[batish]

Cross posting from another thread:

Originally Posted by batish

I need help in understanding if ETFs are better or Equity Mutual Funds?

For instance in MFs, I SIP 15k monthly for 15 years with ROR 15%. Now this invested amount totals to 27L, plus estimated returns around 74.5L. Total comes around 1.015Cr. With the current taxation, I pay 10% LTCG? It'll be around 10.15L.

In case of ETFs, everything remains the same, but my invested amount with indexation totals to 66.34L and capital gain is 35.18L. So I pay 10% on LTCG which comes to be around 3.51L.

Am I doing the maths right or am I missing something? If I am doing everything correct and this is how it works then why would anybody go for Equity MFs?

[whitewing]

Originally Posted by batish

Cross posting from another thread:

Assuming the SIP starts from now, my understanding is that all Equity MF and Equity ETF have the same taxation on capital gains i.e LTCG at 10.4%.
The first 1L of the capital gain would be is tax free.
AFIK, indexation benefits is not applicable for equity MFs.

Indexation is applicable to debt/international MFs and ETFs but the tax rate is 20%.

[revv_maniac]

Hi,
Could someone point me in a direction to start off ? New but do not know from where to start , the basics, which trading platform to start with , recommended portals to browse through daily. Sorry, if this has been addressed already in these 329 pages ! Couldn't find them.

TIA

[dailydriver]

Originally Posted by revv_maniac

Could someone point me in a direction to start off ? New but do not know from where to start , the basics, which trading platform to start with , recommended portals to browse through daily. Sorry, if this has been addressed already in these 329 pages ! Couldn't find them.

There are multiple sources, from books to articles to video tutorials.

For a serious beginner though, Zerodha Varsity is a good starting point.

Please understand the concepts clearly before investing even a single rupee of your hard earned money.

Disclaimer: I am a Zerodha client.

[thirugata]

Originally Posted by revv_maniac

Hi,
Could someone point me in a direction to start off ? New but do not know from where to start , the basics, which trading platform to start with , recommended portals to browse through daily. Sorry, if this has been addressed already in these 329 pages ! Couldn't find them.

TIA

There are multiple ways to make money in stock market.
Mainly 2 methods: Fundamental analysis, Technical analysis.
Read about both and see what style appeals to you.
Then comes the question of what kind of time frame suits you.
I mean a day trader, swing trader, short term investor or long term investor. Basically you have to discover what suits your risk apatite and temperament and go with it. It wont be a short journey, so start small. Good luck.

[arin_12]

Originally Posted by Gansan

Did anyone here invest in L&T Infrastructure bonds 2011B series? I have 20 bonds in my Dmat account which matured on 10th Jan. I received a mail from the company during December that the proceeds will automatically be credited to my account on the said date, but no such credit is received. The bonds are still visible in my Dmat account.

I sent an email to the company, for which I have received an acknowledgement number which runs into thousands, and seems I have to wait some time for their reply.

Today while surfing my 26AS I found this transaction. Money has been credited to the specific account. However this Investment was without Demat account.

[fordday]

GAIL.

Last month they went for buyback of shares. Post which the price crashed instead of going up. Today they have announced bonus issue of 1 share for every 2 share held.

Are these events beneficial to the minority shareholders?

[whitewing]

Originally Posted by fordday

GAIL.

Last month they went for buyback of shares. Post which the price crashed instead of going up. Today they have announced bonus issue of 1 share for every 2 share held.

Are these events beneficial to the minority shareholders?

Not invested in this stock, no view on the price movements.
Logically, the price should have increased, proportional to the reduction in the equity.

If seen as an alternate to dividend, which is taxed at the hand of the shareholder, with buy back even retail investors get a fair chance to make some money.

[SmartCat]

Originally Posted by fordday

Last month they went for buyback of shares. Post which the price crashed instead of going up. Today they have announced bonus issue of 1 share for every 2 share held. Are these events beneficial to the minority shareholders?

