line at the charging stations to get charged at the night.

&nbsp;

Moreover, the government needs to come up with a clearer roadmap and should think of every segment as a different trajectory i.e. In EV&rsquo;S adoption &ndash; 2-wheeler will have its own pace, while 3-wheeler will have its own and similarly the passenger vehicles.

&nbsp;

In the end, we should make sure that the power required by these EV&rsquo;S is not produced by coal, else we will end up creating the same amount of pollution or more without ever solving the problem which we wanted to solve at the first step.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)&nbsp;&nbsp;

Today is World Automobile Day, Electric Vehicles have less than 1% market share and 95% of this market is constituted by Electric Scooters.

The Ministry of Heavy Industry and Public Enterprises, Government of India released the National Electric Mobility Mission Plan, 2020. The Plan came the with a view to enhance national energy security, mitigate adverse environmental impacts, including CO2, from road transport vehicles and boost domestic manufacturing capabilities for electric vehicles. Urban transport planning in India has to address numerous challenges which include deteriorating air quality, rising greenhouse gas emissions, and adverse energy security risks. There is an increasing consensus among planners that a range of additional measures will be required, beyond the existing policies, to mitigate the adverse impacts of transport on these sustainability indicators. Electric vehicles (EVs) offer alternate mobility options that can help to redress these adverse impacts. EVs so far have remained on the fringe. However, technology and battery advancements are making EVs more attractive to the consumer due to convenience and affordability. The transport sector, which is amongst the largest energy consuming sectors, is globally overly dependent on liquid fossil fuels. 93% of all the fuel used in transport sector was oil based in 2010. The sector is also a major source of GHG emissions and accounts for 22 % of total global energy-related CO2 emissions. Transport sector energy demand and CO2 emissions would increase at a rapid rate over the next few decades. Realising the threat it poses, emission mitigation and reducing energy consumption in the transport sector have been at the centre of national as well as global energy and environmental policy debates in the recent years. One of the key ways in which future emissions can be avoided is through the development and use of low carbon technologies. In the context of decarbonising transport, Electric Vehicles (EVs) are one such option for CO2 mitigation from light-duty vehicle fleet. However, the big question is ‘Would India be EV ready by 2030’? The Indian Government wants to achieve the mission by 2030 and replace all the ICE(Internal Combustion Engine) with Electric Vehicles. However, Currently EV’s have less than 1% market share and 95% of this market is constituted by Electric Scooters. In numbers, we have currently around 2000 EV’s while the number of Petrol or Diesel Cars is 30,46,727. We have only one manufacturer producing Electric Vehicle i.e. Mahindra, and the cost of its electric cars comes around Rs 6 lakhs to Rs 11 lakhs with a mileage of around 140 km on a full charge. If we talk about the charging stations, India currently has around 500 charging stations. To make it scalable, however, Delhi alone will need around 3 lakh charging stations to make the EV’s a true success. If we do a fact check with other countries, India has set a timeline of 2030 for the new ICE, Scotland has set it to be 2032, France and England have set the deadline to be 2040. Which clearly shows that India has definitely set itself against a hugely ambitious target. Will it be able to achieve it? According to Mr Amitabh Kant, the CEO of Niti Aayog, “despite all these challenges, India has an advantage, per capita usage of cars in India is 20 per 1000 people while the same number for America is 800 per 1000 person, thus we will need to tweak our infrastructure at a very small scale in comparison to what the U.S. has to do” Moreover, in India, 80% of the transportation happens within 5 km radius. Therefore, the first impetus of government would be to bring change in the public transport. According to him, in 2026, prices of EV’s will be equivalent to cars running on diesel or petrol. So, while the current scenario gives a grim picture of Electric Vehicles and, on the other hand, the government has made big promises, Amitabh Kant of Niti Aayog believes that India stands at an advantage point when it comes to accepting EV’s. Then, What are the challenges which manufacturers are facing currently? Roadmap for EV: We still need a clear Roadmap for EV in terms of whether we are moving with the Battery Swapping or Charging stations. Fiscal Incentive: Mahindra has a long-pending request for subsidy for its Electric Vehicle, however, Government is not in any mood for a subsidy and wants automobile manufacturer to figure it out. We need to realise that China has become the 2nd biggest EV’s manufacturer in 2 years is because of its clear roadmap and the subsidy it provided for the Electric Vehicles. Tax Parity: Currently, the Hybrid is taxed at 28%, EV are taxed at 12% and batteries are taxed at 28%. Therefore, if a manufacturer moves towards a battery swapping model then they have to pay 12% tax on car and separate 28% tax on the batteries and battery being a major component of EV’s, it will increase the cost drastically for the consumer. Irrespective of, whatever happens, we should learn from our CNG experience and should not create a situation, where all the cars are standing in line at the charging stations to get charged at the night. Moreover, the government needs to come up with a clearer roadmap and should think of every segment as a different trajectory i.e. In EV’S adoption – 2-wheeler will have its own pace, while 3-wheeler will have its own and similarly the passenger vehicles. In the end, we should make sure that the power required by these EV’S is not produced by coal, else we will end up creating the same amount of pollution or more without ever solving the problem which we wanted to solve at the first step. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Is India ready for Electric Vehicles?

