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Finance

What is swing trading? How is swing trading used in the stock market?

Do you actively trade in the stock market? If yes, then you are reading the right article since this will help you to understand the concept of swing trading and how that works for retail investors. So, first, let us try and understand this strategy and compare it with the others in the market.

What is swing trading?

In a nutshell, swing trading strategies refer to a combination of day trading and trend trading strategies. It is the best of both these strategies and is used for multiple small short-term gains, making the profit sizable. Swing trading is more about weekly gains in the margin of 5%, and these short-term gains usually come in handy against long-term gains of above 25% over a few months.

Swing trading vs day trading

This is a widely debated topic in investing, and swing trading vs day trading have different kinds of returns. However, these two may seem similar to a layman who reads the theory and keeps it there. But, to an investor, there is an ideological difference in both strategies, which is the time involved in holding a position.

When it comes to day trading, you should not hold a stock for more than one day. However, when it comes to swing trading, you will need to hold the position for two days, at least. This entirely revolves around the demand and supply of any security in the stock market today.

Swing trading strategies

Many seasoned investors prefer to use different theories of swing trading, like the Fibonacci retracement, where they understand the resistance levels, or the T-line trading method, where the traders create a T-line to understand when to buy or sell their securities in the market.

Advantages of swing trading

  • Swing trading returns are usually fewer but more substantial than day trading, and this is one of the major reasons many new traders prefer to use this strategy to hold their positions.
  • You can recover your losses quickly with this technique and create enough cash flow every week. This helps to set up and acquire other investments for your portfolio.
  • You can also reduce speculations regarding trading since swing trading involves technical analysis and a study of the markets.

Disadvantages of swing trading

While there are no direct disadvantages of swing trading, still, since it is related to the markets, there are always chances that you can lose your money. This is because the markets respond to demand and supply and other forces that can reduce the prices of the stocks.

The bottom line

If you can afford to hold your position for more than a few days and work around the trends, you should consider trying swing trading. Remember to set your profit targets and use stop-loss orders to maximise profits and minimise losses in the market.

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Finance

Wealth Management: A Holistic Approach to One’s Financial Life

Wealth management is an investment advisory policy that includes several services for families and individuals to protect wealth better, its growth, and a healthy work-optional lifestyle. Wealth managers guide individuals and help them undertake wealth management policies to lead a better life. In a way, it can be said that wealth management is a more comprehensive approach where wealth managers assist people regarding their retirement plans and build an investment profile according to one’s lifestyle and standard.

So, it is essential to form a good relationship with the wealth manager for better wealth management. Choose a wealth manager or a wealth management company that can be relied upon entirely.

Why choose wealth management?

Here are the reasons as to why one should opt for wealth management from beforehand:

  1. Makes one prepared for any crisis

Unpredicted events may occur anytime. One has to be prepared for untoward happenings. It is expected that one will be prepared for such situations with the necessary wealth management policies. Only having a wealth management policy is not enough. One has to be ready for untoward happenings. It has to be strategized well so that it can soften the impact of sudden disruptions. Instead of reaching out to a financial manager after a mishap has occurred, take a precautionary approach.

  1. Provides a broader view of opportunities

When one has the assistance of a wealth manager or a reliable wealth management company, one can get a value proposition beyond the traditional financial market. With the emergence and inclusion of various technologies in the financial sector, a non-specialist can’t find the best investment policy for him, especially after retirement. Hiring wealth management services from beforehand will allow people to get the desired financial security after retirement.

  1. Reduced taxes

It is known to all that with great money comes excellent taxes. None can escape from the tax bills. The purpose of an effective wealth management company is to house the investments in the correct order and inculcate proper tax planning to keep the expenditures low. Hiring an experienced wealth manager can help people navigate all tax-related matters.

  1. Optimal use of time

All people plan to maximize their earnings. But doing it without professional help is going to take a lot of time. It is because one has to research the market, study financial reports, analyze economic data and then take the necessary financial decisions. All these responsibilities can be bestowed on a reliable wealth management team.

  1. Gather better financial knowledge

When one comes under a professional wealth manager or a wealth management team, it is their job to educate clients about finances. As a result, one gathers a lot of financial knowledge. Also, every person should know where his money is going and how it can contribute to an individual’s growth.

Conclusion

Therefore, before one gets retired, one should hire the services of a wealth management company and ensure to invest his wealth in the correct strategy so that it can benefit him at the right time.

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Finance

Misapprehensions About Two-Wheeler Insurance That You Should Ignore

Buying a two-wheeler in today’s day and age is no luxury but a mere matter of convenience. Convenience from hassles of public transport. But whichever two-wheeler you ride, having an insurance cover is mandatory as per the law. The Motor Vehicles Act lays down this need for compliance failing which, attracts hefty penalties.

