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  • What are the Advantages of Investing in Multiple Properties [ Real Estate] ?  

    Real Estate is a traditional method for investing and accumulating wealth over the long run. Most people around us with good financial knowledge or without financial knowledge choose real estate investment as the most secure method. [ They usually compare the risk of investing in plots or apartments with investment  in the stock market, which is highly volatile].

    But, as with all investments, investing in real estates also comes with its share of risk. Factors like bad economic conditions, pandemics (like corona), market fluctuations specific to property, and tenant related risks could impact the returns  from the property. In some cases you should even face financial losses.

    To reduce the risk Investors often opt to diversify their portfolio of properties. Simply by investing across various locations, asset types and markets it is possible to maintain a balanced real estate portfolio.

    Diversification is a crucial risk management strategy that guarantees steady income, minimizes exposure to market volatility. Moreover it boosts your financial security with steady cash flow from multiple resources.

    The idea of investing in multiple properties is among the most efficient ways to lower risk and guarantee longevity of financial stability in the real property. It is as simple as the popular quote “don’t put all eggs in a single basket”. It is recommended for investors to buy  different types of properties in different areas,  to shield themselves from market declines and tenant vacancies.

    Another major advantage of having multiple properties is related to “TAX”, which we will discuss later.

    Investors should not depend on One Area / Location While Investing

    Real estate markets differ based on region due to factors like the growth of employment, economic development, infrastructure and whether it is in an urban or semi urban locality . If an investor owns a  property in a city [ if you go at micro level like investing in real estate properties in a popular area within the city ] they are completely vulnerable to market risk.

    If one region is facing an economic slump or stagnation in such cases your investment in  properties in other areas remain in good shape. They assure you a stable and secured income.

    This method of investing guarantees you  protection  against area specific disasters and policy changes. 

    Now lets see what are the Advantages of Investing in Multiple Properties [ Diversification ]

    Advantages of Investing in Multiple Properties

    1.  Market Fluctuation Protection

    Like all investment, real estate and rental income from properties also shows instability in its performance, if there is any slump in the economy. Values of real estate and demand for rental fluctuate based on the local economic condition. Your investment should be diversified into various types of property i.e. residential commercial, commercial and vacation rentals, etc. If you follow such a practice in investing in real estate property, you are literally creating a cushion for Market Fluctuation.

    Commercial and residential properties don’t always move in tandem. If one market is struggling the other could protect or save you. It’s like a hedging concept in trading.

    1. Continuous Cash Flows as rental income

    One of the greatest dangers of investing in real estate is the loss of rental revenue due to changes in market conditions or tenant vacancies. Multiple properties provide diverse income streams, ensuring consistent cash flow.

    Even if one of the properties remains empty, other properties remain generating rental revenue. This strategy guards against financial losses in case of no tenant or non-paying tenants.

    1. Rental Risk Management 

    When you are relying on one rental property as a major income source, one bad tenant or a prolonged vacant period can create a huge financial burden. 

    Investing in multiple properties can help investors diversify risk for tenants, thus reducing the risk of a single troublesome tenant.

    If you follow this method a single tenant’s default would not significantly impact the overall cash flow of yours.

    1.  Protection Against Economic Downturns 

    The economic slump or stagnation affects different real estate industries in different ways. While one industry may see lower demand, others could be stable or even increase. A well-diversified property portfolio mitigates financial losses during such marketic conditions.

    In general Residential properties remain stable even during economic slowdowns. But if you observe commercial real estate , chances of it struggling are very high. So having a balanced portfolio is recommended to reduce financial losses.

    1. Better Loan & Financing Opportunities 

    Possessing multiple homes boosts  your chance of obtaining better loans for future investments.

    You can use the existing properties as collateral purchasing new properties. Moreover Banks can offer loans for decent interest rates for investors who have several assets.

    Investors can refinance their old loans with lower interest rates as their property portfolio expands.

    1. Long-Term Wealth Accumulation 

    The value of real estate has historically increased in value, which means that multiple properties can increase the value of an investor’s net worth in the course of time.

    Different markets appreciate at different speeds having multiple properties boosts your chance of gaining from the growth areas.Real estate is like an insurance against inflation, which directly ensures the accumulation of wealth.

    Investors have the option of selling high-value properties at the right time to earn maximum profit.

    1. Tax Benefits & Deductions 

    Possessing multiple properties offers substantial tax advantages, which allows investors to cut down on their tax liability by deducting. Investors can claim depreciation for properties, which reduces the tax-deductible income.Costs like maintenance and home repairs and insurance are tax deductible.The losses from a property may be offset with gains from another property to lessen tax burdens.

    Conclusion :  That’s it from our end on “  Investing in Multiple Properties”.  We have covered all the advantages of following diversified investing in real estate. If you guys have any suggestions, please do let us know in the comments section. In our upcoming blog posts we will see more about investing in stocks and other instruments which could appreciate wealth in the long run.

  • Basic Financial Education for Children [ Teach Kids about Money ]

    Most people don’t know about the importance of letting their children know about “Financial Education” at an early age. Like all other subjects i.e. Math’s, Science and Learning Mother tongue , having extensive knowledge about money is a must for every student. Parents and teachers should consider this as one of the most important “Life Lessons” and they should patiently induce the concept of money in young minds.

    Having a strong and trenchant financial skill helps in addressing the issues related to money like money management,  needs vs want, and handling the stress related to financial issues. In today’s world, Money is the ultimate ruling factor so having a good knowledge on money is a necessity. Whether it’s a business or personal life, money plays a crucial role and people having it in good amounts enjoy some privileges in our society like getting respect etc. 

    We all know that Children curious about everything around them. If they observe their parents using credit cards, cash and electronic payments that may trigger a curiosity among kids to know more about them. But without proper guidance it is not possible for kids to know about money and the basic queries related to it like earning money, saving, charity and spending. Financial literacy provides children with the necessary skills on budgeting, saving and investing for the future.

