Macro-Economic Variables

Macroeconomic variables or MVs, are indicators of the overall state of a country's economy. Four Major macroeconomic variables are particularly important: Gross Domestic Product (GDP), Inflation rate, Fiscal Deficit and Current Account Deficit (CAD).
The government studies MVs and attempts to keep them at certain levels in order for the economy to function.

Gross Domestic Product (GDP):
The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis (Year On Year-YOY), it can be calculated on a quarterly basis as well.

Inflation:
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

Fiscal Deficit:
A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits.

Current Account Deficit (CAD):
Current account deficit is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports.
A current account deficit means the value of imports of goods / services / investment incomes is greater than the value of exports. It is sometimes referred to as a trade deficit. Though a trade deficit (goods) is only part of the current account.

13 steps to become a successful investor

Investing in the stock market is a way to make more than just a little extra cash. In fact, with the right approach and the right skills can earn you decently. If you want to become a stock market millionaire then here are 13 of the most proven tips to reaching your goals, and the earnings you have always wanted.

1. Focus on Hot Stocks Hitting New Highs

As you get started with your stock market dreams, make sure to focus on hot stocks. Do your research, look into their patterns and place your focus on stocks that are already growing as you plan to stick with them until they reach new heights.

2. Focus on Large Cap Stocks Hitting New Highs

Do look to stocks hitting new lows if they are preferably large caps, that is companies with strong fundamentals & capability to return with a bang. These stocks hits low because of macro-economic variables & because of issues with company fundamentals (micro economics).

3. You Can Buy and Short Sell

There are some people who think they need a bull market to get rich. This isn't the case. Don't ignore short selling. You don't have to hold on to a stock for a long time to earn a profit. Just look at the success some day traders have; they are the epitome of earning off of short selling.

4. Go long on shares with good fundamentals

You can hold on to strong fundamental stocks which can fetch you returns in short term too, but can provide you bigger returns if you go long on, say 2-3 years. But as mentioned above don’t stick to large caps alone as our strategy should be continuous returns which is hard with long term holdings where in short selling will assist you fetch returns.

5. Cut Your Losses Quickly

If you want to be successful in the market, take your ego completely out of the situation. If you face a setback, cut your losses and move on fast (sell the particular stock & don’t sit on losses). Do not dwell on your failure, but instead look to the future, where in the same money can be utilized in other performing stocks to fetch u decent returns. You are going to fail, so be prepared and just be ready to move on.

6. Don't Be Afraid/ Hesitant to Take Partial or All Profits

The thing about your earnings is that they aren't really profits until you take them. Don't be afraid to take partial profits or take profits too quickly. The market changes fast; it is OK to get out when you feel it is right and take the profits that you can.

7. Embrace New Technologies

The world is changing and it is changing fast, so you need to be changing with it if you want to be successful in the stock market. Now is not a time to be afraid of technology companies. There are the companies of the future. Embrace new technologies and business models and be willing to stay ahead of the time as you look to your investments.

8. Stick With Liquid Stocks

If you want to earn some serious income, then it is best to stick to liquid, highly traded stocks. Try to stay away from non liquid stocks at all costs. These are stocks that make big promises but tend not to uptrend. But yes if some stocks are on its path from becoming a mid cap or large cap from the small cap, based on your detailed research on the particular stock then do go for that calculated risk, but do stick to the above rules.

9. Don't Believe Anything the Stock Says

In the trading world, talk is cheap. Don't listen to promises or hype, look only on the action of the stock. Do your research look into how that stock is performing and what action it is really taking. This is how you will know what to expect from the stock in the future.

10. Don't Diversify and Don't Use Leverage

Many people/ brokerages talk about diversifying and using leverage. This is not the way to earn millions. I typically keep 7 to 10 stocks at a time and don't use more than 30% of my assets in my investments. Once you book profits in your stocks replace them with new ones from the money you get out of selling the other stock including its profit helping you put more of money into stocks thus helping you grow more.

11. You Don't Need to Buy Bottom, Sell Top

So many new traders are focused on the old adage that you need to buy right at the bottom and sell right at the top. Yes it would be nice if you could as that would mean the most profits possible, but you just need to focus on the meet of the move, not necessarily the top and bottom. You can get in during the middle and still make some major profits.

12. Never borrow or invest in stocks cut shorting your daily financial needs

While investing in stocks do remember not to forget you are a social being & need to fulfill your family financial needs on daily basis & not to put everything you have in stock market. Also should control your emotions, excitement, greed & fear while trading. Also only invest the money you will be able to allocate in stocks & never borrow. There is always a second chance to buy the stock on a later date, so don’t be in a rush ruining your financial balance.

