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Tag: Finance

What will you do if I give you 1 crore or 10 million rupees?

What will you do if I give you 1 crore or 10 million rupees?

    Million dollar ideas, literally!   You really don’t need to have millions of rupees to actually start dreaming about what you would do if you had that much money. Afterall if you don’t even dream about it first how can you convert your […]

Integrity for Indians: Why keep working when no one is looking

Integrity for Indians: Why keep working when no one is looking

Sorry young Indians, we older Indians love to bully you When a country faces excessive restrictions on the civil liberties of its young population, it is nothing but bullying by older lawmakers. A sign of mistrust in the integrity of the young reflects bad on […]

17 financial jargons that will make you a stock expert

17 financial jargons that will make you a stock expert

Decisiveness and Patience to trump life!

Seeking to explain complicated financial hindsight in the most comprehensible way, here is a list of 17 questions to research before you invest your hard earned money in Equity. Stocks can give the best returns over a long term.

If you don’t need your capital for some other trusted business that can ensure you higher returns, then invest in stocks.

I definitely recommend everyone to park a little funds in the stock markets. You need to ensure your financial future by bringing in cash flows from different sources. Investing in Equity is in a way investing in the economy. Public companies also capitalize on their equity to increase borrowings and grow.

If you have cash lying around and don’t know anything better to do with it, then you should consider a well diversified index fund. Investing passively across a diversified ETF should definitely ensure steady returns over a long term.

However, such schemes do come with a cost. Hence if you have no intentions to research your stock picks, you may have to find the cheapest and most reliable index fund out there. Vanguard index funds are very popular as they have a very minimal costing structure. The passive fund requires no active managers and thus is much cheaper.

Remember to stay long in the equity markets.

But if you really want to have fun in the equity markets and would like to save that extra fee that you pay for an index fund, you can construct your own stock portfolio.

You need to purchase great companies with strong fundamentals at the right price. Based on my personal experience, simple financial knowledge can make you big money in the stock markets.

In spite of the recent March, 2017 gains in the Indian equity markets, I have chosen to remain long. Maybe, I should be booking my profits now, but I prefer to wait it out. I would have to pay loads of transaction fee and short term gains taxes. But I would like to stick around and collect dividends for the next 20 years or more.

My personal preference here is to stay long. I believe that it is impossible to predict the direction of prices in the short term. But the trend is always up in the long term, if nothing drastic affects the company with strong fundamentals.

Therefore, considering these 17 points before you go long should help you make a better decision.

17 things to consider before buying stocks


Investment Quote, MilanKaRaja.com
Investment Quote, MilanKaRaja.com
  1. Prepare to diversify your investments for long term growth:

    • Though the checklist may work for short term gains, it is aimed for the long term investor.
    • Is the Investment less than 5% of your total Investment portfolio? This is me diversifying against hate comments post Blog publish. Your money is very important also for me. The markets are too erratic for anyone to predict accurately. Hence, always diversify.
    • Most of my stocks have fallen after purchase. Eventually after a time period, most of them do rise.
  2. Basic Company research:

    • What product or service does the company provide?
    • How big do you think is the market? Is growth sustainable in the long term?
    • Great understanding of the company and its business is crucial before you decide to buy its shares.
    • What are its short term and long term missions?
  3. Industry information:

    • Market shares of competitors?
    • What are the Industry trends? How are the peer company stocks performing?
    • What are the Industry headwinds?
    • The key is to make sure that the stock chosen is the best among the peers. To make sure that whatever the reasons you were interested in it was not just Industry specific.
    • Hence it is important to analyze in detail all the peer companies too.
  4. Sales:

    • Does the company have a steady Sales growth? If not why?
  5. Profitability of the company (Historical):

    • Operating Profit Margins (OPM): This can be tricky to analyze in financial sectors like Banking. But nonetheless, higher the profit the company makes after paying for the cost of goods sold the better. Who wouldn’t invest in a product with high margins?
    • Net profit margin: The profits the company makes after paying out everything including the taxes. Pre Tax margins should also be looked.
    • Return on Equity: The net income a company makes over its shareholders investments. i.e. (Net Income/Shareholder’s equity)
    • Return on Assets: The net income a company makes over its total assets. i.e (Net Income/Total Assets)
  6. Earnings per Share (EPS):