    Why is Financial Education so crucial ? 

    a)  Children who are taught about money in the early years establish better saving and spending habits. These habits help them in maintaining financial discipline in their adulthood.

    b) In the real world everything directly or indirectly depends on Money. With proper financial education we are preparing children to face real-world financial challenges. This knowledge about money will help kids to stay out of debt traps later on in life.

    c) It is the responsibility of parents and teachers to make children know about the difference between needs and  wants. With good financial knowledge they don’t need anyone’s help in spending money on “needs vs wants”.  They can make decisions independently and this boosts their confidence in money Management.

    How to Teach Kids about the Basics of “Money” ? 

    First and most important step is to let the children know the “meaning of money and how it’s earned”. Without knowing these basics, they may not understand the terms like savings, spendings etc.

    It is the parents responsibility to make children understand the fundamentals of money. Later on this knowledge can help you in making responsible financial decisions among the superfluous available.

    Explain to kids about different types of cash like coins, notes, credit cards and Debit cards and later ask them to identify and compare. Explain how the cash can be used to buy things.

    How Money is Earned  ?

    Make sure children understand that “Money has to be earned”. Explain to them in simple words that to earn money they have to do a job [ doctor, engineer, Teacher] or business or any other hustle. [ Don’t complicate it by explaining with examples they don’t understand].

    To make children practically know about money and work, Parents could give children a small amount of money for completing tasks, such as doing their own laundry or helping with the garden.

    Now comes the actual part “Saving”.. Till now they have learned what cash is and what they have to do to get it.

    Money Management :

    Earning money is important but handling it responsibly is even more important. Again it is teachers and parents responsibility to teach Kids on how to manage money earned effectively.

    Explain children to divide their earnings into 2 parts a) Savings b) Spendings

    Explain to them about Savings and Spendings in simple language, so that these things get etched in their minds.

    a)  Saving

    Saving means keeping a part of the earned money for future use without spending them at once. They may not understand at first but with time they will come to know the importance of saving.

    Explain to them about “piggy banks or a savings jar” in which they can keep the remaining cash after spending.

    b) Spending

    Spending is nothing but using money to purchase things that we need / want . Again here comes another subject, the difference between “needs” and “wants”.

    Again as a parent you should play your role in making Kids understand the difference between “needs” in contrast to “wants”.

    You can use basic examples to make them understand like food, books come under needs whereas toys come under wants.

    Conclusion : Financial Education is a very important life skill every child/ Kid should learn at an early age and it is their parents responsibility. In this blog post we have covered basics about financial education for kids like “importance of money”, “importance of spending and saving money”. In our upcoming blog posts we will cover more about Savings and  Money Management related topics for Children and for students.

  • 4 Best & Top Used Swing Trading Indicators by Experts in 2025

    Top swing trading indicators

    The swing trading method is an extremely well-known trade technique that focuses on earning profit from price movements that are short to medium-term in financial instruments. Instead of investing for a long time or trading several times per day, traders who use swing trading hold their positions for days to a few weeks, according to market conditions. This technique allows traders to benefit from price fluctuations without having to stay glued to the screen for the entire day.

    To succeed in Swing trading , employing the correct strategies and tools is crucial. The most essential tools used by traders are technical indicators. They help traders understand market trends, anticipate price changes and make informed trading decision-making. In this article we’ll look at some of the top indicators to assist you in identifying lucrative opportunities, enhance your trading strategy and increase the potential return you can earn. If you’re a novice or an experienced trader having a thorough understanding of these indicators will improve your performance when it comes to swing trading.

    Understanding Swing Trading in Simple Terms

    Swing trading is about recording price changes within a certain time frame, which is longer than a day, but less than investing in the long term. In contrast to day traders who must shut down all of their positions by the closing time of the trading day, the swing traders keep their positions until the trends remain favorable. This could last from a few hours up to some days or even weeks. The aim is to follow in the “swings” in the market and buy when prices are low, and selling when they are at their highest.

    There are two main shifts that traders of swings are keenly watching:

    1. Swing Highs are when the price of an asset is at the top before falling back. This is a signal to short-sell in the hope of buying back at a price lower in the future.
    2. Swing Lows occur when prices drop to a minimum before rebounding back up. This is a great opportunity to buy and the intention to sell later at a higher value for gain.

    Understanding the swing highs and lows is vital for traders since it can help them identify the best times for trading to start and end.

    Why Indicators Matter in Swing Trading ?

    Indicators are vital tools traders employ to analyze market conditions and make better decisions. These indicators remove uncertainty of trading and offer important insights based on past prices and patterns of technical. The reasons they are so important:

    1. Better Decision-Making: Swing trade indicators offer traders with an knowledge of market trends and price changes. This helps them make more informed decisions about when to join or close an investment.
    2. Accuracy Improved : In lieu of relying upon the whims of your mind or speculation, indicator provide traders information-driven insight, assisting them make trades with more precision.
    3. Finding Trends in Markets Early : Certain indicators are able to detect trends before they are obvious which allows traders to profit from price fluctuations early and increase their profits.
    4. Measuring the momentum of a trend : Utilizing certain indicators like those that measure momentum, such as the Relative Strength Index (RSI) helps traders assess the strength of a trend in price is. If the momentum is strong then the trend is likely to last; when it begins to weaken the possibility of a reversal is in the near future.

    With the help of these indicators traders are able to make more intelligent and more calculated decisions which reduces risk and increases their chances of success swing trading.

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    4 Key & Best Indicators for Swing Trading [ Top & Most Used ]

    Swing trading is about finding the best times to buy and sell stock within a brief to medium period of time, typically between a couple of days and a couple of weeks. To make informed trade decisions traders use specific technical indicators that can assist in predicting price movements. These indicators function as tools that provide insight into whether a particular stock is trending either way, or the other way around, and when it’s either overbought or undersold or if it’s moving.

    In this tutorial we’ll take a look at four important indicators –Relative Strength Index (RSI), Ease of Movement (EOM), Bollinger Bands as well as MACD (Moving Average Convergence Divergence), in an order that’s simple to comprehend even for those who are new to trading.

    Relative Strength Index (RSI) for gauging Market Momentum

    It is the Relative Strength Index (RSI) is among the most frequently used indicators for swing trades. It’s an oscillator of momentum which means that it aids traders to understand the strength or weakness of the movement of a stock’s price over time. RSI analyzes the speed and changes of price movements using the scale of 100 to 0.

