Basics of Finance/ Stock Market

  Inflation Inflation It is the most important financial term in our lives. It is referred to as a rise in the prices of goods and services of daily use (other than these, our life cannot go smoothly). It is measured in percentage change in avg. price of these everyday use commodities. In simple words, if suppose inflation rate is 7p.a. and your monthly expense is around 10000, then after one year, it will be around 10700. This number seems to look so small in the short run, but in the long run, it is very much as it is getting compounding every year. If you don’t invest your money and let it be dormant in a savings account with a 2% interest rate, you are losing around 5% every year. And in F.Ds with 5.5% interest rates, you are losing approximately 1.5% every year. And the Inflation rate I have taken is avg. inflation rate, while during hyperinflation, these rates go as high as 10-15% , so now you can calculate how much money you are losing every year.  In India, the Ministry of Sta

  Rich Dad Poor Dad- Summary Rich Dad Poor Dad- Summary It is one of the greatest books that everybody should read as it focusses on basic finances that normal people forget or don’t pay attention to and especially if you are a teenager than this book is a must. It is one of the best-selling books of all time. This book is written by the famous author Robert Kiyosaki, who now a days also teaching about basic finances which everybody should know, through his YouTube channel . Robert Kiyosaki The main points that this book focuses on are: Fear and Desire: The author says that due to these 2 emotions, people tend to work throughout their lives and never get time to enjoy. He calls this a Rat Race. He says no matter how much your salary increases, you cannot be rich as salary increases, taxes increase, and monthly expenses also increase; if you want to be rich, you need to invest your money. Assets and Liabilities: Know the difference b/w assets and liabilities- Rich Dad. He says assets

  The intelligent investor- Summary Intelligent Investor- Summary This book is known as investing bible. It was written by the mentor of Warren Buffett (the greatest investor of all time), Benjamin Graham . Benjamin Graham- Intelligent Investor   Warren Buffet- Intelligent Investor The main points that Graham focusses are: ·        Be a defensive investor: Don’t go too aggressively in the market i.e. don’t invest in the market for great returns in a small period of time rather go for consistent returns. And only try to put that much money in the market that you would not need in near future(exceptions are always there). ·        The concept of Mr. Market: He says that stock market is very irrational/emotional sometimes and some stocks trade at way low or way high prices than the actual value of the stock. So try to get stocks that are near/below its actual price. This concept is also known as Value Investing. ·        Diversification of Portfolio: He says maintain 50-50 ratio between