Is there someone who still have not heard about Bitcoin? Or is there someone whose heartbeat hasn&rsquo;t skipped when they heard about the jump in prices of the Bitcoin?

I was reading an article about Mr Kristoffer Koch who invested around $27 in 2009 to buy 5000 bitcoins and in 2017 those bitcoins would be worth $86899725, that&rsquo;s a return of around of more than 4,000,000 per cent in less than 8 years.

If you search back in history, you won&rsquo;t find lot many investments which would have given such yields in such a short span of time. Courtesy his $27 investment,&nbsp;Mr Krishoffer now doesn&rsquo;t need to work ever, and he says that he invested while he was writing a paper on the topic without putting too much thought into it.

So, how many of you are planning to invest? In this article, I want to talk about why I believe Bitcoin is interesting and it&rsquo;s going to stay and, yet, I would stay away from investing in it.

What is Bitcoin: Bitcoin is a cryptocurrency invented in year 2008/2009 by a guy named Satoshi Nakamoto (no one has met him till date). The whole infrastructure of Bitcoin is based on the algorithm, miners, exchanges and the wallets.

So, in short &ndash; Bitcoin is just another currency system but it is not like any other system working currently. I will be talking in detail about cryptocurrency, the role each of these players plays and how to really understand cryptocurrency in the coming weeks.

&nbsp;

<div class="ui-state-default" contenteditable="false"><img alt="" draggable="false" src="http://s.wionews.com/photos/3-20171220083306.png" />
<div class="media-description">
Benefits of Bitcoin. (Others)
</div>
<a class="close-mark close-div" href="javascript:void(0)" id="jqclosemark">&times;</a></div>

Problem with our current payment system:

Our current payment system is based on Fiat Currency, i.e. it is based on a system where we trust some central authority and because it says so, we accept that the value of money.&nbsp;

Now, while Fiat Currency is just 100 years old, the world is changing rapidly and somehow our Fiat Currency is not able to keep pace with the current requirements and Bitcoin is able to exploit these shortcomings.

For example, over the years, more and more transactions have started happening digital and because these deals are happening virtually, we need a 3rd party to authenticate it. However, with more and more transactions happening over the internet, the banks become the main authority to authenticate these transactions through maintaining a track or ledger.

Moreover, every time you transact, you are passing your information to the bank which it can use to formulate a complete map of your financial health and a lot of people don&rsquo;t want the bank to have all their financial information.

Secondly, Fiat Currency gave enormous power to the governments to print the money at their will which leads to another problem of hyperinflation.