    How RSI Works in Simple and easy to understand language?

    Consider RSI as a method to determine if a stock is moving up too quickly (overbought) or has been dropping too quickly (oversold).

    In the event that RSI value is higher than 70 and the stock is deemed overbought. That means the price has risen rapidly and the possibility of a pullback (price decrease) could be on the horizon.

    When the RSI value is less than 30 then the stock is considered to be oversold, meaning that the price dropped significantly and an increase (price rise) could be expected.

    How to Use RSI in Trading

    • If RSI rises over 70 and then begins to fall, it could indicate a selling signal suggesting that the stock is losing momentum.
    • If RSI falls below 30 and begins to climb, it could be a buy signal which means the stock could be about to rebound.

    Practical Example

    Imagine a stock trading at $700 and then the RSI rises to 78. This indicates that the stock is overvalued, and there’s a good likelihood of a price decline within the next few days. An investor may choose that the company should be sold, or even avoid buying it at this level. However when the RSI decreases by 25 points, it indicates that the stock could be undervalued and is due for rising prices, which makes it an ideal buying opportunity.

    Ease of Movement (EOM)

    The Ease of Movement (EOM) indicator allows traders to determine if the price of a stock is advancing or declining quickly, based on price action and volume of trading.

    How EOM Works ?

    The indicator is displayed by a line that begins at zero.

    In the event that the EOM line shifts upwards this means that the price of stocks is rising without resistance. Buyers have control.

    In the event that the EOM line is below zero, that signifies that the stock price is falling steadily and sellers have control.

    Why is This Important?

    If the price of a stock is climbing, however the EOM increases and the volume of trading does not increase, it could suggest that buyers are loosing their power. This could signal that sellers may be able to take over and cause an eventual price decline. The traders use EOM to know the signs that a trend is strong and when it could begin to weaken.

    Bollinger Bands : to know about Volatility and Breakout Opportunities

    Bollinger Bands are three lines drawn on a chart of the price of a stock:

    1. Middle Band: A move average (shows an average of price for twenty days).
    2. Upper Band Upper Band: A line that extends two standard deviations over the middle band.
    3. Lower Band: A line that is two standard deviations lower than the middle band.

    The bands can expand or contract according to market volatility.

    How Bollinger Bands Help Traders ?

    If the price reaches the upper end of the band this could mean that the stock is in overbought condition and could indicate a sale opportunity.

    If the price reaches the lower part of the range this could mean that the stock is selling which could indicate a purchase opportunity.

    When the bands swell (come closer) this signals an easing of volatility, usually leading to a major price break.

    If the bands get wider this indicates increased volatility, which indicates that larger price fluctuations are taking place.

    Practical Example

    Imagine a stock trading at a price of $479 and then its price starts to touch its lower Bollinger Band. This could mean that the stock has been overbought and a move down is likely to occur soon. An investor may choose to sell or look to see if there is a better opportunity to buy.

    In contrast, if the price crosses below the Bollinger Band, it could indicate that the price is low and is ripe to bounce, making it a potential buying possibility.

    MACD (Moving Average Convergence Divergence) :

    The MACD indicator aids traders to spot fluctuations in the momentum of prices and potential trend reverses. It has three components:

    1. MACD Line: The line is the differences in two Moving Averages (fast as well as slow).
    2. Signal Line : Moving Average that is part of MACD line which acts as an indicator for signals to buy or sell.
    3. Histogram: Visual representation of the distinction in both the MACD line as well as the signal line.

    How to Use MACD in Trading ?

    If the MACD line is above that of the line signal, it’s buying signal, indicating that momentum is moving upwards.

    If the MACD line is below it’s signal line it’s a sell signal. This suggests an upward trend.

    Best for Momentum Trading

    MACD is an effective instrument for trading based on momentum since it confirms the validity of price fluctuations.

    Combining RSI and MACD for Stronger Signals

    If used in conjunction, RSI and MACD can help to make trading more precise

    Conclusion : Above are the best and most famous Indicators used in Swing Trading by market professionals for entering into a trade and of course for booking profit or to trail it. If you guys feel we have missed out any other Indicator which works absolutely great in Swing Trading , then do let us know in the comments section.

  • Nvidia : Journey to Trillions: Growth, Innovation, and the 2024 Stock Split

    Nvidia Corporation (NVDA) has become one of the largest businesses around the globe, with an estimated market capitalization of $3.4 trillion. This is a staggering amount of money, making it the second largest company within the United States, surpassing corporate giants such as Warren Buffet’s Berkshire Hathaway and Johnson & Johnson.

    nvidia stock split 2024

    However, the climb to the top wasn’t immediate. It was a modest company at beginning but gradually built its name over the years by introducing revolutionary technology.

    Let’s go deep into the story of Nvidia’s rise beginning with its inception through its massive growth in stock, and then consider the way that a modest stake in NVDA stock in the past could have been a huge fortune in the present.

    Nvidia’s Origins: From a Startup to a Global Powerhouse

    Nvidia was established in the month of April 1993 by three visionaries: Jensen Huang Chris Malachowsky, and Curtis Priem. In the early days, computers were rapidly evolving and the co-founders realized the huge potential in the field of graphics-based computing.

    At first, the company was concentrated on making graphics cards specifically for video games. However, the vision for the future was more expansive. Nvidia set out to build solid foundations in research and development, which would later expand to other areas.

    In 1999, Nvidia had launched its first GeForce graphics card, a device that was to become the benchmark for high-performance gaming as well as visual processing. The was the same year that Nvidia was listed on the stock exchange with an first publicly traded company (IPO) which marked the beginning of its career to become a publicly-traded corporation.

    Nvidia’s Evolution: Beyond Just Gaming

    While Nvidia was founded in the beginning on gaming graphics cards it never stopped growing. It was constantly exploring new markets and invested in the latest technology that would later revolutionize computing.

    One of the most significant breakthroughs occurred in the field of cryptocurrency.

    In the late 2010s Nvidia’s graphic processing units (GPUs) became the top option for cryptocurrency mining. The intricate mathematical problems required in mining Bitcoin as well as other currencies could be solved with high-performance GPUs. This led to a rise in the demand for Nvidia’s hardware exploded which led to an exponential growth.