Your search for a bike insurance policy may be supported by suggestions from friends, family and even your peers. But during the lookout for a suitable policy, there are various misconceptions that you mustn’t believe. Here are some of those misapprehensions you need to stay away from to make a prudent choice of bike insurance policy.

  1. Two-wheeler insurance is complicated

There are a myriad insurance plans to choose from and all of which are loaded with different jargons and terminologies. This makes most buyers believe that two-wheeler insurance plans are complicated in nature. However, that isn’t the case. The jargons and terms used in the policy documents and brochures only create such an impression but in reality, it is simple and straightforward once you breakdown those terms. Moreover, with the advent of internet technologies, bike insurance renewal and its purchase can be made seamlessly online. All of it at the convenience of your couch. So, the next time you hear that two-wheeler insurance is a complicated process, trust no one because it is easy and straightforward.

                                                               

  1. A third-party policy provides sufficient coverage

Many buyers of bike insurance plans overlook the importance of a policy that offers 360-degree coverage. Thus, they opt for only a third-party policy. Such third-party plan, although suffice the legal requirement of a two-wheeler insurance policy, often falls short of its coverage when it comes to protecting against own damages. Thus, the misconception about a third-party policy being enough must not be believed in. In fact, you must opt for a policy that offers comprehensive coverage. This way, any damages sustained by your bike during an accident or due to natural calamities or other man-made perils can be covered under your insurance policy’s scope. * Standard T&C Apply

  1. Your insurer cannot be changed or switched

Two-wheeler insurance plans are valid for a specified tenure, which is generally for a period of one year. After such tenure, you need to renew the insurance coverage wherein you can opt for additional or delete covers, or even opt for an ungraded insurance policy. Not just that, you can even change your insurance company and transfer accumulated benefits like the no-claim bonus too. Moreover, such transfer is possible even during your policy tenure, however, it isn’t advisable to switch mid tenure unless there are some serious coverage flaws. You can visit the official website of IRDAI for further details.

  1. Two-wheeler insurance provides for all damages

A comprehensive two-wheeler insurance plan protects your bike from different perils which otherwise are excluded from third-party policy’s scope, but just like all insurance policies, it has its share of limitations. Cases like riding under the influence of an intoxicating substance isn’t covered under any insurance policy. The insurance company straight up reject such claim applications. Hence, you need to be aware of the inclusions and exclusions of your policy and ensure you follow the law to have protection from damages.

  1. Buying two-wheeler plans is an expensive affair

Lastly, it is commonly believed that two-wheeler insurance plans are expensive. While in reality, economical plans are also available. While add-ons to a comprehensive plan can increase the premium, offloading those that do not add any value can help you save on premiums. In this process, tools like two wheeler insurance premium calculator come handy.

With the common misconceptions cleared about two-wheeler insurance plans, you can make a smart decision the next time you are buying one. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

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Finance

Everything you need to know about the National Pension System

All your life’s hard work and struggle pays off during retirement, your golden years, if you have an effective retirement plan in place. A good retirement plan will ensure you get a steady flow of income after you’re done working. One such effective plan that every Indian citizen is entitled to is the National Pension System or NPS. So, what is NPS and how does it work? Let’s figure out all you need to know about NPS here so that you can get started.

What is NPS?

NPS is a voluntary retirement plan that all Indian citizens between 18-70 years of age can invest in. It’s a government scheme that even corporate sector employees and self-employed individuals can benefit from.

Not only does the NPS help you save money, but also helps in reducing your taxes as the plan is eligible for a tax deduction. You invest a certain amount of money every year which builds up a corpus fund that you can withdraw during retirement. So, the earlier you plan, the more you can benefit from it.

Types of NPS accounts

There are two types of NPS accounts:

●      Tier I account:

When you want to invest under NPS, this is the default scheme you go for at first. It requires a minimum initial investment of Rs. 500 and a minimum annual investment of Rs. 1,000. There is no limit to the maximum amount you can invest in.

Here, you get a lock-in period till the age of 60. Withdrawals are permitted only after the lock-in period unless there are special circumstances. You are entitled to a tax deduction for NPS investment up to Rs. 1,50,000 each year under section 80 C and further deductions for up to Rs. 50,000 under section 80CCD (1B) of the Income Tax Act, 1961.

●      Tier II account:

This account is completely voluntary and you’re eligible to invest here if your Tier I account already exists. The minimum initial investment here is Rs. 1,000 and the minimum annual contribution amount here is Rs. 250. There is no tax deduction or lock-in period here. This means you can withdraw from here at any given point in time.