In fact, in the short of history of 100 years, there have been 55 instances of hyperinflation. The most recent example is in 2008 when it was losing half its value in 25 hours. One of the worst was the hyperinflation in Zimbabwe where the value of currency went below a toilet paper itself.

Nationalistic in nature: If you are travelling from one country to another, you need to purchase the currency of the country you are visiting. According to 2015 figures, 6 trillion dollars of ForEx transactions happens every year. If we put a fees of half a percent over 15 per cent&nbsp;(varies based on banks and corporations), then a lot of money just goes only for&nbsp;transacting your money. Moreover, because of transaction charges, it gets very cumbersome to transact small amount of money.

So, if you see there are three main issues with the current set of payment systems:

<ul>
	<li>Hyperinflation</li>
	<li>Nationalistic in nature while the society is becoming globalised.</li>
	<li>Loss of identity in every transaction.</li>
</ul>

Moreover, if you look closely you will understand that all three are serious issues and we do require some better currency and &lsquo;Bitcoin&rsquo; came at the right time to solve all these issues.

Bitcoin is a global currency, thus, you can transact from any country to another country without any currency conversion. It is limited in number, therefore, while its price will increase, there won&rsquo;t ever be hyperinflation as no one can print it infinitely.&nbsp;

Lastly, Satoshi has built a powerful infrastructure at the backend and an incentive mechanism for the miners, due to which, we don&rsquo;t need any 3rd party to keep a record of our transactions.

Isn&rsquo;t Bitcoin just great? If I am so much optimistic about Bitcoin, then why I won&rsquo;t invest?

<div class="ui-state-default" contenteditable="false"><img alt="" draggable="false" src="http://s.wionews.com/photos/2-20171220083131.jpg" />
<div class="media-description">
Examining Bitcoin for Ponzi scheme signs. (Others)
</div>
<a class="close-mark close-div" href="javascript:void(0)" id="jqclosemark">&times;</a></div>

Few of the reasons for not investing:

Too much optimistic: Whenever I invest in a company&rsquo;s stock, I always ask myself &lsquo;how much price is due to optimistic nature of people&rsquo;. While people have already compared it to next big development after the Internet, I believe they have valued it way too higher. I say so because the inherent benefits of Bitcoin are also the biggest concerns, which stops it from becoming a mainstream currency.

For example: If no one has the information of the transactions i.e. where the money is moving then it creates a lot of issues. For example, A big usage of Bitcoin currently happens on the Deep Web where people do want to hide their credentials.

Moreover, governments do like to have some control over the finances of the people to stop them from doing something illegal i.e. funding child pornography or terrorism.

Multiple cryptocurrencies: While there are still a lot of questions to be answered, one of the big questions is whether we will all work on a single cryptocurrency or multiple cryptocurrencies and if we decide to work with single cryptocurrency, then which one to choose and who is going to decide that currency. Will it be some Central Government? And if we leave it to the public, then every time a price of a cryptocurrency goes beyond the roof, we will jump to the other one with less value and which will eventually again pop up the problem of conversion of cryptocurrencies.

4,000,000 per cent :&nbsp;People are still saying that Bitcoin can go higher because of its limited number. There is only 21 million bitcoin that can be mined, however, it is more becoming more like Ponzi schemes.

<div class="ui-state-default" contenteditable="false"><img alt="" draggable="false" src="http://s.wionews.com/photos/1-20171220083034.png" />
<div class="media-description">
Bitcoin market price fluctuations (Others)
</div>
<a class="close-mark close-div" href="javascript:void(0)" id="jqclosemark">&times;</a></div>

In a similar fashion to a Ponzi Scheme, the people who invested in the initial days would surely benefit as the value has risen through time. The people at the bottom (or who will enter last) will get hurt the most as they will buy at a premium and the value will drop drastically when it comes to its real value.