    Nvidia wasn’t only a gaming firm, it was driving its future digital asset portfolio.

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    Unbelievable Growth: How Nvidia Rewarded Long-Term Investors

    The growth in the financials that has been experienced by Nvidia has been nothing short of spectacular.

    Between 1999 to 2024, the company’s revenues grew by 385 times.

    Net income of the company increased by 7,200% during the same time.

    To put this in perspective to put this into perspective, if you had made a bet of 10,000 dollars into Nvidia stocks in November of 2004 the investment would be worth $12.77 million. That’s a staggering annual growth rate of 43% over the last 20 years.

    Nvidia’s stock also experienced multiple splits of its stock that made it more available to investors.

    Nvidia’s Stock Splits: What You Need to Know

    Stock splits are an corporate procedure in which a business splits its existing shares into a number of new shares. Although this doesn’t alter the value of all shareholder’s assets, it will increase the amount of shares they own, and reduces the value per share.

    Nvidia has been involved in several stock splits throughout the time:

    • 2000
    • 2001
    • 2006
    • 2007
    • 2021
    • 2024

    Most recently, the 10-for-1 split was completed on June 7, 2024. This is a reference to:

    If you had one share of $500, you now own 10 shares that are worth $50 each.

    The total amount of the investment is unaffected but the lower price per share makes it accessible to new investors.

    Why Companies Like Nvidia Split Their Stock

    A stock split may have multiple advantages:

    • The lower price of shares allows individuals to purchase shares.
    • In circulation more shares allows for more efficient buying and selling.
    • A stock split could draw new investors and create more interest in the market.
    • While splits of stock don’t alter the overall value of a business however, they can provide a sense of movement on the stock market.

    Conclusion :

    The rise of Nvidia from a modest graphics card maker to an industry leader in technology is a testimony to its ability to innovate, adapt and vision. It has not only taken over the gaming industry, but made its mark in the fields of artificial intelligence, cryptocurrency as well as high-performance computing.

    For investors who are looking for a long-term investment, Nvidia has been one of the most profitable stocks of the past. With the constant advancements in AI cloud computing and even data centers, Nvidia’s success story isn’t finished yet.

  • Best Way to Invest Money Short Term in 2025

    best way to invest money short term in 2025

    Before saving your hard earned money for a goal within the next few years [ you can say such goals as short term goals ], investors must select an investment strategy that stands between risk and reward. 

    In general people who are willing to invest short term investments look for a plan that gives good returns and at the same time they  also need their money protected with easy access to spending. So in simple words, in Short term investments stability along with liquidity is the main priority. Whereas long term investments may have some liquidity issues and there is no guarantee that your asset value won’t come down in the next few years.

    Short term investments enable you to protect your capital safety from market volatility even  in unexpected events like “Covid” pandemic. Moreover  you can earn interest from your investment. 

    Lets see the best investment options  for the short term in 2025.

    Best way to invest money short term in 2025

    High Yield Savings Account

     A high-yield savings account proves to be an intelligent financial decision  if you are looking for high returns with a short term investment plan.

    The high-yield savings account serves as a superior option than keeping money in checking accounts that typically generate minimal or no interest. The regular add-on of interest in high-yield savings accounts makes your funds grow steadily while maintaining easy access to your savings.  

    Not only the high-yield savings accounts deliver better interest rates than traditional savings accounts but they are also insured through FDIC for banks and NCUA for credit unions. So you need not to worry about the money in your savings account.

    Another feature about “High Yield Savings Account” is that it is easy to access their money for primary bank transfers. So there is no issue of liquidity..  

    This type of account represents an excellent solution for storing short-term funds with low risks and modest earnings potential.  

     High-yield savings accounts  are tailor made  for risk-averse individuals along with users who must access their money quickly while avoiding market volatility. The protection your money receives from these accounts comes at the expense of limited inflation adjustment over time. So these types of Savings accounts are  suitable for temporary savings but not suitable for long investment periods.  

    Certificates of Deposit (CDs): 

    Banks together with credit unions provide customers the time-bound savings instrument known as Certificate of Deposit (CD). The amount you invest in CDs becomes inaccessible for a predefined  period and in exchange they offer you a rate of interest that remains unchanged during this locked-in time. CDs are highly secured short-term investments as they are insured by FDIC or NCUA for each depositor at every bank.  

    By investing in CDs you can expect a fixed interest rate during the entire term. These interest rates typically exceed the ones you are getting from your regular savings account.

    The typical maturity duration of CDs are 3 months, six months, one year, two years and five years.Financial experts recommend this investment strategy for Short Term purpose only.

    If you want to withdraw the amount before the lock-in period then you may have to pay a penalty. If you are looking for an investment with inflation-beating returns, stay away from CDs.

    This CDs investment option appeals to investors who need funds for upcoming commitments such as buying a house or making large purchases. 

    For a section of people who want stable returns and peace of mind from their savings without having immediate Access to Funds , Certificates of Deposit is the best option.

    Corporate Bonds 

    Generally Big Companies look at “Corporate Bond” as an option to raise funds for their business expansion or for day to day operational needs.

    If you are investing your funds in corporate bonds, then literally you are providing a loan to them, for which they will pay interest on a regular basis, may be monthly or quarterly etc depending on their policies. So “Corporate Bonds” have become a lucrative investment option for people who are looking for regular income from their investments through passive mode.

    Corporate bonds are an ideal solution for people who are expecting  predictable and decent returns from their investment portfolio.

    Compared to other financial instruments , investing in  “Corporate bonds” is easy and very low risk. Because of their lower market risk, corporate bonds are suitable as investments for people who avoid financial risks. 

    People usually invest in short-term corporate bonds between one and five years 9 of maturity. As you are looking for short term returns on your investment, it is recommended to invest in 1 year or 5 year Corporate bonds.  

    Apart from getting monthly payments [ through interest], Corporate Bonds have very high Liquidity. You can buy or sell them on any day [ Only when the markets are open].

    Corporate bonds are not 100% risk free like “CDs”.Corporate bonds do not carry insurance protections from the government which means a slight possibility exists that investors can lose money if the issuing company defaults on payments. 

