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To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future.In finance, the expected future benefit from investment is a return. The return may consist of capital gain and/or investment income, including dividends, interest, rental income etc.Investment generally results in acquiring an asset, also called an investment. If the asset is available at a price worth investing, it is normally expected either to generate income, or to appreciate in value, so that it can be sold at a higher price (or both).Investors generally expect higher returns from riskier investments. Financial assets range from low-risk, low-return investments, such as high-grade government bonds, to those with higher risk and higher expected commensurate reward, such as emerging markets stock investments.Investors, particularly novices, are often advised to adopt an investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk. Investment differs from arbitrage, in which profit is generated without investing capital or bearing risk.An investor may bear a risk of loss of some or all of their capital invested, whereas in saving (such as in a bank deposit) the risk of loss in nominal value is normally remote. (Note that if the currency of a savings account differs from the account holder's home currency, then there is the risk that the exchange rate between the two currencies will move unfavorably, so that the value in the account holder's home currency of the savings account decreases.)Speculation involves a level of risk which is greater than most investors would generally consider justified by the expected return. An alternative characterization of speculation is its short-term, opportunistic nature. Investments are often made indirectly through intermediary financial institutions. These intermediaries include pension funds, banks, brokers, and insurance companies. They may pool money received from a number of individual end investors into funds such as investment trusts, unit trusts, SICAVs etc. to make large scale investments. Each individual investor holds an indirect or direct claim on the assets purchased, subject to charges levied by the intermediary, which may be large and varied. Approaches to investment sometimes referred to in marketing of collective investments include dollar cost averaging and market timing. A value investor buys undervalued securities (and sells overvalued ones). To identify undervalued securities, a value investor uses analysis of the financial reports of the issuer to evaluate the security. Value investors employ accounting ratios, such as earnings per share and sales growth, to identify securities trading at prices below their worth.Warren Buffett and Benjamin Graham are notable examples of value investors. Graham and Dodd's seminal work Security Analysis was written in the wake of the Wall Street Crash of 1929.The price to earnings ratio (P/E), or earnings multiple, is a particularly significant and recognized fundamental ratio, with a function of dividing the share price of stock, by its earnings per share. This will provide the value representing the sum investors are prepared to expend for each dollar of company earnings. This ratio is an important aspect, due to its capacity as measurement for the comparison of valuations of various companies. A stock with a lower P/E ratio will cost less per share, than one with a higher P/E, taking into account the same level of financial performance; therefore, it essentially means a low P/E is the preferred option. An instance, in which the price to earnings ratio has a lesser significance, is when companies in different industries are compared. An example; although, it is reasonable for a telecommunications stock to show a P/E in the low teens; in the case of hi-tech stock, a P/E in the 40s range, is not unusual. When making comparisons the P/E ratio can give you a refined view of a particular stock valuation.For investors paying for each dollar of a company's earnings, the P/E ratio is a significant indicator, but the price-to-book ratio (P/B) is also a reliable indication of how much investors are willing to spend on each dollar of company assets. In the process of the P/B ratio, the share price of a stock is divided by its net assets; any intangibles, such as goodwill, are not taken into account. It is a crucial factor of the price-to-book ratio, due to it indicating the actual payment for tangible assets and not the more difficult valuation, of intangibles. Accordingly, the P/B could be considered a comparatively, conservative metric. Free cash flow measures the cash a company generates which is available to its debt and equity investors, after allowing for reinvestment in working capital and capital expenditure. High and rising free cash flow therefore tend to make a company more attractive to investors.The debt-to-equity ratio is an indicator of capital structure. A high proportion of debt, reflected in a high debt-to-equity ratio, tends to make a company's earnings, free cash flow, and ultimately the returns to its investors, more risky or volatile. Investors compare a company's debt-to-equity ratio with those of other companies in the same industry, and examine trends in debt-to-equity ratios and free cash flow.