    • Positive earnings per share followed by consistent growth is desirable.
  7. Market Capitalization:

    • If you are here for the long haul, you should diversify your portfolio across company size.
    • Market Capitalization = Number of outstanding shares X Price of each share
    • Important to check if your company is listed in any of the popular indexes. If you are invested in a company listed in popular ETFs then you are ensured of steady inflows.
  8. Valuation of the company:

    • Finding a good company is not the challenge. The real challenge is finding its shares available at a great price. The key is to buy great stocks at the cheapest price.
    • Price to Earnings: The ratio of the share price over its per share earning is a great valuation metric.
    • Higher P/E ratios could indicate a growth potential in a stock. Investors are hopeful that the earnings will rise so high that the P/E ratio will eventually decrease. Most great blue chip companies trade at significantly higher P/E ratios. Picking some of these at lows can be a great idea.
    • But on the other hand, companies with low P/E can be great investments for short term returns. Considering that markets always over react, a stock trading at low P/E for temporary reasons make great investments. An investment in an Indian oil stock has yielded over 150% in returns in less than a year. I found it to be trading at a historical low P/E  only due to Industry headwinds.
    • Look at historical P/E ratios to pick stocks at the right time.
  9. Dividends:

    • The key here is to find companies paying consistently increasing dividends over a long period.
    • Apart from the Dividend yields, you need to look at the Dividend payout ratio. It is the percentage of earning paid out in dividends, should ideally be around 20-30%. This would mean that the company still keeps 70-80% of the earnings to reinvest in itself. If the Industry has huge growth scopes, this would be justified. More saturated cash cow companies would tend to give out a higher payout ratio in the range of even 50-60%. But remember, this means that they have lesser money to reinvest in further business.
    • My suggestion is to get a mix of companies, but make sure that 90% of your portfolio has a long dividend history. Dividends make a big difference in the long run. A sign of a healthy business.

      Warren Buffet Quote, MilankaRaja.com
      Warren Buffet Quote, MilankaRaja.com
  10. Volumes:

    • Often ignored, but you can learn a lot from traded and deliverable volumes.
    • If the stock price is going up and you have a higher percentage of equity delivered in demat accounts after trade, then investors are bullish.
    • If the stock price is going down and you have a higher percentage of equity delivered in demat accounts after trade, then investors are bearish.
  11. Historical Volatility or Beta:

    • An indicator like the Beta of your stock indicates how volatile its price is in comparison to the market. The calculation of a beta is done by dividing the covariance of the stock and market returns by the variance of the market returns.
    • Beta values can be easily found on line for listed companies. Stocks with higher beta tend to give higher returns in a bullish environment while lower beta stocks are companies whose sales do not get much affected by market sentiment.
    • Pharmaceuticals and FMCG usually have a beta lesser than one as their sales tend to not be correlated with the overall market. Whereas Banking, Financials and Materials tend to have a beta higher than one.
  12. Historical excess returns or Alpha:

    • Like Beta, Alpha helps you to compare your stock returns with a benchmark. The Alpha is the excess returns over a benchmark index.
    • An indicator to measure investor performance, it is important to pick an appropriate benchmark index for your stock.
  13. Cash Flows:

    • While earnings can always be manipulated, the cash flows paint a more clear picture. Steady positive operating cash flows is a good sign.
    • Free Cash Flows i.e Operating cash Flows minus Capital Expenditure , is a good indicator as it shows the ability of the company to enhance shareholders value.
    • Discounted Cash Flow method of valuation of a company utilizes these Free Cash Flows.
  14. Promoters and Shareholding Pattern:

    • Who are the Promoters and what is the Shareholding pattern?
    • How is the Shareholding pattern changing over time?
  15. Current Ratio:

    • The ratio of current assets and current liabilities from the Balance Sheet is a popular indicator for liquidity of the company.
    • Comparing historical values of all the ratios is recommended.
  16. Debt to Equity Ratio:

    • Dividing the total company liabilities with the shareholder equity enables a better understanding of the financial leverage of the company.
    • It is important to understand how much Debt and Shareholder Equity goes to finance the assets of the company.
  17. Price to Book ratio:

    • Book value of a company is the shareholder’s equity (Assets-Liabilities) that excludes also the intangible assets.
    • Low Price to Book ratio makes a stock attractive as you get ownership of more tangible assets for a lesser price.