    Treasury Bills ;

    Another short term low risk investing option is putting your money in Treasury bills [ T-bills ]. If you are not sure about what exactly are treasury bills ? then here is the answer for you guys.

    Treasury bills are simply a form of short-term investment issued by the U.S. government. You can treat Treasury bills this way i.e. a loan you give to the government and in return you will get profit along with your capital.

    These investments last for a very short time i.e. anywhere from a few weeks to a year. As these TBills are backed or insured by the Government, they are the safest bet to invest your money for short term.

    Another interesting feature about the “Treasury bills ” investing option is , it is flexible. Its in your hands to choose the time period you want to invest i.e. may be a week or month or two months etc. And moreover liquidating the Tbill before the maturity date is also possible, so you need not to wait till the investing period ends.

    If you need your money before the term ends, you can simply sell your Tbill in the market, making it a great option for those who want easy access to their cash. 

    Have you heard a saying in the finance world “Low Risk, Low Returns”, “High Risk, High Returns”. Of Course this saying is not related to every financial instrument. In case of “TBills” the saying works absolutely great.

    As we already discussed, T-bills are very safe [ low risky], so don’t expect high returns from “Treasury bills” like stocks or corporate bonds. However, they are a good choice for people who want to keep their money secure while still earning a little extra.

  • Dollar-cost averaging | DCA vs Lump sum Investing Which is better ?

    Dollar-cost averaging [ DCA] :

    dollar cost averaging

    Dollar-cost averaging [ In the UK it is called Pound-Cost averaging ] is a simple and uncomplicated investment  strategy which doesn’t require you to read the charts or time the market to gain profits. This investment approach assists investors in lowering their risk of exposure to market uncertainty and increasing their wealth over time.

    Here is the strategy and Logic behind it :

    Instead of investing a large amount of money all at once, break your money into smaller parts and invest in a stock or fund at regular intervals for a period of time. If your goal is to create fortune with this strategy then you should invest in the same fund for a long period.

    We all know that Market is quite unpredictable and handling volatility is not an easy task even for seasoned investors and traders. With this approach it is possible to skip all the guest work like “timing the market perfectly”, “analyzing the charts on multiple time frames”. Moreover, this strategy guarantees you peace of mind, even after investing in a market that is unpredictable.

    Now lets move a step ahead and dive into more minute topics related to Dollar-Cost Averaging like pros and cons, how it is different and best from other investment strategies etc.

    Example of Dollar Cost Averaging for Easy Understanding :

    In this section we will explain about Dollar-cost averaging with an example.

    Lets assume you are planning to invest in Alphabet [ GOOGL ] stock with the aim of generating decent returns from your investment.

    Investment Amount : lets assume you have $5,000 to invest in a fund or stock [ In this case you have chosen GOOGL to invest].

    As per Dollar-cost averaging instead of investing total $5,000 at a time, split the amount into smaller portions and buy accordingly over a period of time.

    Instead of investing $5,000 at once you can go for $500 a month for 10 months or similarly you can opt for $1000 a month for 5 months.

    Here we are going to stick with investing $1,000 on the first trading day of each month for the next 5 months.

    As on January 4th, 2025 Google stock is trading at $191. For the purpose of easy calculation lets assume “Google stock” is trading at $ 100.

    Google’s Stock Price Over the Past Five Months:  [ Hypothetical Analysis]

    GOOGL :  $100 per share in January. 

    GOOGL :  $80 per share  December 

    GOOGL :  $60 per share in November

    GOOGL :  $90 per share in October

    GOOGL :  $120 per share in September

    Lets breakout the investment approach :

    A $1,000 investment is made in the month of September at a price of $120 per share, resulting in the purchase of 8.33 shares.

    October Month :  At $90 per share, you will get 11.11 shares.   

    November Month :  At $60 per share, you will get 16.67 shares.  

    December Month : At $80 per share,  12.5 shares.  

    January Month :  At $100 per share , you will get 10 shares for your investment of $1000.  

    Total number of shares you hold at the end of 5 months : 11.11+16.67+12.5+8.33+ 10 = 58.61 Shares

    Total Investment [ For 5 months ] : 5x$1000 = $ 5000

    Investment value :

    In the month of January stock is trading at $100 per share.

    Total Stocks X CMP [ current market price ] : 58.61X 100 = 5861$

    With an investment of 5000$ you have generated a profit of 861$ with in 5 months.

    The fact that the final price of GOOGL in January was $100, which is more than the average price you paid ($85.34). In the first month the stock price was around $120, later it has seen a down trend and has seen a low of 60$. Even after the completion of 5 months, the stock price is below the first month’s buy price., but still you could generate decent returns on your investment.

    The above example explains to you how dollar-cost averaging can work in your favor even when prices fluctuate.

    Dollar-Cost Averaging vs Lump Sum Investing  [ Front Loading ]

    lump sum investing

    Dollar-Cost Averaging (DCA) and Lump Sum Investing are two key strategies you should look at while making investment decisions. Both approaches have their merits and downsides, depending on market conditions. One strategy works fine during the bull and another one works fine when the  market is in downtrend or sideways.

    It is recommended to choose a method based on the individual’s preference and circumstances of the market.

    In simple terms :

    Dollar-cost averaging is an approach where a person should invest in small portions at predetermined periods, without looking at the market conditions or stock price.

    On the other hand  “lump sum” investing is pouring all of your available funds at once in an instrument. [ it may be a stock or fund ].

    During Bull Run : 

    If you implement Dollar-Cost Averaging strategy during a bull run then you are not using the full potential of the bull run to earn returns. Because during the bull run period you may have invested only  a percentage of your available funds.

    In the case of Bull run, Lump sum investing works like a charm as you are investing all of your available funds at once in a stock.  This strategy gives maximum returns during a bull run.

    During Volatile Market : 

    Implementing a “lump sum” investing strategy in a volatile market exposes you to immediate decline in the investment value. As you are dumping all of your funds at once and if the market goes against your direction then you have to face a loss on the whole amount invested.