 

A popular valuation metric is Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA), with application for example to valuing unlisted companies and mergers and acquisitions.For an attractive investment, for example a company competing in a high growth industry, an investor might expect a significant acquisition premium above book value or current market value, which values the company at several times the most recent EBITDA. A private equity fund for example may buy a target company for a multiple of its historical or forecasted EBITDA, perhaps as much as 6 or 8 times.In certain cases, an EBITDA may be sacrificed by a company, in order for the pursuance of future growth; a strategy frequently used by corporate giants, such as, Amazon, Google and Microsoft, among others. This is a business decision that can impact negatively on buyout offers, founded on EBITDA and can be the cause of many negotiations, failing. It may be recognized as a valuation breach, with many investors maintaining that sellers are too demanding, while buyers are regarded as failing to realize the long-term potential of, expenditure or acquisitions.The amount to pay in taxes for long term investments, investments that span over a year long term, and short term investments such as those that are below a year are different. The long term investments range from Zero to twenty percent for capital gains and they are regulated by what tax bracket you are in for income taxes. For the zero to fifteen percent income tax bracket you could qualify for the zero percent long-term capital gains rate. The next bracket is the fifteen to twenty percent income tax bracket where you are set at fifteen percent capital gains tax for long term investments. The next bracket is between twenty and 39.6 percent and that leads to a twenty percent capital gains tax however with these numbers you should add 3.8 percent for the health care surtax. The short term capital gains tax is also related to your total taxable income and is taxed at the same rate as your income and ranges from ten to 39.6 percent

News

Bajaj Allianz General launches mobile-based settlement system

Customers can instantaneously submit digital documents through company's self-service mobile app Posted: Mon 16th of January, 2017

Royal Sundaram General eyes 25% biz from accident,health cover

As of March 2016, its total premium stood at Rs 1,700 crore which may touch Rs 2,100 crore Posted: Mon 16th of January, 2017

Indian insurance sector to grow significantly in coming yrs: Report

UK-based reinsurance company Lloyd is expected to set up its branch in Mumbai in 2017 Posted: Mon 16th of January, 2017

Muthoot Finance to raise up to Rs 1,400 cr via NCDs

Muthoot Finance said it will utilise the funds raised through this issue to lending activities of the company Posted: Mon 16th of January, 2017

HDFC ERGO raises Rs 350 cr via NCDs

The NCDs were issued in November with a coupon rate of 7.6% Posted: Mon 16th of January, 2017

ICICI Bank blocks transactions through Flipkart wallet PhonePe

These moves are seen as banks getting nervous of being disrupted by new-age digital payments players Posted: Sun 15th of January, 2017

Finance Ministry finalising fund infusion for PSBs; to exceed Rs 25k cr

In line with the blueprint, PSBs are to get Rs 25,000 crore in each fiscal Posted: Sun 15th of January, 2017

Interest rate over 7% unsustainable: Fino Paytech

Fino was one among the 11 entities given in-principle nod to start payments bank by RBI in Aug 2015 Posted: Sun 15th of January, 2017

RBI employees urge governor to protect autonomy

RBI and PM Modi has been criticised for the implementation of demonetisation Posted: Sat 14th of January, 2017

IFCI cuts benchmark lending rate by 75 basis points

The new rate would be effective from January 15 Posted: Sat 14th of January, 2017

DCB Bank Q3 net up 25% to Rs 51 crore

The city-based lender had reported a post tax profit of Rs 41 crore in the year-ago period Posted: Sat 14th of January, 2017

Axis Bank cuts rate by up to 70 bps

The new rates are effective from January 18 Posted: Fri 13th of January, 2017

SBI in pact with Oman's SGRF, to invest $50 mn in Oman-India fund

SGRF to infuse $150 mn; OIJIF Fund II is targeting a corpus of $300 million by 2017-end Posted: Fri 13th of January, 2017

Dena Bank favours tax benefits on digital payments in Budget

Bank has favoured tax concessions in the upcoming Budget for customers Posted: Fri 13th of January, 2017

Airtel payments bank offers highest savings deposit rate

7.25% for savings accounts; plan is to have 600,000 banking points by year-end Posted: Thu 12th of January, 2017