Therefore, my suggestion would be it&rsquo;s good to be informed about Bitcoin and cryptocurrency as they are making the noise for the right reason, however, it&rsquo;s also important to understand the true value of any product and not to invest just because everyone else is talking about it or investing into it.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL).

Investors need to understand the true value of any product and not to invest just because everyone else is talking/investing in it

Is there someone who still have not heard about Bitcoin? Or is there someone whose heartbeat hasn’t skipped when they heard about the jump in prices of the Bitcoin? I was reading an article about Mr Kristoffer Koch who invested around $27 in 2009 to buy 5000 bitcoins and in 2017 those bitcoins would be worth $86899725, that’s a return of around of more than 4,000,000 per cent in less than 8 years. If you search back in history, you won’t find lot many investments which would have given such yields in such a short span of time. Courtesy his $27 investment, Mr Krishoffer now doesn’t need to work ever, and he says that he invested while he was writing a paper on the topic without putting too much thought into it. So, how many of you are planning to invest? In this article, I want to talk about why I believe Bitcoin is interesting and it’s going to stay and, yet, I would stay away from investing in it. What is Bitcoin: Bitcoin is a cryptocurrency invented in year 2008/2009 by a guy named Satoshi Nakamoto (no one has met him till date). The whole infrastructure of Bitcoin is based on the algorithm, miners, exchanges and the wallets. So, in short – Bitcoin is just another currency system but it is not like any other system working currently. I will be talking in detail about cryptocurrency, the role each of these players plays and how to really understand cryptocurrency in the coming weeks. Benefits of Bitcoin. (Others) × Problem with our current payment system: Our current payment system is based on Fiat Currency, i.e. it is based on a system where we trust some central authority and because it says so, we accept that the value of money. Now, while Fiat Currency is just 100 years old, the world is changing rapidly and somehow our Fiat Currency is not able to keep pace with the current requirements and Bitcoin is able to exploit these shortcomings. For example, over the years, more and more transactions have started happening digital and because these deals are happening virtually, we need a 3rd party to authenticate it. However, with more and more transactions happening over the internet, the banks become the main authority to authenticate these transactions through maintaining a track or ledger. Moreover, every time you transact, you are passing your information to the bank which it can use to formulate a complete map of your financial health and a lot of people don’t want the bank to have all their financial information. Secondly, Fiat Currency gave enormous power to the governments to print the money at their will which leads to another problem of hyperinflation. In fact, in the short of history of 100 years, there have been 55 instances of hyperinflation. The most recent example is in 2008 when it was losing half its value in 25 hours. One of the worst was the hyperinflation in Zimbabwe where the value of currency went below a toilet paper itself. Nationalistic in nature: If you are travelling from one country to another, you need to purchase the currency of the country you are visiting. According to 2015 figures, 6 trillion dollars of ForEx transactions happens every year. If we put a fees of half a percent over 15 per cent (varies based on banks and corporations), then a lot of money just goes only for transacting your money. Moreover, because of transaction charges, it gets very cumbersome to transact small amount of money. So, if you see there are three main issues with the current set of payment systems: Hyperinflation Nationalistic in nature while the society is becoming globalised. Loss of identity in every transaction. Moreover, if you look closely you will understand that all three are serious issues and we do require some better currency and ‘Bitcoin’ came at the right time to solve all these issues. Bitcoin is a global currency, thus, you can transact from any country to another country without any currency conversion. It is limited in number, therefore, while its price will increase, there won’t ever be hyperinflation as no one can print it infinitely. Lastly, Satoshi has built a powerful infrastructure at the backend and an incentive mechanism for the miners, due to which, we don’t need any 3rd party to keep a record of our transactions. Isn’t Bitcoin just great? If I am so much optimistic about Bitcoin, then why I won’t invest? Examining Bitcoin for Ponzi scheme signs. (Others) × Few of the reasons for not investing: Too much optimistic: Whenever I invest in a company’s stock, I always ask myself ‘how much price is due to optimistic nature of people’. While people have already compared it to next big development after the Internet, I believe they have valued it way too higher. I say so because the inherent benefits of Bitcoin are also the biggest concerns, which stops it from becoming a mainstream currency. For example: If no one has the information of the transactions i.e. where the money is moving then it creates a lot of issues. For example, A big usage of Bitcoin currently happens on the Deep Web where people do want to hide their credentials. Moreover, governments do like to have some control over the finances of the people to stop them from doing something illegal i.e. funding child pornography or terrorism. Multiple cryptocurrencies: While there are still a lot of questions to be answered, one of the big questions is whether we will all work on a single cryptocurrency or multiple cryptocurrencies and if we decide to work with single cryptocurrency, then which one to choose and who is going to decide that currency. Will it be some Central Government? And if we leave it to the public, then every time a price of a cryptocurrency goes beyond the roof, we will jump to the other one with less value and which will eventually again pop up the problem of conversion of cryptocurrencies. 4,000,000 per cent : People are still saying that Bitcoin can go higher because of its limited number. There is only 21 million bitcoin that can be mined, however, it is more becoming more like Ponzi schemes. Bitcoin market price fluctuations (Others) × In a similar fashion to a Ponzi Scheme, the people who invested in the initial days would surely benefit as the value has risen through time. The people at the bottom (or who will enter last) will get hurt the most as they will buy at a premium and the value will drop drastically when it comes to its real value. Therefore, my suggestion would be it’s good to be informed about Bitcoin and cryptocurrency as they are making the noise for the right reason, however, it’s also important to understand the true value of any product and not to invest just because everyone else is talking about it or investing into it. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL).