    Similarly if you go for “ Dollar-Cost Averaging strategy” in a volatile market, your investment amount is prone to less risk. As in this case you are not investing a total amount at a time.

    When to Use Dollar-Cost Averaging Strategy ?   

    Splitting your investment amount into smaller portions and investing at regular intervals keeps you safe from uncertainty in the market. With this approach you are literally killing the danger of purchasing the stock with all the funds available at a time when the market is at its highest point.

    This DCA approach perfectly suits investors who don’t want to take risks and who are not ready for an emotional rollercoaster ride. DCA can provide you the peace of mind in unexpected market conditions. You can also follow this strategy during a “Bull run”, the returns on the investment are going to be limited.

    When to Choose Lump Sum Investing ? 

    If you are an avid risk taker then “Lump Sum Investing” is for you. 

    When the market outlook is favorable, investing in a lump sum can result in better returns when compared to any other strategy.

    Another scenario where “Lump Sum Investing” can be useful is : When you have money in your pockets after selling property [or anything similar to that ], if you don’t invest it properly then the chances of misusing the fund is very high. In such cases you can go for a lump sum investment.

    Conclusion : Hope we have given clear picture on what exactly is Dollar cost averaging and its pros and con’s when compared to strategies like lumpsum investing. In our upcoming blogposts we will cover more info on DCA like “Buying the dip vs dollar cost averaging”, “Dollar cost average in crypto especially bitcoin” and many more. Please do bookmark our blog and share it with your friends.

  • Saving vs Investing: How to Make Your Money Work Smarter for Financial Success

    Saving vs Investing : For a person to lead a peaceful and stressless life, having a good knowledge on how to maintain financial resources is crucial. Just having the knowledge won’t give you financial freedom. You have to implement the knowledge in a wise way to accumulate good fortune over the long run.

    If you don’t know about how to manage your finances, then we recommend you to keep it as a high priority objective and learn the basics. This one simple step could significantly change your lifestyle in many ways. If you are not comfortable or don’t have time to learn about maintaining your finances, then you could approach financial advisors. There are a myriad number advisors, choose the one based on the reviews and ratings. They will charge fees for giving you advice on how to allocate funds for short term and long term goals.

    Planning a Family Vacation to Maldives comes under short term objectives, whereas planning to buy a home after retirement or accumulating funds for children’s education comes under Long term goals. You should have a clear understanding how much funds you should save for short term goals and long term goals. Without having a solid strategy you could misuse the funds and opportunities. A person with good capability of managing his financial resources can lead a peaceful and happy life even if he encounters unforeseen circumstances.

    Many People think that “Saving” and “investing” are the same and they interchange these words comfortably during any debate or while explaining to others about their financial status. “Savings” and “Investing” are two different financial terms with differences in meaning. In this blog post we will cover the exact difference between “Savings” and “investing”, and how they can be used to achieve financial freedom.

    Investing vs Saving  : Main Difference

    To successfully manage your finances, you should inculcate two approaches in your lifestyle i.e. saving and investing. Saving and Investing are two different methods and depending on the financial goal you should choose one.

    Saving :

    Saving is nothing but “the act of putting your hard earned money for future requirements in a secure and easily accessible place , such as a savings account“. Apart from savings accounts there are few other options like bonds where you can save your money. You can use these funds for fulfilling short term goals or to face issues which come into your life without any notice like medical emergencies. You can withdraw this saving fund very easily and it will act as a financial cushion in case of unexpected events.

    Investing : 

    Investing is another form of saving money by buying assets like stocks or real estate with a hope that money invested would appreciate in the long term. You should look at investment as a long term strategy. If you are a salaried person and aiming to become rich then investing for the long term is the only way. You should not touch these assets in case of emergencies and let them grow.

    Unlike saving, investing has the scope to give you huge returns on the money you have deployed in the assets like stocks and real estate. Of course Investing has its own set of con’s  like Illiquidity & Scams & Frauds. So be cautious while taking investment decisions as it could wipe out your whole capital. 

    So it is recommended to keep a balance of savings and investing, as human life is unpredictable. In case of emergencies you can use Savings and leave Investments for long term, so they could give multifold returns.

    Till now we have covered only on standard definition of saving and Investing . From here on we will dive more into the topic and cover all the in-depth topics related to savings & investing like “Pros and cons of saving & investing”, “when a person should opt for saving & investing”, “Difference between saving & investing”, “Goal setting vs Savings & investing” and many more.

    Saving :

    As we have already explained about “Saving” earlier and in this section we will explain more about ” Common reasons for opting Saving over investing”.

    Saving is nothing but keeping aside a small portion of your monthly income after all your expenses.   This income kept aside for later use is coined as  “Saving”.  Here “later use” is nothing but short term goals, unforeseen obstacles like medical emergencies or sudden job loss etc.

    Let us assume you are earning  $ 10k per month and around $6k will go for monthly expenses. So the remaining $4k can be used for saving. [ here we are not discussing investing ].

    The Savings amount is readily available and you can use it whenever you require them. To be precise this is the most simple & secure way to keep your money aside for the short term future and at the same time you can earn decent interest or returns from it. Don’t expect that you are going to beat inflation with returns from your savings.

    Apart from the interest rate the most important thing about “Saving” is you are not risking your money i.e. your money is 100% secured. Moreover cashing out money from saving is very easy and it can be done without any extra fees.[ You will get to know about fees, once you start reading about Investing.]

    What are the most common reasons for “Saving” ?

    In managing personal finances “Savings” plays a crucial role and many people fail because they don’t have ample knowledge on it. First of all people are not aware of unexpected scenarios that may come into their life without any warning. Most of us think that “let’s face the issue when it happens”. We don’t prefer to think about it and prepare to face it in advance. This is the main reason for most of the people struggling in their life during the unexpected emergencies.

    Here we are going to list out all the situations [ some of them are unexpected and others are planned ones ] where the savings amount can become handy. 

    In case of Short Term Financial Goals 

    Short term financial goals can be considered as goals which you are looking to achieve within the next few months or 1 year or 2 years. 

    Examples : Family Vacation, Special gifts on Birthdays & Anniversaries, Education & Tuition fees, Buying a new electronic gadget like smartphone, buying a home appliance or kitchen appliance, Festival Expenses , for paying insurance premiums annually etc.