Analyzing your stock picks based on the above seventeen points should  make you a smarter investor. Additionally, it is useful to visit investor forums to further your company research.

Finally, correct decisions and long term patience is needed to make huge gains in the stock markets. Investing in equity is only a wealth generation tool and should not be looked upon as an alternative to make regular income. The short term volatility can cause massive losses if you are not careful.


Read more interesting stories by the “Road not Taken” at  milankaraja.com


Top Indian Multi bagger Stock Picks for 2016

Top Indian Multi bagger Stock Picks for 2016

How to find Multi bagger stocks? 2016 was a rough year for Indian equities, with Currency Demonetization, Fed rate hike, Trump presidency, Brexit, year end stabilization of crude oil prices happening all at once, causing massive FII outflows from the Indian stock market. Fortunately 2017 […]

How to win in Indian stock markets post Demonetization

How to win in Indian stock markets post Demonetization

Stock Markets post Indian Demonetization The recent March, 2017 Indian elections has had a favorable effect on the Indian stock markets. The rising markets and my own rising portfolio gains made me curious to explore more. Firstly, what is the trend post Demonetization?     […]

Indian’s opinion on Italian Banking Crisis: Simple Observation

Indian’s opinion on Italian Banking Crisis: Simple Observation

Italian Banking Crisis: how to improve?

Looking at the Italian banking crisis with some seriousness I made certain observations. I hope to take advantage of living in Italy for 6 years graduating with a Masters in Finance. Comparing Banking in Italy with Banking in India I can make some constructive blog talk.

My basic experience with having a bank account in Italy is understanding how complicated it can become to get a bank account as a foreigner in possession of limited documents. In the present example, I was just accompanying an Italian citizen in the Christmas week.

As a student, you may get help from you university to get an account. While you work, you may be asked to get certain documents like the Italian Identity Card with an address proof. “Know Your Customer” or KYC is important but there seems to be a lot more other reasons keeping depositor’s money away from the banks.

Banking in Italy during the Holiday season: Error!

Two days before Christmas, I walked in to the nearby Unicredit and Intesa Sanpaolo, with a freind hoping to create a bank account quickly. Unfortunately, the staff at both these places acted so overwhelmed with work. Not only didnt they decline helping us that day without an appointment, but they really didn’t seem that keen to invite us an other day.

The only thing they seemed to care was to get us away for an other day, with the Unicredit manager inviting us after a week. The Junior staff in charge of secretarial work seemed more friendly, while the senior officials in charge of opening bank accounts seemed to always want their sweet time in creating a silly bank account. To think that no bank accounts would be opened for more than a week is quite shocking.

With the banking crisis, this is the last thing I would expect to see. On one hand Indian PM Modi makes citizens eat dirt when everything seemed to be ok, while on the other hand we see Italian Banking on a holiday during the festive season in spite of a looming banking crisis.

Not asking employees to be denied vacation time, but I am sure that an activity like opening accounts can be facilitated in such a manner in order to compete with the Italian Postal Service, who give out prepaid cards in a jiffy even 2 days before Christmas.

Simple observations on Italian banking by an Indian

Instead of aiming to serve low income individuals who may nonetheless maintain some account limits, Italian banks seem to hold the door wide open for their competition, the Italian post. Have not been a big fan of the Italian post earlier, but I do get the feeling that it is improving in the right direction. They have adopted mobile payments.

Supposedly, you now have free wifi in a lot of Italian post offices too. Was also interviewed by a marketer who seemed really interested in my opinions on some of the postal services. You just get a good vibe that they are doing something right.