Opinion: Bitcoin is interesting but not worth investing

Most of us consider stock market as a complex web where people either make a lot of money or lose all of their money. Worse, the common assumption is: people, mostly, make or lose their money in a way of gambling. The feeling about the stock market is best summed up as, &ldquo;I consider it a bad option, so I will stay away from it&rdquo;.&nbsp;

So, today I am going to help you understand: what is a stock market, does it help in nation building, why people lose money and how can you proceed in a safe manner.&nbsp;

What is a stock market?

I am sure you must have seen &lsquo;Guru&rsquo; - the biopic on &lsquo;Dhirubhai Ambani&rsquo;. In case you have not, I will urge you to watch it. At one point in the movie, Abhishek Bachchan wants to expand his business and he decides that he won&rsquo;t go to the banks. On the contrary, he decided to go to the people to raise funds and, in the process, his company gets listed on the stock market.

Therefore, according to Indian norms set by SEBI, the stock market is a place where companies get listed to raise money. Companies, such as Jockey, Asian Paints, Britannia as well as Tata&#39;s, Reliance and Aditya Birla group have been raising money through stock markets for decades as well.

Now, in the movie, Abhishek could either borrow from the bank at a certain interest rate which is normally around 15-25 per cent based on company credit rating or can borrow from the general public. In the latter case, he had to make them part-owner of the company, paying them a part of the profit and expecting them to share a part of the losses as well.

As the companies get listed, the common man, institutional investors and anybody can be part of the corporate journey in buying the shares of their company.

Thus, the most basic definition of the stock market is a lending platform which the big business houses can use to borrow money from common people in lieu of a part of their company (called shares in common parlance).

Now there are few ways to take part in the stock market and it will help you understand why people lose money.&nbsp;

Day trading: This is the most risky way in which people participate in the stock market and it, in reality, doesn&#39;t benefit the companies much. Just imagine, how many times have you taken a loan for a single day and do you really think that someone can use that money for such a short span of time to expand their business or build a new refinery. So day traders try to predict the price on a daily basis and if they are correct they make millions and if they are wrong, they lose their whole capital.

We at NiveshGyaan can&rsquo;t predict and, thus, advise our readers also to stay away from it. As we don&rsquo;t feel it benefits anyone apart from the stockbroker due to the high transaction charges, and this happens to be the most commonly misinterpreted and abused way of trading.