    All the above stated are planned goals but you cannot achieve such goals with your monthly income. So it is recommended to save a part of your monthly income and preserve them to achieve your short term goals. With this approach you don’t need to depend on credit card or traditional way like taking credit from others.

    To avoid Debts in achieving short term Goals and in Planning one in a life time Purchases :

    Whether you are planning for to purchase a home or car, then you have to pay down payment in order to avail the loan facility. In such scenarios you can use savings to fulfill the down payment amount.

    As we have discussed earlier, you can use savings amount to meet your short term goals.

    In achieving such short term goals and down payment for big purchases, with saving amount you don’t need to take credit from others. Avoiding debts is possible with you savings and you can contain the financial stress with this approach.

    Savings can be used as Emergency Fund :

    As human beings we should be ready for unforeseen situations. we all know that life is quite unpredictable and we should be equipped with required tools in such unexpected events. Saving will act important tool in dealing with medical emergencies, in case of sudden job loss etc.

    Few examples of emergencies : Health related issues, car accident, car repair, home repair, layoff etc.

    Finance experts and advisors recommend everyone to keep at least 3 to 6 months of monthly income in your saving, so that in case of any emergency you could handle the situation without any financial stress and peace of mind.

    If You are planning a side hustle for passive income then Savings can come as your savior:

    Everyone has their own dream of starting a business to earn passive income and to increase their revenue sources. If you don’t have saving’s then for starting a business you have approach a lender or for a bank loan which eventually increases the stress.

    To start a business, you need to have initial capital to buy equipment’s, rent a space and to pay salaries. You can use the savings amount as an initial capital to start your own venture.

    For Retirement :

    Here we are not discussing about long term retirement plan, for such situations only option is investing. Instead we are talking about immediate post-retirement expenses and days before retirement.

    Savings amount act as cushion during early and post retirement days. With this saving you can cover short term needs and day to day expenses. In some cases your health insurance won’t cover all the health issues. You can use the “saving” to cover such health emergenies.

    Tools / Instruments for Saving :

    Saving is nothing but preserving your hard earned money in a account / instrument with zero risk [ minimum risk]. At the same time it should provide perks like easy to cash out without any extra fees and security.

  • Acid Test Ratio | Which is Better High or Low Ratio ?

    Acid Test Ratio is not only a financial term, but it gives you clear insights about a company’s financial stability or performance in short term. It acts a tool to gauge company’s financial performance. Acid Test Ratio is also known as ” quick ratio” .

    acid test ratio

    What is Acid Test Ratio ?

    Let us imagine that you are running a business and you have bills to pay in short term. Acid test ratio is nothing but ” your ability to pay all the short term bills of the company immediately without depending on selling on inventory and future sales”. You have to pay the immediately bills just by making use of the assets like cash and money you owe from customers. Anyway let us make it more easy for you to understand.

    The acid test ratio is a financial indicator that provides you with an understanding of how well your company is able to meet its immediate obligations by utilizing just the assets that can be converted into cash in a short amount of time. Assets like inventory or real estate etc. takes time to convert into cash, so we won’t count them as assets for paying short term bills [ at least in this case ].
    In case of Acid Test Ratio, we should consider assets like cash that is readily available in the bank, amounts receivable from customers and investments that are easy to cashed out quickly like stocks, mutual funds and bonds.

    For more clarity on “What exactly is Acid Test ratio is ? ” we will explain the term with an example.

    Lets suppose, Company “A” has to pay bills of $ 20000 in short term / immediately. You can consider this as current liabilities. Similarly company “A” as cash of $20000 in bank account and $ 10000 to come from customers and $ 10000 of investment in bonds. These $20000 + $10000+$10000 can be considered as assets that are easy to cash out.

    Formula of Acid Test Ratio :

    Acid Test Ratio=Current Liabilities (Bills and Debts Due Soon) / Quick Assets (Cash, Receivables, Investments)

    $40000/$20000 = 2

    In this case Acid test Ratio is 2.

    This indicates that you have $2 in money that are quickly available for every $1 that you owe on short-term debt. General thumb rule is, if the Acid test ratio is one or above, it is generally considered to be a positive indicator because it indicates that you are in a strong position to meet your immediate financial obligations.

    Acid test ratio is calculated by applying a straightforward formula that assesses a company’s capacity to meet its short-term obligations with the assets that are the most liquid.

    Quick Assets: Assets that can be converted into cash in a short amount of time with ease and without any impact on their worth.

    Current liabilities: Another simple fin term that explains financial commitments that a company is required to pay within the next year / next few months . Examples of current liabilities are short-term loans, and other immediate debts.

    Why the Ratio is coined as “Acid Test Ratio “?

    Long back, Miners would use acid to determine whether the shiny piece of metal was actually gold or not. This is where the name “acid test” originated. If the shiny piece of metal is gold then it would sustain the test without getting harmed by the acid. If the shiny piece of metal is not gold then it would not pass the test.

    Similar to the acid test ratio in finding the genuine gold , this acid test ratio is a rigorous and straightforward method of evaluating the financial health of a company.

    It eliminates assets that are less liquid and assets which takes time to convert in immediate cash like inventory etc. Instead this Ratio focuses on assets that can be utilized immediately to meet pressing financial necessities.

    So Acid Test Ratio has become an essential instrument for determining whether a company is able to withstand the pressures of the financial market or not without relying on assets which are not easy to liquidate.

    Importance of Acid Test Ratio in Financial Analysis :

    As we have earlier stated acid test ratio is not merely a numerical value. It acts a vital indicator in analyzing the short-term financial health of a company.

    A Gauge to measure Financial Preparedness in case of unexpected events :

    Any individuals life is full of surprises, similarly a Company’s financial health can be. There are few unexpected events which may temporarily hinder company’s financial performance. Once recent example about unexpected event is ” Corona Pandemic”. Companies related to Pharma and Medical has performed exceptionally during the pandemic, but companies related to entertainment like Theatres didn’t perform well during this tough phase.

    Suppose the Company “B” is into entertainment industry and it has to pay bills in short term [ during corona pandemic ] .