13. Always Make a Plan

If you want to truly find long-term success in the stock market, the best thing you can do is to go into every trade with a very specific plan. Before you get started create a specific risk/reward profile for what you demand of your investments and stick with it no matter what. Never stray from the plan.

Earning millions in the stock market can seem like a daunting task, but it is one that you can achieve, if you follow these steps and keep this dedicated approach in mind. If you prepare yourself for setbacks and understand the challenges that can come with this investing strategy, then you may just find yourself coming closer and closer to reaching your investing goals.

About Me

Hi,

I am a Mechanical Engineer by profession located in Pune, Maharashtra, born & brought up in KKerala. You may wonder how I relate with “Finance & Economics”! Well as my profession is related to mechanical engineering industry & performance of the same is linked to the market economics, out of personal interest I cultivated the habit of knowing about the market from newspapers, magazines, lots of books, online blogs, videos and TV shows. After which I developed this unique passion for investing. Use to spend my spare times trying to explore & understand the basics of Economics,Finance & Investing, still I am a humble student in it. Trust me guys I dedicate whole of my office working hours to my main job, but I do manage to handle my personal finance including Mutual funds and Stocks allocating some extra time after my office hours & leisure time.

"Accounting is the language of business & financial statements tell a story. When the words of management & your qualitative analysis match the story coming from the numbers, get ready for action!!".

Happy Investing!

Where to start?

Once you enter your first Job you will be allocated a salary account. Immediately go for a recurring deposit like i-wish (offered by ICICI Bank) say for 3 years wherein you can go for a fixed monthly deposit of 1000rs & you can top up any required amount whenever you have t with you within the tenure of your i-wish. As explained in my previous posts go for a SIP of 3000-4000rs on monthly basis. Yearly (preferably after first 1.5 to 2 years where you can visibly see decent returns) redeem some units from your Mutual fund (SIP) deposit & transfer it to the recurring deposit. Save some cash from your monthly salary (based on excess monthly amount, yearly salary hikes or bonuses) & top it up in the recurring deposit. At the end of 3^rd year you have 5 lakhs with you to buy your dream car. If you had started deposit with a goal at the end of 3 years as 3lakhs, then go buy your dream car with this 3 lakhs & rest 2-3 lakhs go for a car loan (@interest 9.5-9.8%). In parallel slightly increase your monthly SIP contribution & whatever you loose as interest over your car loan can be countered using the interest you gained out of your carefully chosen SIP (10-15% minimum returns). So is car buying a big deal? You know it now! Similar fashion go for good SIPs where in you can buy a i-Phone at the end of say two years. As you graduate & mature in the mutual fund investing I would recommend you to enter Stock market trading which is decoded & explained in my next post.

The Beginning..

I don’t intend to use heavy indigestible economical/ financial terms while decoding the investment strategies to you, as this is for those who are more concerned are interested more in earning decently rather than getting stuck in the complexities of investing. Decoding the myth of successful investing, & as a first rule of it, I would strongly recommend you to start your investment from the day you start getting your first salary how low it may be. As a beginner the best way would be to start with a simple Systematic Investment plan (SIP) for capital as low as 500rs! Now you must be thinking what is this SIP, how mere 500rs could make you rich etc. Well trust me, this really works! Well I will brief you in short in this post how it works though we will look deeper into it in the upcoming posts. Say you just entered your job as a fresher after your degree/graduation with a salary of say just 15000rs. Assuming that you are single & got no other financial burdens, you can invest 25-30% (Rs 4500) of your income into your investments. Now to start with an SIP, you can apply online for a KYC which is really simple & then go for an SIP. Also you being a beginner, I would recommend you to go for Mutual funds (MF) through SIP & not directly into equity (stock trading/ share market) investing. Once you are comfortable/ convinced with the returns you get out of the MFs then you can go for direct stock market trading after you get a demat account. Do note that, once you get into share trading, never stop your SIPs, because we are working professionals & it’s not certain that you get enough time to monitor stocks you hold in your portfolio, hence these SIPs will ensure your hard earned money works hard by itself & grows along with you, though I will guide you how to manage your portfolio effectively within your time constraint with both SIPs, Stocks & other investment tools. But reminding you, make it mandatory to start investing from day 1 since the beauty of compounding (money multiplication) is most effective of you give it longer time periods!