Long-term investing: In this form of trading, you buy a stock after considering its basic fundamentals and then you stick with it for a long time, at least for a year or until you are in some dire need of money.

In this process, you help the company and it rewards you with the gains or sometimes you do make losses (but then which business is 100% risk-free) though you are not gambling and over a long run_ you will realize great companies have always increased your wealth.

We advise you to take part only in long-term investing.

Stock Market&#39;s role in nation-building exercise&nbsp;

&nbsp;Let&#39;s consider for a moment there is no stock market and Tata&#39;s want to expand their business by 100 Crore, so where do you think they can borrow this money; it will be either banks or individuals or some group of investors. Though, it must be tough to borrow 100 crores from a single individual or let&rsquo;s suppose 10-15 people who are close to Tata&rsquo;s as well.

If they are going to go to banks or institutional investors, they will be required to keep some form of security and also pay the lending rate i.e. 15% -20% based on different channel, the risk involved in the project and the fixed deposit rate is 7%.

So, let&rsquo;s suppose this company borrows from the bank at 15% annually. As a result, it definitely has to make profits and also worry about earning 15% extra on the money to pay off the interest.

Now, let&#39;s bring the stock market in the picture. Let&#39;s consider that TATA&#39;s are evaluated to be a 1000 Crore organisation and they want to borrow 100 Crore. So they put their 10% of the company (i.e. 100 Crores) on Stock and distribute these shares in various proportion, including individuals, HUL&rsquo;s and institutional investors.

From Tata&#39;s perspective, two good things could happen:&nbsp;

? &nbsp; &nbsp; &nbsp; The shares got divided among a lot of people, which reduces the chances of taking over the company.

? &nbsp; &nbsp; &nbsp; They got the required money while not actually being worried about generating 15% extra income.

The national perspective

Now, with the formulation of a new unit of Tata&rsquo;s, new employment will be generated, which will bring more money in the economy, which in return will boost the local economy, thus, churning the wheel of the country.

Therefore, companies should expand if a country needs to develop and it is beneficial for both country and the company if this happens through the stock market.

Now, let&rsquo;s see how &lsquo;You&rsquo; get benefit out of all this.

Common Man&rsquo;s Perspective

The options in front of you for your idle money are either keeping your money in the bank account or keeping it with yourself, considering you don&rsquo;t rely on the stock market, and which gives you the best interest rate of 7%.

Now, let&rsquo;s take TATA&rsquo;s again and I hope you agree they have a good management, they will try their best to earn more than the bank F.D. rate. Else common sense tells that they could have also put all their money in a bank and sit nicely at home; there was no need of so much effort IN running companies, managing employees and handling agitation, including the whole Cyrus Mistry scandal.

Therefore, stock market opens up a new avenue for you to put your money and grow at a faster rate than bank F.D&rsquo;s and this, in turn, help both the companies and the economy.

Happy investing and happy growing your money.

&nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

&nbsp;

Stock market opens up a new avenue for you to put your money and grow at a faster rate than bank F.D?s and this, in turn, help both the companies and the economy.