BoB declares 200 borrowers as wilful defaulters

List is for the period up to September 2016 Posted: Thu 12th of January, 2017

PSBs need equity worth about Rs 2 lakh crore by March 2019

REITs and InvITs are vehicles created to primarily invest in revenue-generating real estate assets Posted: Thu 12th of January, 2017

Over 4 mn bank accounts could be dormant, suspects I-T department

CBDT spotlight on banks, dormant accounts that got sudden outflow during demonitisation Posted: Thu 12th of January, 2017

In November, banks' exposure in all major industries shrank

The infrastructure sector saw a dip of 6.7% in the year to November 25 Posted: Wed 11th of January, 2017

Lending rates cut leads to balance transfers in home loan market: ICRA

SBI reduced the lending rates for home loans by 50 bps to 8.6% for floating rate loans Posted: Wed 11th of January, 2017

News

Bajaj Allianz General launches mobile-based settlement system

Customers can instantaneously submit digital documents through company's self-service mobile app Posted: Mon 16th of January, 2017

Royal Sundaram General eyes 25% biz from accident,health cover

As of March 2016, its total premium stood at Rs 1,700 crore which may touch Rs 2,100 crore Posted: Mon 16th of January, 2017

Indian insurance sector to grow significantly in coming yrs: Report

UK-based reinsurance company Lloyd is expected to set up its branch in Mumbai in 2017 Posted: Mon 16th of January, 2017

Muthoot Finance to raise up to Rs 1,400 cr via NCDs

Muthoot Finance said it will utilise the funds raised through this issue to lending activities of the company Posted: Mon 16th of January, 2017

HDFC ERGO raises Rs 350 cr via NCDs

The NCDs were issued in November with a coupon rate of 7.6% Posted: Mon 16th of January, 2017

ICICI Bank blocks transactions through Flipkart wallet PhonePe

These moves are seen as banks getting nervous of being disrupted by new-age digital payments players Posted: Sun 15th of January, 2017

Finance Ministry finalising fund infusion for PSBs; to exceed Rs 25k cr

In line with the blueprint, PSBs are to get Rs 25,000 crore in each fiscal Posted: Sun 15th of January, 2017

Interest rate over 7% unsustainable: Fino Paytech

Fino was one among the 11 entities given in-principle nod to start payments bank by RBI in Aug 2015 Posted: Sun 15th of January, 2017

RBI employees urge governor to protect autonomy

RBI and PM Modi has been criticised for the implementation of demonetisation Posted: Sat 14th of January, 2017

IFCI cuts benchmark lending rate by 75 basis points

The new rate would be effective from January 15 Posted: Sat 14th of January, 2017

DCB Bank Q3 net up 25% to Rs 51 crore

The city-based lender had reported a post tax profit of Rs 41 crore in the year-ago period Posted: Sat 14th of January, 2017

Axis Bank cuts rate by up to 70 bps

The new rates are effective from January 18 Posted: Fri 13th of January, 2017

SBI in pact with Oman's SGRF, to invest $50 mn in Oman-India fund

SGRF to infuse $150 mn; OIJIF Fund II is targeting a corpus of $300 million by 2017-end Posted: Fri 13th of January, 2017

Dena Bank favours tax benefits on digital payments in Budget

Bank has favoured tax concessions in the upcoming Budget for customers Posted: Fri 13th of January, 2017

Airtel payments bank offers highest savings deposit rate

7.25% for savings accounts; plan is to have 600,000 banking points by year-end Posted: Thu 12th of January, 2017

BoB declares 200 borrowers as wilful defaulters

List is for the period up to September 2016 Posted: Thu 12th of January, 2017

PSBs need equity worth about Rs 2 lakh crore by March 2019

REITs and InvITs are vehicles created to primarily invest in revenue-generating real estate assets Posted: Thu 12th of January, 2017

Over 4 mn bank accounts could be dormant, suspects I-T department

CBDT spotlight on banks, dormant accounts that got sudden outflow during demonitisation Posted: Thu 12th of January, 2017

In November, banks' exposure in all major industries shrank

The infrastructure sector saw a dip of 6.7% in the year to November 25 Posted: Wed 11th of January, 2017