NPS scheme details – Rules for application, investment, and withdrawals

The easy and quick way to apply for NPS is through the online portal where you need to link your account to your Aadhaar, PAN, and mobile number.

Once your permanent retirement account number is generated, you need to make the initial investment. Your pension fund manager will take care of the investments you make here, helping you select the investment mode – equity, corporate debt, or government bonds. You’re allowed to change this mode only once in a financial year.

For Tier I account, the maximum age for exiting the scheme is 75 years. After that, you are entitled to withdraw 60% of the total corpus amount you have, while the rest 40% is to be invested in an annuity scheme if your corpus amount is more than Rs. 5,00,000.

You can make three premature withdrawals throughout the tenure, given it is for children’s higher education and/or marriage, house purchase/renovation, or medical emergencies. This is limited to 25% of your total investment and only applicable for those who have invested for at least three years.

Going for an NPS scheme is important for every individual as it helps contribute to your retirement corpus. Retirement planning ensures that you don’t have to financially depend on anybody in your golden years and are financially stable even after you stop working.

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Finance

What is Factoring? Types, Advantages, Disadvantages, Mechanism

Factoring can be defined as a financial where a factoring company purchases from the customers’ accountable receivables from the sales of products or services to clients. If your clients become the debtor of the factoring company, they must fulfill their obligation towards the factor.

The factoring contract assumes that the factoring company takes the entire credit risks and the collection of the account. Factoring in Winnipeg offers companies an effective way of financing their financial needs. They also act as a tool for the collection of invoices and risk hedging.

Traits of Factoring

  • The factoring company offers money to the supplier, including advance payment and loans.
  • In most cases, the factoring period is 90-150 days. However, some factors allow more than 150 days.
  • Factoring is a cheaper source of working capital compared to loans
  • Factoring receivables is a perfect financial solution for emerging and new companies without enough cash flow. That’s because creditworthiness is appraised based on the financial ability of the client. Thus these businesses can leverage the financial power of their clients.
  • A credit score isn’t essential for factoring in Winnipeg. However, the factors conduct a credit risk assessment before signing an agreement.
  • Factoring in Winnipeg is a technique of off-balance-sheet funding.

Mechanism of Factoring 

  • A factoring agreement involves three parties: the one selling account receivables, the customer of the seller, and the factoring company.
  • The seller of the product or services who prepares the invoices is the client and is a business.
  • Customers of the client or debtors are the recipient of the invoice of goods and services offered. They owe the cash for the value of service provided or goods purchased from the seller. They pledge to pay the money within the agreed payment agreement.
  • The factor or factoring company is the service provider who buys the invoices and provides advance payment to the business.

The factor is, therefore, an intermediary between the buyer and the seller.

Benefits of Factoring 

Substitute for Business Loans

Factoring plays a vital role in working capital funding. It substitutes business loans and supplements the credit or supplier’s credit. It’s a perfect replacement for high-cost loans.

Saves Time 

Factoring in Winnipeg will save effort and time to the business spent on collecting the invoice from clients. That effort can be channeled to other company expanding initiatives such as marketing, customer development, and sales.

Non-Collateral Needed

Unlike conventional bank loans, factoring does not require you to risk your property or home as collateral.

Minimal Operating Cycle Time

The average invoice collection period is lessened, and as a result, the total operating cycle duration of the customer is lessened.

Liquidity 

Factoring in Winnipeg helps the business raise the money, up to 90 percent of the receivable value instantly after the sale. That builds up the liquidity position of the customer.

Advisory Services

Factoring companies provide a range of advisory services to their customers, including credit evaluation for their overseas buyers.

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Finance

Investing guide for people looking to invest in Exchange Traded Funds

An Exchange Traded Fund (ETF) is like a basket that contains shares, bonds, etc. and can be traded on an exchange. It tracks an underlying index, either Nifty or Sensex, and holds assets in the same proportion as the index.

Looking to invest in ETFs? Here are some tips that could make your investments work for you –

  • An ETF fund could give good returns, but you as an investor should remember that not all investments provide positive returns. Hence, you should restrict your investment using limit orders where instead of waiting for a huge profit or recovery from a bad loss, the investment will be transacted at a good reasonable price that will benefit and save you from a loss. You need to set the limit on the order, and the rest will be taken care of.
  • It is advisable to begin trading a few minutes after the market has opened or before the market will close of the day. These are the periods when there is comparatively more volatility in the market. Following this advice could be beneficial in knowing the true value of stocks.
  • If you are not sure of the trade, you should seek professional help from the fund manager before investing big time. Essentially, an ETF is a market-based investment, and all market-based investments are subject to market risk. Any fluctuation in the market will impact an ETF, and though it is a diversified portfolio, there cannot be an assurance that it won’t incur a loss.
  • Always watch out for spread; a spread is a gap between a bid price and an ask price, where the bid price is the price on which investors are willing to buy while the asking price is the price on which investors are willing to sell. The difference between bid and ask is spread, which widens or narrows down according to market conditions. The transaction should be based on this spread as it determines the profit and loss of the investment.