    Acid test ratio is a useful tool for determining whether a company is able to deal with unforeseen events, such as an unexpected expense or a rapid decline in revenue, without having to scramble for additional funds or take out emergency loans.

    For Investors & Creditors :

    Gaining the confidence of both Investors & Creditors is very crucial in successfully establishing and running a business.

    Investors prefer to invest their money into companies that are able to withstand any unexpected events. Investors will feel more comfortable investing in a company with healthy acid test ratio because it demonstrates that your business is financially solid and able to deal with issues in the short term.

    When you are looking for a loan or credit, you will for lenders. But Lenders before giving you the required credit they look at the Acid Test ratio to determine whether you will be able to repay on time or not . A high acid test ratio can provide you with an advantage when it comes to negotiating terms in your favor.

    Comparing with Other companies in the Same Field :

    Acid test ratio enables you to evaluate your company in comparison with others in the same industry.

    If your ratio of your company is significantly lower than the average for the industry, it is a red flag and indicates that you are in difficulty. Similarly if your company has greater ratio then it is a positive sign indicating that you are ahead of the peers.

    You can see Acid Test ratio as an Early Warning :

    When the acid test ratio is low, it indicates that there is a possibility of trouble. These early signs alerts you and you can take appropriate measures to improve the overall financial health of the company.

  • Difference Between “Owner Financing & Traditional Financing”

    Have you ever been involved in buying or selling a property / business ? If the answer is yes then the probability of knowing about the fin term “owner financing” is very high for you. 

    Owner financing vs bank loans traditional finance

    Anyway we will discuss very indepthly about “owner financing” in this blog post. Here is the brief introduction on what exactly is “owner financing” in easy to understand terms.

    When it comes to buying or selling a property, a bank or mortgage lender is generally engaged in the transaction. We all know about this method as it is the traditional method that has been followed since long back.

    Apart from this traditional transaction method, there is one another method which may sound unconventional but many people are following it. This choice might be advantageous for both buyers and sellers and is coined as ““owner financing”.

    As per this alternate method the seller is able to take on the role of the lender, which offers a novel approach to ease the sale of property or other real estate transactions.  

    What exactly is Owner Financing?

    Owner financing, also known as seller financing, is a simple technique where the seller himself finances the transaction amount  required to buy  a real estate property to the buyer. In this approach the buyer need not worry about getting finance from a bank or other  financial institution. Owner of the property himself plays the role of lender and finances the buyer to buy it. Main benefit of obtaining a loan from the seller eases the transaction for the buyer. In many cases buyers and sellers prefer this “Owner Financing” method apart from going for traditional bank loans.

    Under this arrangement, the buyer is solely responsible for making payments to the seller directly over a period of time, typically in monthly installments, until the agreed-upon amount is completed and settled.  There is no involvement of third parties in such real estate settlements. Negotiations take place between the buyer and the seller about the agreement, which include the interest rate, loan time period, and the corresponding payment plan.

    For the transaction to complete without any issue, a legal instrument, such as a promissory note, is drafted in order to formalize the arrangement. This document outlines the provisions that have been collectively agreed upon. In the majority of instances, the seller will keep a lien on the property until the buyer has paid the full amount of the purchase price. 

    How does “Owner financing” Differ from  conventional forms of financing?

    In simple terms “If the Loan for  buying a property is provided by the Owner, it is called “Owner Financing” and if the Loan for buying a real estate property is provided by Banks or financial Institutions it is called traditional or conventional financing.

    Traditional Financing :

    In a normal real estate transaction, the buyer obtains a mortgage loan from a bank or lender.  If you are not sure about a mortgage loan, then here is the answer for you. Mortgage loans are the most common type of loans given by banks after confirming the buyer’s creditworthiness, income, and assets.  Banks only provide loans if and only the buyer fulfills certain regulations set by them like credit score and income. Until the loan is returned in full, the buyer is responsible for making regular payments to the bank, which include both the principal and the interest. 

    Owner Financing:

    In this type of financing, the seller takes on the role of the lender / bank and provides a loan to the buyer.  In these types of Financing, involvement of a bank or mortgage business is absent. So the buyer need not not worry about showing documents related to Credit Score, Assets and income.

    In this approach  there are less obstacles to overcome for buyers. Especially for the buyers who might have been having trouble qualifying for conventional loans.

    There will be an agreement between seller and buyer regarding the loan payment and interest rate. As per the agreement Buyer pays the interest amount and Monthly installment , till the loan tenure completes or the loan amount is settled.

    Scenarios Where Owner Financing is Used

    There are many circumstances in which owner financing can be helpful. Below we have clearly explained bout the scenarios where buyers and sellers can get benefit from this “Owner Financing” approach.

    a) As a buyer if you are facing any issue in getting Traditional Financing.

    Buyers who may have difficulty in getting approval for a traditional mortgage can get the maximum benefit with this “Owner Financing” method. There are many factors responsible for not getting conventional loan such as bad credit, self-employment, or an insufficient credit history. Buyers who perfectly fits in to the above mentioned categories will go for “owner financing”.

    Sellers that are ready to provide financing might pave the way for purchasers who are in this situation.

    b) Real Estate Properties that are not Easy to Sell

    Generally this unconventional method of Financing comes into play in case of properties that are tough to sell. So the Owner of property comes with a unique tactic of financing the buyers. Through this approach Seller has the probability of attracting more potential buyers.

    Owner Financing concept is used in a situation where selling the property via traditional financing is difficult.

    c) If the Seller is looking for a regular Stream of Income:

    Sellers who do not require the total amount of the sale immediately may opt to receive recurring monthly payments instead of the full sale price. This has the potential to generate a consistent revenue stream. More importantly he would get good profits through the interest.

    d) In case if you want to avoid transaction fees

    When dealing with situations that involve rapid transactions, owner financing frequently removes the long approval processes that are necessary by banks.

    Another advantages is to avoid the fees and complications that are associated with banks. Buyers and sellers can save decent money on loan fees, appraisal costs, and other standard financing expenses.

    It is important to take into consideration owner financing as a realistic alternative, regardless of whether you are a buyer searching for a means to become a homeowner or a seller looking for new ways to attract different customers.