Buyback is a waste of money. It increases EPS and hence reduces PE ratio, but nobody invests based on PE ratio anyway. So what a share buyback does is reduce company's cash pile with no tangible benefits for existing long term shareholders.

Bonus shares/split shares is just cutting one big pizza slice into 2 smaller slices.

[carboy]

Originally Posted by SmartCat

Buyback is a waste of money. So what a share buyback does is reduce company's cash pile with no tangible benefits for existing long term shareholders.

Huh? It's a way to share profits with the investors. Just like a dividend.

[SmartCat]

Originally Posted by carboy

Huh? It's a way to share profits with the investors. Just like a dividend.

Please do explain.

When a company pays out Rs. 1,000 cr as dividend, all shareholders get money into their account, based on the number of shares they own. They keyword here is 'all shareholders'.

Now what happens when a company does a buyback of Rs. 1,000 cr? What about shareholders who do not tender their shares in the buyback? What exactly are they getting?

[thirugata]

Originally Posted by carboy

Huh? It's a way to share profits with the investors. Just like a dividend.

In my opinion, dividend paid by a company is profit sharing is the biggest marketing gimmick used by advisors to make you buy these shares. Because what you get paid as dividend get deducted from the share value you are holding. It may be good a good thing for the company to do so, but not for the share holders. If I use the same analogy of pizza, its like taking a bite of the pizza, you get nothing extra.
In simple terms : Post dividend value of share = Pre dividend value of share - dividend received.

[SmartCat]

Originally Posted by thirugata

In my opinion, dividend paid by a company is profit sharing is the biggest marketing gimmick used by advisors to make you buy these shares.

Dividend is a sign of good health of a company.

1) Unless you are an expert on forensic accounting who can read the Annual Report and Balance Sheet line by line, there is no simple way to figure out if a company's profits are real or imaginary. But dividends can never be faked. It is real money put into the hands of shareholders. So when you buy a stock that pays out significant percentage (minimum 15%, desirable 20% plus) of profits as dividends, you can be sure that profits are real.

2) 100% of companies that have been proven to be fraudulent or have gone bankrupt or those that are currently in ICU never paid significant dividends. So when you buy companies that pay large dividends, you automatically have a portfolio of high quality stocks.

3) Keeping an eye on dividends helps you get out of an investment if things are NOT going well for a company. Dividends is the first thing a company reduces or eliminates if they are in trouble.

[joslicx]

Originally Posted by thirugata

In my opinion, dividend paid by a company is profit sharing is the biggest marketing gimmick used by advisors to make you buy these shares. Because what you get paid as dividend get deducted from the share value you are holding. It may be good a good thing for the company to do so, but not for the share holders. If I use the same analogy of pizza, its like taking a bite of the pizza, you get nothing extra.
In simple terms : Post dividend value of share = Pre dividend value of share - dividend received.

Vedanta made an open offer to its shareholders for delisting (at around 90 rupees I think) couple of years back.
That failed and it didn't get delisted. Since then, in the last two years, it has paid more than 100 rupees as dividend and is still available at Rs 254!

I like companies that give dividend. As smartcat said, it is a decent barometer of their financial health for most of us (unless one can really do forensic analysis of balance sheets). A debt free company with good cash flows and that pays good dividends is a good investment for me. Such companies will provide you decent guarantee of not losing everything.

[thirugata]

Originally Posted by SmartCat

Dividend is a sign of good health of a company.

My point was not about doubting the quality of the company. Dividend is not something extra you get from companies as it is widely portrayed. Most people who recommend stocks ask you to buy dividend yielding stocks as they give you "additional income" periodically, which is not true.

Originally Posted by joslicx

Since then, in the last two years, it has paid more than 100 rupees as dividend

All that 100 Rs you got was deducted from the share value, else it would have been 350 instead of 250 now ( roughly to make the calculation simple), thats the point.
BTW, there are enough companies with substantial debt give dividend. You can check the tata steel and tata motor for example. ( Using these names just for exaple they were in top of my mind, not indicating these companies are bad)