Sources of information for learning : Stock market for Beginners

Sources of information for learning : Stock market for Beginners 

Learning is the most important thing in life as well as stock market investing. As money compounds, knowledge as well as compounds over the years. 

The below quote by Charlie Munger.

“I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up & boy does that help, particularly when you have a long run ahead of you”.

1. Books

                     This is the best source of learning about investing because of the below mention reason. Books are collection of information written down by a writer (in our case an investor) after many years of practice/experience of investing & devoting many hours remembering each & every point from the memory for writing it down. 

                     This will help you in many ways (1) Investing mindset, (2) Investing Strategies, (3) Investing avenues, (4) Learning's about different companies, (5) Setting investing goods, etc.

                     Books recommendations at the bottom of the blogs.

2. YouTube channels

                   YouTube channels on the stock market are getting popular but many channels are mostly useless or a complete waste of time. Especially which give targets on a stock because no one knows what will happen in the short term. For Eg:- COVID-19 crash, no one ever thought on 1 Jan 2020 that after 3 months the stock market will crash & then after few months rebound as nothing happened.

                  But few channels like Finnovationz & Pranjal Kamra in Hindi & Sven Carlin, Cooper Academy in English are worth watching.

3. Annual Reports 

                     Read annual reports will help you understand how business works. Most of the investor makes his mistake of not reading annual reports & just investing blindly in companies 

“An important key to investing is to remember that stock is not lottery tickets”.

 -Peter Lynch

                    Also, try to read the competitor’s annual report which will help in comparing the performance of the company. Do read Berkshire Hathaway’s annual report where Warren Buffett explains how he invests in companies.

4. Interview & lectures 

                   Many famous investor & fund managers appear on Business news channels where they talk about their investing philosophies & strategies which would be tremendously helpful for your investing journey. Investor & Businessman’s usually present their presentation to their investors or college student wherein they cover different topic’s which can be helpful as well. For Example - Mohnish Pabrai, PPfas Mutual Fund, Ivey Business school, etc. 

5. Blogs

                   If you are serious about investing & love reading. You can read blogs like Fundoo Professor, Safal Niveshak, GetMoneyRich (GMR), Trade Brains, etc. in India. Sven Carlin which I follow outside India, but there are many interesting blogs one can read.

6. Newspapers

                    Newspapers are good for staying updated with the market. But for beginners, it can be confusing. Day-to-day news about a company is useless as in a day company can never be formed so getting out of business is also difficult. 

Amazon.in (For India)

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Intelligent investor: https://amzn.to/2RzmwRn

Amazon.com(FOR USA)

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Capital gain tax impact on Stock Market Investment (In India)

 Capital gain tax impact on Stock Market Investment 

Long Term capital gain (LTCG).

               When the holding period of your equity investment is more than 12 months, then it is called a long term investment. The gain on selling your equity investment after holding for 12 months is called Long term capital gain.

                   The tax rate is 10% of income exceeding 1 lakhs from LTCG from 1/04/18

For Example:-

             Let suppose you brought stock worth ₹ 15 lakhs & it went up in value to ₹ 17.5 lakhs. The total profit i.e. LTCG is ₹ 2.5 lakhs, but the Government of India has given a relaxation of tax of ₹ 1 lakhs. So the actual LTCG is ₹ 1.5 lakhs which will be taxed @ 10%.

                  

         

Short Term capital gain (STCG).

               Equity investing in which the holding period is less than 12 months is called short term investment. The gain on selling stocks before 12 months holding period is called short term capital gain.          

 

                                            The tax rate is flat 15%

For Example:- 

             If a person’s total income is less than the basic exemption limit i.e. Income is less than ₹ 2.5 lakhs then only the amount above ₹ 2.5 lakhs will be taxed @15%.

For Example:- A person’s salary is ₹ 2 lakhs p.a. & he have a STCG of ₹ 1 lakh than ₹ 50K (i.e. ₹ 3 lakhs – (₹ 2 lakhs + 1 lakh) - ₹ 2.5 lakhs) only be taxed @ 15%.

Few important point:-

STCG can be set off against short & long term gain. But not against salary & business income.

Do one get taxed even if he does not  sell his position?

A. No, one do not gets taxed until and unless he have sell his position.

What is tax implications on dividend income?

A. Dividend income is taxed  as per the individual slab rate.

Peter Lynch's quote

 

This quote is written in the book One up on Wall Street.

This quote means that industry where there is lower growth, entire of new firms is rare because it is very to compete with existing firms and many other reasons like that.

In this book he have given example of company name Philip Morris Ltd. Who is in the business of selling cigarettes. Cigarette industry have being declining in terms of volumes for many decades still they have manage to earn higher profits by increasing prices .Also the industry do not attract competition because of government policies and the reputation of the existing companies.

The above example also stands true in case of ITC Ltd.

Opposite to example is the credit/loan industry and retailing which over the year's have attracted massive competition.

This quote from Peter Lynch is the most basic concept. But people usually forget it and fall prey to the stock news, stock tips, stock advice, etc. 

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Stock are piece or part ownership in a business. When the revenue and profit grows the share price will ultimately grow .

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For example : If the profits of the company grows at 15% then share price over a period of time will also grow at a similar rate.

Warren Buffett's quote.

 

The above Buffett quote is based on the market cycle and debt. It means that when the market is at the full wing at the top and people are happy they leverage there position ; which can be hazardous for one's financial health.

For eg: Warren Buffett and Charlie Munger had a partner who leveraged his position and the when the tide turned he had to sell his share to Warren Buffett just because he had was leveraged.

Charlie Munger's investing quote.

The  most important thing to understand while investing in stock markets is, holding for long term always works. 

Also when you buy and sell stock frequently your broker makes money that's why don't get influenced by stock tips.

In real estate people don't flip , then why they think they can money by flipping stocks.

Golden words from the right hand man of Warren Buffet. 

Learning new skills or subjects is the most fascinating thing for me. And the compounding effect also kicks in over a period of time with it. 

This quote is my favorite .

It just means that one should try to invert the problem in order to solve it. Inversion may not solve the problem but can make it easy to solve it.

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For example : If one want to take brilliant decisions in life, he should first stop taking stupid decisions.