Most of us consider stock market as a complex web where people either make a lot of money or lose all of their money. Worse, the common assumption is: people, mostly, make or lose their money in a way of gambling. The feeling about the stock market is best summed up as, “I consider it a bad option, so I will stay away from it”. So, today I am going to help you understand: what is a stock market, does it help in nation building, why people lose money and how can you proceed in a safe manner. What is a stock market? I am sure you must have seen ‘Guru’ - the biopic on ‘Dhirubhai Ambani’. In case you have not, I will urge you to watch it. At one point in the movie, Abhishek Bachchan wants to expand his business and he decides that he won’t go to the banks. On the contrary, he decided to go to the people to raise funds and, in the process, his company gets listed on the stock market. Therefore, according to Indian norms set by SEBI, the stock market is a place where companies get listed to raise money. Companies, such as Jockey, Asian Paints, Britannia as well as Tata's, Reliance and Aditya Birla group have been raising money through stock markets for decades as well. Now, in the movie, Abhishek could either borrow from the bank at a certain interest rate which is normally around 15-25 per cent based on company credit rating or can borrow from the general public. In the latter case, he had to make them part-owner of the company, paying them a part of the profit and expecting them to share a part of the losses as well. As the companies get listed, the common man, institutional investors and anybody can be part of the corporate journey in buying the shares of their company. Thus, the most basic definition of the stock market is a lending platform which the big business houses can use to borrow money from common people in lieu of a part of their company (called shares in common parlance). Now there are few ways to take part in the stock market and it will help you understand why people lose money. Day trading: This is the most risky way in which people participate in the stock market and it, in reality, doesn't benefit the companies much. Just imagine, how many times have you taken a loan for a single day and do you really think that someone can use that money for such a short span of time to expand their business or build a new refinery. So day traders try to predict the price on a daily basis and if they are correct they make millions and if they are wrong, they lose their whole capital. We at NiveshGyaan can’t predict and, thus, advise our readers also to stay away from it. As we don’t feel it benefits anyone apart from the stockbroker due to the high transaction charges, and this happens to be the most commonly misinterpreted and abused way of trading. Long-term investing: In this form of trading, you buy a stock after considering its basic fundamentals and then you stick with it for a long time, at least for a year or until you are in some dire need of money. In this process, you help the company and it rewards you with the gains or sometimes you do make losses (but then which business is 100% risk-free) though you are not gambling and over a long run_ you will realize great companies have always increased your wealth. We advise you to take part only in long-term investing. Stock Market's role in nation-building exercise Let's consider for a moment there is no stock market and Tata's want to expand their business by 100 Crore, so where do you think they can borrow this money; it will be either banks or individuals or some group of investors. Though, it must be tough to borrow 100 crores from a single individual or let’s suppose 10-15 people who are close to Tata’s as well. If they are going to go to banks or institutional investors, they will be required to keep some form of security and also pay the lending rate i.e. 15% -20% based on different channel, the risk involved in the project and the fixed deposit rate is 7%. So, let’s suppose this company borrows from the bank at 15% annually. As a result, it definitely has to make profits and also worry about earning 15% extra on the money to pay off the interest. Now, let's bring the stock market in the picture. Let's consider that TATA's are evaluated to be a 1000 Crore organisation and they want to borrow 100 Crore. So they put their 10% of the company (i.e. 100 Crores) on Stock and distribute these shares in various proportion, including individuals, HUL’s and institutional investors. From Tata's perspective, two good things could happen: ? The shares got divided among a lot of people, which reduces the chances of taking over the company. ? They got the required money while not actually being worried about generating 15% extra income. The national perspective Now, with the formulation of a new unit of Tata’s, new employment will be generated, which will bring more money in the economy, which in return will boost the local economy, thus, churning the wheel of the country. Therefore, companies should expand if a country needs to develop and it is beneficial for both country and the company if this happens through the stock market. Now, let’s see how ‘You’ get benefit out of all this. Common Man’s Perspective The options in front of you for your idle money are either keeping your money in the bank account or keeping it with yourself, considering you don’t rely on the stock market, and which gives you the best interest rate of 7%. Now, let’s take TATA’s again and I hope you agree they have a good management, they will try their best to earn more than the bank F.D. rate. Else common sense tells that they could have also put all their money in a bank and sit nicely at home; there was no need of so much effort IN running companies, managing employees and handling agitation, including the whole Cyrus Mistry scandal. Therefore, stock market opens up a new avenue for you to put your money and grow at a faster rate than bank F.D’s and this, in turn, help both the companies and the economy. Happy investing and happy growing your money. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: Why you should invest in stock market

Author

Zee News Rajasthan

Editor

Prashant Agarwal

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