These are some of the best ETF trading tips; however, if you are trading in an ETF for the long term, you should keep in mind its taxation benefits, brokerage charges, transparency of the trade executed by the portfolio manager and returns on investment promised by brokerage firms.

To make your ETF investments simpler and to explore more stock and mutual fund investment options, you could also reach out to a financial expert to curate bespoke financial plans that are in line with your risk tolerance, investment goals and horizon.

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Finance

Capital Solutions for Life Science Innovations

If you have an idea for an innovative new healthcare product, either a drug or a piece of equipment, or a therapy, you will need capital to develop and market that product.  At SWK Holdings we specialize in providing capital to life science businesses that are developing new ideas.

Often, a life sciences company will find it difficult to obtain capital in the usual ways.  For example, when trying to develop a new medication, a scientist cannot offer up the usual collateral that a bank or a traditional loan company would require to secure a loan.

Different Stages in the Development Process

Pioneering a new drug requires inventive capital solutions.  Most people believe that pharmaceutical companies are rolling in money so they should have no problem footing the bill for new therapies.  Whether or not that is true, the pharmaceutical companies don’t get involved in developing new drugs until close to the end of the process.

This discovery phase of drug development does not have such a need for capital solutions. The National Institutes of Health and other federal government entities have historically provided funds for the discovery stage.  In addition, state governments have lately been more involved in funding the discovery part of drug development.

At the other end of the process in the late-stage development time frame, is where pharmaceutical companies get involved and put their money into the development of the drug.  Again, the scientists won’t need capital solutions at this stage.

The Capital Gap

The time between the initial discovery research and the late-stage development is the time when novel capital solutions become critical. Sometimes charitable foundations will fund this stage because they are looking for drugs for a rare disease.  But most doctors, scientists, and life sciences companies are left to look for funding on their own.

A smaller biopharmaceutical company that wants to develop a new medicine must also look for a financial company that can offer advanced types of capital solutions for the middle part of the development project.

Since investment companies are not subject to the same regulations as banks are, they can typically do things that banks can’t do. They can individually tailor their loans to companies.

Asset Purchase

One of the ways an investment company can help out with innovative financing solutions is to purchase the asset.  Sometimes an investment company may purchase the drug being developed and fund it to market when it is ready.

Structured Financial Products

When a life sciences company needs major capital, it can seek out a structured financial product from a specialized company that focuses on life science innovations.  This type of loan would not be available from a conventional bank.

Structured financial products usually involve combining financial assets, and then selling these financial assets to investors.  One structured financial product is a credit-linked note.  This loan is structured to shift some of the risk of the loan over to the investors.  In return, the investors enjoy a high rate of return because their investment is riskier.

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Finance

What Are the Top-Most Creative Capital Solutions in the Finance Industry?

The right capital investment is the backbone of each and every business. Without the support of working capital, none can sustainably manage the cash flow, cost reduction, risk reduction, etc. This is why it’s really important to follow the most creative capital solutions which will be functioning just right for a small company. Small or big every business has a different financial situation and so an organization should adopt capital solutions depending on its strategies and programs.

Key goals of capital management

 

  1. An efficient capital solution is crucial for maintaining smooth operations and improving the profitability of a business.
  2. Creative capital solutions play a vital role in managing different company activities including debt management, inventory management, revenue collection, and much more.
  3. This method also identifies the areas which need more attention to maintain profitability and liquidity.
  4. Working capital management is essential for every business. This ensures that the business has enough liquidity to meet its short-term obligations.
  5. A capital solution maximizes the return on current asset investments by covering unexpected costs.

This article will focus on the top five capital management solutions that will maximize cash flow.