Intesa San Paolo evidently seems to have made big major changes to their website and offices. Appreciating the great makeover, my bank account with Intesa Sanpaolo is of the Superflash category and it continues to serve me well with very limited charges for use in Italy. The normal bank accounts in Italy always seem to come with large costs.

Unlike in India, where I would be paid a savings interest, In Italy I was expected to pay a big amount as fee for most normal saving accounts. Obviously, keeping my money in a Bank Account is only a way for me to keep it secure. I don’t get anything else in return for my parked money.

Future of Banking: Fintech and Robo Advisors

But, I never had considered the other alternative of loosing my deposits in case of bankruptcy of my retail bank. As a depositor, a certain amount of money is insured. But a higher amount can be under considerable risk. As depositors are looked upon as share holders instead of bond holders.

Saving money in banks in Italy some how doesn’t seem like a favorable option. Rather unfair, in days of Fin tech and peer to peer lending. You can make more returns from alternate investments these days. They would see a further rise when banks cant make bigger returns from the deposits.

As we peer lend to who we trust, Banks may just serve us in providing advice and we the people would finally get to decide where our savings would go. The rise of Robo Advisors will make banking more lean as an organization. Banking employees will have to contribute in some other way.

Suggestion to increase deposits and investments

Italian banking needs to expand depositor base, every euro counts and needs to be rewarded with a better savings rate.  Time for the legislation to reward small savers. Need to get competitive with peer to peer lending, gambling etc. Need to encourage a savings culture among the young.

Immigrants hold considerable amount of liquidity that lies unaccounted. Utilized away from the system not returning gains as investments. Banks need to provide opportunities to allow small amounts of cash to enter the system.

Money entering in terms of deposits by providing a small savings interest rate would nonetheless be a great deal.  Much better than the other financing available from foreign banks.

Time for Digital Italy

Reforming the banks to make an account opening and deposit process as efficient as possible will go a long way. Encouraging digital payments will allow banks to leverage on easy deposits and credits.

Unfortunately, mobile payments is still a recent trend that is yet to catch up in Milan. On the other hand, many Indians cant ignore mobile payments now, doesn’t matter if they have a mobile or not.


“Bears at the Libon Zoo”, Dont ask me why I put this picture up here

Download my CV here to learn more about Vineeth Hari Naik and his other interesting work experiences across the world

Read more interesting stories at milankaraja.com

Milankaraja knows the best. Look no more. Bushlark could be the ultimate travel app.

Should governments be investing in big statues?

Should governments be investing in big statues?

Do we need massive structures serving minimal purpose?   Everyone loves magnificent buildings like the Bosco Verticale in Milan. Especially since it also serves also as a structure that hosts a number of trees placed vertically. I loved the building so much that I even wished […]

What is FinTech and Digital Currency? Should I buy Bitcoins?

What is FinTech and Digital Currency? Should I buy Bitcoins?

How can FinTech help you make money? FinTech refers to an industry composed of companies using innovation and technology to compete with traditional financial institutions in the delivery of financial services. They are easing payment processes, eliminating fraud, saving costs, increasing financial planning, thus benefiting the Financial […]

Want to retire early? Build your Financial Fortress today!

Want to retire early? Build your Financial Fortress today!

How to plan your financial future?


This Blog is going to discuss conventional retirement planning with a millennial friendly accelerated retirement plan, so as to feel richer and secure earlier in life. To think about it, if your are in your late 20s and early 30s then you have gained a great understanding of the world from different perspectives to have enjoyed as well as disliked it.

Now could be a great time to finally start making some money. You may have walked the line from Left to Right, understanding better how the whole world functions, begun to appreciate capitalism as you build your little investment pot in assets, to have traveled enough, to start Blogging every trip to monetize it, making small savings as they will be of use on a later date.

Now is the time to love economic prosperity and spending of others as you will be now invested in the direction of economic prosperity for all.

Approach to life: For a prosperous future

Your future could depend on the ability of the youth to continue to contribute for your pensions. A better world of informed people, doing great financially is mutually beneficial for those already invested.

