Category Archives: Investing

Buffett Offers Tips for Investors

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For someone who’s long been one of the world’s richest men, Warren Buffett continues to be an inspiration to both the wealthy and the struggling. He has always credited his practical approach to things—from business to investing to government—with his long-standing success as an investor. Here are five lessons from Buffett that can help put your decisions on the right track.

Go against market fears: The financial crisis has created a “climate of fear” among investors, and this has kept many people timid in their decisions. According to Buffett, there’s value to be found everywhere—it’s just that people tend to listen to commentators and market players who overplay the negatives. Learn to see situations as they are instead of letting collective fears guide you.

Stick to what you know: One way to help you follow the rule above is to invest in markets you really understand, or are interested enough in to try to understand. A “perfect opportunity” may be hard to pass up, but if you know nothing about the industry, Buffett recommends steering clear. The risks of making wrong decisions down the road often outweigh the benefits today.

Keep a buffer: The market’s uncertainty is one reason people rush after trendy investments or shy away from good ones. Get over your own financial insecurities by building a cushion, something that will remind you that losing isn’t always so bad. Buffett recommends putting enough money aside to tide you over for six months in case the worst happens. Having this sort of security will keep your mind clear when it’s time to make key decisions that can make or break an investment.

Think long-term: Buffett always tells people to focus on what really counts in investing. According to him, it’s all about how much you pay for a stock today and how much it earns in ten or twenty years. The best value is always gained in the long term. Although there is something to be said about short-term gains, a good investor will always reinvest them—and it all still translates into the long term.

In a way, this brings together all the bits of advice we’ve counted: see the market clearly and stick to what you know, so you have a good idea of what happens in the next two decades. And with your six-month buffer, you won’t be afraid of the dips that are almost sure to happen within that period.

Gold Rate in Bangalore

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As trust in currencies continues to fall and investors opt for stability, gold rates are reaching record highs worldwide. This is especially true in large, established gold markets in the Middle East, Asia, and Africa. One market that’s particularly noteworthy is Bangalore, where gold remains an important commodity alongside the foreign services sector.

Gold rates in Bangalore have risen fairly steadily in the past few months. Even so, gold buyers—locals and foreigners alike—have lost little enthusiasm, trading the precious metal on various platforms to the tune of millions or tens of millions every day. One easy indicator is the jewelry market: the city’s shops have never been so busy, even outside of tourist season. In some of the better-known stores, jewelry pieces can be ordered months in advance.

It’s good news for those investing in gold reserves. It’s a much larger investment, but at the rate things are going, it’s also much more stable. In the last month alone, gold rates went from about Rp2,400 to Rp2,700 ($55 to $62) per gram for 24K gold. The trend looks set to continue as major currencies like the euro and the U.S. dollar remain at a standstill. At the moment, a fast-growing economy like India is more attractive to investors, at least in terms of long-term stability.

Online gold trading is the easiest way to invest in Bangalore gold. It allows you to get your foot in the market without physical backing, and get excellent protection against inflation. What you usually buy are futures contracts, which basically promise to deliver a set amount of gold (or other precious metal) at a given time for a given price. A typical futures contract controls one brick of gold weighing one troy ounce, or a little over 31 grams.

If you’re visiting Bangalore, you may also want to look into gold coins. These are sold in the trading district, often alongside other precious metals and jewelry. Locally they are considered ornamental as well as financial assets, so there’s excellent resale potential even a few years down the road. Of course, this also means you’ll have to shop around for the best deals, and enter the market with a good idea of the Bangalore gold rate.

Other Indian cities also have strong gold markets. Mumbai, Delhi, Chennai, Kolkata, and Hyderabad are excellent alternatives, and should be taken into account when looking to make your first investment in the country. As with any other financial move, the best way to take advantage of the gold rate in Bangalore is to be informed and make sure you’re getting your money’s worth.

Mutual Fund NAV

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Mutual funds have redefined investing over the last 20 years. In fact, to many of us, investing simply means putting money in mutual funds and little else. A mutual fund consists of a group of investors pooling their money and buying stocks, bonds, and other commodities, with a fund manager being paid to manage the investments.

One of the key indicators of a mutual fund is its net asset value (NAV), which is used to determine the price of its shares. Investors can buy shares from the fund company and sell them to another. The buying price is called the “bid price” and the selling level is the “redemption price.” A mutual fund NAV can be obtained by taking the total value of a fund’s cash and securities and subtracting the value of its liabilities. The share price is obtained by dividing the NAV by the number of outstanding shares. This number is calculated at the end of every trading day, when the closing prices of the fund’s securities roll in.

Here’s a pretty simple example. If at the end of the day, a mutual fund ends up with $20 million in assets and $5 million in liabilities, its NAV would be $15 million. From here we can obtain the share price: assuming the fund has one million outstanding shares, we divide the NAV of $15 million by one million, which gives us price-per-share of $15.

The use of a mutual fund NAV differentiates it from company stock listed on stock exchanges. Companies on the stock market have a limited number of shares, determined when it first goes public, and may offer more in a secondary market. In this case supply and demand largely determine the price of the stock, making it sensitive to market changes. Mutual funds are less vulnerable. However, since it’s more diversified, they stand to gain less when one of its stocks skyrockets. A mutual fund manager is expected to balance risk and potential gain and maximize the latter.

It must be noted that the mutual fund NAV is most commonly used as an indicator of price. It helps investors decide whether or not to buy shares from it. It says little about the fund’s performance, as the number of shareholders is also factored in. A much better indicator is the mutual fund’s total returns, which is the amount it has gained through various investments minus any liabilities.