Investment happens when you save from your earnings and invest in a financial instrument to make it grow in the future. Speculation occurs from investing in a high-risk instrument with the intention of making a quick profit. Investment is about method, planning, adequate time horizon and fundamentals, While speculation is like a whack off the last ball in a T20 cricket match, which could easily get caught.
Equity Derivatives
Speculators also serve the market: they impart liquidity by taking trading positions and risks. However, it is important to note that professional traders, such as broking entities and foreign portfolio investors (FPIs) have the bandwidth to understand the risk, deep pockets, and expertise to take equity derivative positions. But as an individual, you would not have the same bandwidth or funds or expertise to trade in derivatives. Unless you are full-time into trading and have an experience of many years, there is no comparison between a professional broker-trader or financial institution and you as an ordinary investor.
Equity F&O You should invest in equity either directly if you have the bandwidth, or through a mutual fund.
Recent data by the Securities and Exchange Board of India (Sebi) shows that 91.1 per cent of individual traders (about 7.3 million traders) lost money in the equity futures and options (F&0) segment in 2023-24 (FY24).
On an average, they saw net losses of ₹1.20 lakh per person in FY24. During FY22-FY24, 1 1.30 million individual traders incurred a combined net loss of ₹1.81 lakh crore in F&0. Only 1 per cent managed to earn profits exceeding ₹1 lakh, after adjusting for transaction costs.
The 'smart boys: the proprietary traders and FPIs, do it through computer algorithms, known as algo trades, and 97 per cent profits of FPIs and 96 percent profits of proprietary traders came from algo in FY24.
Bu hikaye Outlook Money dergisinin November 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Outlook Money dergisinin November 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
Gold ETFs And FoFs
While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.
PLANNING TO BUY CHILD INSURANCE? THINK TWICE
Child insurance plans combine insurance and investment but often offer low returns due to high costs, making a combination of a term insurance cover and mutual fund a better option for securing your child’s higher education needs
How Do You Define Happiness?
Money does buy happiness, but after a while, the appeal fades. We talk about our relationship with money, but, maybe, it’s time to revisit our relationship with happiness
Avoid Crypto As It Is Highly Volatile
I am 22 years old and have recently started working. I want to invest a small portion of money in cryptocurrency. How should I go about it? Does it require a huge capital investment?
Invest Right, Don't Speculate
The lure of high returns and quick gains from equity tips, cryptocurencies, and equity F&O can be enticing. But remember, return of capital is more important than return on capital
The Wedding & Budget: Is Minimalist Trend The Right Knot For You?
Indian weddings are known for their pomp and grandeur, but minimalist weddings are also in vogue now. Dia Mirza was one such celebrity who went for a minimalist wedding. If you also want to keep things minimal on your big day, here’s how to do it
Here's How To Buy An ETF?
Mutual funds are the preferred choice for retail investors. However, they come at a cost and fund management risk, apart from other risks. A smarter alternative is to invest through ETFs.
How Passive Funds Help Diversify
Passive funds provide a simple way to invest in broad markets as well as in specific themes and sectors, making them ideal for an investor's satellite portfolio
The Rise Of Passive Funds
The popularity of passive funds among retail investors has risen post Covid, and fund houses are out with many variations of ETFs and index funds. Does this category present a new opportunity for investors?
Tax Reforms: What's In Store?
The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms
