If your idea of saving is transferring sums into a fixed deposit, we suggest you try a new strategy. With inflation at 12.4%, and fixed deposits giving you just 10% per annum, you are actually spending more than you are saving!

The stock market and mutual funds, allow you to up profits, by taking bigger risks. Investing is an art, and involves analysing the company you are pooling your savings in. There are no shortcuts here.

You need to do some to reap rewards. And things just got easiest with leading investment magazine Dalal Street Investment Journal releasing a book, Stock Market Guide, to help newbies join the bandwagon.

Life@Work flipped through its pages, and found that core concepts have been demystified with the help of quotes, trivia and cartoons. Here's some dope you can use on trading without leaving the comfort of your cubicle.


What you need to know about

Online trading

What is Internet trading?

It refers to trading online. Gone are the days of running behind a broker and managing paper work. The capital markets are at your fingertips. The onset of online trading changed the traditional value proposition of trading, allowing online brokers to supply investors with rich, interactive information in real-time, including market data, investment research and robust analytics.

How is Internet trading advantageous?

Time: It saves time. Most of us can't make the time to to go to our Depository Participant (DP) and fill out a requisition slip. An online account allows you to trade from anywhere. All you need is a computer, modem and an Internet connection.

Flexibility: The site offers flexibility of trades at your fingertips. If you want to cancel your order or modify it, you can do it in seconds. You can place orders even before the trading session starts.

Elimination of physical brokers: Let us say you never liked your broker, and he kept doing things at his own pace, and it's been tiring tracking him. Here, you eliminate the middleman. 

Standardised procedure: When your order is accepted by the exchange, it will give you your pay-in and pay-out dates. So, now you know when to expect cash or shares to be credited to your account.

Human touch: Service providers combine off-line as well as on-line services. They give you the personal touch added to e-trading, combining structured advice and fast trades.

One-stop shop: Bank statements and transaction statements can be viewed at the click of a button. You don't have to run behind bank executives to receive monthly statements.

Informed research: Service providers carry stock analysis for your reference. This helps you make right choices. All of us can't afford to hire analysts to review stocks and companies. Given our situation, sites that provide research reports, could be useful.

For more dope on investing in the stock market, pick up a copy of Dalal Street Investment Journal's Stock Market Book. The just-launched title is available at major bookstores for Rs 399


Flip side to Internet trading

Limited knowledge: Elimination of a broker could mean trouble, prove risky to enter the capital game without structured advice. When you make a quick buck, you get carried away and may make mistakes.

Outdated Informed Research: In a market that changes fast, a two-year old review does not carry much weight.

Flip side of Value Added Services: When the market is booming, we get carried away by the market wave and take positions that are speculative. Remember that even if your hunch is right, the market can turn against you and expose you to risks.

Higher brokerage: Look at your account at regular intervals as the DP may be charging you brokerage.


3 pre-requisites of online trading

Bank account: The bank should have an alliance with the online trading service provider. The bank account will facilitate as a payment and receipts gateway.

Depository account: Acts as a bank for the shares you hold.

Online service provider account: This can be opened with any of the major service providers.


Other services Internet trading service providers offer

Investing in shares: They offer cash trading, margin trading, BTST and trading on both, NSE and BSE.
 
Investing in MF: Offer hassle-free paperless investing in Mutual Funds.

Derivatives: It consists of futures and options. In futures trading, you buy/sell positions with a longer contract of up to 3 months.

IPOs online: You could invest in IPOs without having to go through paperwork.


Wanna invest in SRK?

After film magazines and glossies, Shah Rukh Khan might appear in pink papers too. Rumour has it that SRK's production company Red Chillies Entertainment, is set to enter the stock market through a proposed IPO.

It plans to use the money raised to fund operations of Kolkata Knight Riders. The stock market is already abuzz with entertainment and media stocks like Balaji Telefilms, Zee Entertainment, Mukta Arts and UTV.