With time, investment in equity tends to rise multi folds, thus protecting your hard earned money from inflation, putting it to productive use. So you basically need assets that generate income streams. Use the income to buy more assets, so as to finally end up having enough income to be able to reinvest and spend it conveniently.

Older citizens invested in the youth need to make sure that the youth are able to be more productive than the earlier generation. Productivity, health and education go together.

What is Conventional Retirement Planning?

The things most people do. Live frugal, save and invest in equities, real estate, gold etc. My strategy has been the same as I was never too keen of trading my equities too often in short term at least.

Or going big in some successful side business activity. My approach to equities was to remain broadly invested long passively, hoping to be rich in 20-30 years. Of course, I too had planned to accelerate the process by making more income and staying decently frugal.

Making a Blog and use it to market other services like Web Development and Equity Research reports as an additional source of income was thought of to be one way to go about things. But my approach is still too conventional and novice. Need to up the game.

Need to get in limitless mode to accomplish your retirement plan if you want to get really rich earlier. Your investments will compound with time, but that is exactly the problem, it will take time.  To save time, you need to start making big and continue to save & invest big.

What is MilanKaRaja Retirement Planning? 🙂

You may also go ahead in doing a business where you directly manage bigger risks. Trade on equities by Active Investing along with passive investing to give them a boost in returns might help. Dividend reinvesting is conventional wisdom, but needs to be highlighted again.

So in all say you have your Paper assets, Real Estate and your Business, the later two will help you retire early. Paper assets will need more time to compound unless you have been really good in picking some really great stocks in big amounts.

Apart from equities, my approach to retirement planning is to build up systems. Do you travel a lot, are you able to monetize your travel experience?

What about a cool job? Do you teach what you learn?

Starting a self business has never been easier. You can accept digital payments easily with your own website.

I am just an amateur. Maybe even inspired from kids younger than me. But I am confident of my Blogging expedition. I would totally recommend everyone else to do it too. Make better use of weekends and set your Blog up.

Creating digital assets is the key focus of my retirement planning. You need to boost your incomes and sometimes little effort on a website can give you immense returns.

My stock portfolio is very much diversified. Invested mainly in dividend paying companies. Spread across the spectrum. Have a great mix of large, Mid and Small Cap. A few risky bets that hopefully might make me richer. But I dont bother about that much. My stocks are for the long term. All the way to retirement. The aim is to build my stock portfolio.

As those consistent dividends are best left passive.

What is a good retirement game plan?

Go frugal now. Save and invest properly to build enough assets to earn enough residual income that exceeds your personal expense. If you have reached this stage then you have successfully built a loop that will only keep increasing considering that you don’t incur any unexpected big expense in the short term.

Make sure to have assets whose returns consider the effects of inflation as well. Owning equity allows you to hedge yourself from inflation, while fixed income bonds would not do good as inflation eats up your fixed returns with time. If you are young and have time, go for good equity of fundamentally strong companies with a few well thought high risk picks.

Make sure to have diversified uncorrelated assets as well. Have equity, money in bank, some fixed assets, some gold, some real estate, some Blogs, some other crazy new business ideas, some free lancing, some consulting services. Its all money making so the experience in each should all be related and useful right? The Indian Demonetization of currency has reduced capital gains to equity holders, making money in bank a safer option across the country.

The important thing to take away is my realization of accomplishing a goal to have enough passive income to meet my expenses comfortably. Breaking this down to further little goals quickly will help you reach there faster.

Once you reach this stage, you should be knowing well how to make income in a way that you truly enjoy. Keep the loop going and growing to reap bigger returns.

Read this interesting blog to learn more (Click here). Though dont trust everything you read online, think well about it.

Read more interesting stories at milankaraja.com


Indian currency demonetization: How it could have been done better?

Indian currency demonetization: How it could have been done better?

Indian currency demonetization: How it could have been done better? Should have been done in phases, first the 1000 could be banned and an effective new 2000 can be introduced in limited amounts so as to ensure an effective shift in to digital, curbing big […]

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