Lending rates cut leads to balance transfers in home loan market: ICRA

SBI reduced the lending rates for home loans by 50 bps to 8.6% for floating rate loans Posted: Wed 11th of January, 2017

Markets

Today's Picks: 17 January, 2017

Nifty, Bank Nifty, HCL Tech, Tata Steel and BPCL Posted: Tue 17th of January, 2017

Dairies' margins under pressure on 20% hike in milk procurement cost

At the farm gate, cost has risen by at least a fifth this year Posted: Mon 16th of January, 2017

Security and Intelligence Services get Sebi nod for IPO

The public issue is expected to raise Rs 500 crore, according to sources Posted: Mon 16th of January, 2017

Oil prices slip on doubts over planned output cuts

Russia and other key exporters outside OPEC have said they will also cut output Posted: Mon 16th of January, 2017

Gold rebounds on global cues, local demands

Silver advanced by Rs 100 to Rs 41,300/kg on pick-up in demand from industrial units, coin makers Posted: Mon 16th of January, 2017

BSE sets its initial public offering at Rs 805-806 band

BSE's IPO of shares next week may raise as much as Rs 1,243 crore for its investors Posted: Mon 16th of January, 2017

Agri input companies on fertile ground

The sales of agri inputs have jumped by 10-15% this year on rising consumption from farmers Posted: Mon 16th of January, 2017

Nifty faces resistance at 8,450 points

The market is now looking at support in the 8,250-8,300 range and it is facing resistance at 8,450 Posted: Mon 16th of January, 2017

Your Money: Choose a wider time span for ELSS

When looking at fund returns, avoid looking at just the past 12 months' performance Posted: Mon 16th of January, 2017

CIL ups coking coal price amid low output

Rise of 141% in international prices helped Coal India raise the rates of coking coal Posted: Mon 16th of January, 2017

Street Food: Three Ravis of National Stock Exchange

The December exit of Chitra Ramkrishna seems to have hit the 'undo' button on this reshuffle Posted: Mon 16th of January, 2017

Slow start to BSE's global exchange

Trading in other derivative products in currency, commodities expected to begin soon Posted: Mon 16th of January, 2017

Market shows tepid recovery as banks lead

The 30-share Sensex ended at 27,288, up 50 points, or 0.18 per cent Posted: Mon 16th of January, 2017

We do not recommend seeking inexpensive value stocks now: Sanjay Mookim

Sanjay Mookim remains positive on India and expects Sensex earnings to grow by 12-14% in FY18-19 Posted: Mon 16th of January, 2017

More upside ahead for Bharat Electronics

Initiatives such as diversification into new businesses support the investment rationale Posted: Mon 16th of January, 2017

Rules spur P-note closure at UBS

Swiss brokerage UBS joins European banking peer HSBC in shutting down its offshore derivative business Posted: Mon 16th of January, 2017

LIC HF: Loans against property prop up show

However, margins may not sustain amid rising competition and stable bond yields Posted: Mon 16th of January, 2017

MF AUMs at all-time high in December: AMFI

And expect to cross Rs 20 lakh crore this year Posted: Mon 16th of January, 2017

India imports 2.7 mn tonnes wheat so far this fiscal

Last month, the government had brought down wheat import duty to zero from 10% to boost domestic availability Posted: Mon 16th of January, 2017

Markets end marginally higher as metal, realty and Tata stocks rise

S&P BSE Sensex settled the day at 27,288, up 50 points, while the broader Nifty50 was ruling at 8,413, up 12 points Posted: Mon 16th of January, 2017

Stocks

Rising regulations to keep a lid on liquor stocks

Sale ban on highways to have short-term impact; likely sin tax in GST and note ban key overhangs Posted: Thu 15th of December, 2016

Dabba trading in stocks and commodities seizes up

In a late night conference call involving Mumbai, Ahmedabad, Jaipur and Delhi based large dabba traders Posted: Wed 9th of November, 2016

S&P 500, Dow Jones ease back after hitting new highs

Investors took a breather after a three-day record-setting rally amid signs of a steadying global economy Posted: Wed 13th of July, 2016