  1. Days Sales Outstanding (DSO): It is the average measurement of a business’ debtor exposure. The DSO helps in measuring the level of outstanding revenue at the end of a month based on the number of days sales/revenue represented by accounts receivable balance. This method is useful in detecting the gap between DSO and BPDSO.
  2. Days Inventory Outstanding (DIO): This is the financial and operational measurement that expresses the average number of days that the company takes to sell its inventory.
  3. Electronic Invoicing: This is one of the most creative capital solutions that can help a company to achieve working capital benefits. The streamlining of the invoicing process automatically minimizes the risk of errors, making sure the consumers are receiving it as soon as possible.
  4. Supply chain finance: For the buyers, it’s also popular as reverse factoring which enables them to offer early payment to the supplier through third-party funders. The supplier can boost the level of DSO due to the early payment at a low cost of funding.
  5. Flexible funding: The working capital providers also offer flexible funding that will help a buyer to move smoothly between supply chain finance and dynamic discounting models. It is effective for a risk-free return on the excess cash of a buyer.

Conclusion

These were some of the most creative capital solutions that are being used by businesses worldwide. There are too many capital partners who help the clients to determine the best strategy to access new sources of capital more efficiently that deliver enterprise goals. The capital advisory experts have unique knowledge of the insurance marketplace that effectively enables the clients to maximize their returns. So, stabilize the cash flow with the use of working capital solutions and meet the growth plans.

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Finance

5 Top Mistakes Every Home Loan Applicant Must Avoid

A home loan is an affordable way to buy your dream house. Getting a home loan is a simple process. Compared to other types of loans, a home loan has longer-term and includes a larger amount. That’s why you should research the loan terms and conditions before settling the deal. Then, you must use the online home loan calculator to find the best deals on housing loans.

In the meantime, let’s check out the common mistakes homebuyers should avoid when applying for a home loan.

1.   Not Comparing Offers

Banks have different offers on home loans. Every bank has varied:

  • Interest rates
  • Repayment term
  • Eligibility criteria
  • Processing fees

Just because you are in a hurry doesn’t mean you should get a home loan from any random lender. Instead, research well and get a loan from a bank that offers the best interest and a flexible repayment plan. Use a home loan interest calculator to compare interest rates. You can also call the banks to ask about the processing fees and tenure.

2.   Not Checking the EMI (Equated Monthly Instalments)

EMI is the monthly instalments paid to the bank. The EMI varies depending on the term of your home loan. If the loan has a longer term, you will pay a smaller EMI. Short-term loans (the ones that are to be paid within 5-10 years) have a large EMI. You should check the EMI and compare it with your repayment capacity. Get a loan only if you can afford the monthly loan payments.

3.   Not Checking Your Credit Score

It is a 3-digit numerical value that shows your creditworthiness. Banks check your credit or CIBIL score to understand your credibility. It is calculated based on your past debt repayment records. The score can be anywhere between 300 and 900. You need a good credit score for a quick home loan application approval.

Always check your credit score before applying for a housing loan. It is available for free at www.cibil.com.

4.   Not Having Enough Money for the Down Payment

Bank asks you to pay a down payment – 10% to 20% of the total cost of the property. After that, banks pay up to 90% of the cost of your property while you pay the rest. Your home loan application is accepted only when you have enough funds for the down payment. So, check if you can arrange the down payment before applying for a home loan.

You only repay the amount you borrowed from the bank. For example, the 10% of the amount you paid from your pocket as the down payment is not included in the loan balance. You only repay the 90% borrowed amount.

5.   Getting Home Loan at Higher Interest

Always use a housing loan interest calculator when applying for home loans. Banks offer home loans with fixed-rate and floating-rate interest. The fixed-rate interest is a good option for borrowers who want a stable interest rate throughout the term. The interest does not remain the same in the fluctuating-interest loans.

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Finance

Top Reasons to add savings account in your financial portfolio

When it comes to money, being cautious means saving it for occasions when you might need it the most. It could mean getting repairs done in your home or covering sudden medical expenses. With these goals in mind, you always try to save more money than you did last year.

Regardless of how you save and how much you save, it is crucial to decide where you are going to put this money. Many often think about putting it into investment options. But that is a risky option if you simply wish to have more money on your hands. In such a situation, your best option is to have a savings bank account. Here are few reasons that make savings account the best option to store your money:

Safe option to store money

Savings accounts give you a great deal of safety when it comes to storing your money. The biggest sign of safety is that you can deposit or withdraw money from your savings account with ease. This way, you do not have to find a place to store cash. Moreover, you don’t have to carry cash with you all the time.

Digital banking services

The government has been making a lot of efforts to promote digital payment options. With newer payment options and more opportunities to make digital payments, these efforts made by the government only need to be complemented by people willing to adopt a new way of making transactions. For people with a savings account, making the transition to digital payments is much easier. This is because online savings accounts offer digital banking facilities like net banking, NEFT, RTGS, IMPS, UPI, etc. This way, you do not need to go to your bank branch to make any transactions.

Government scheme benefits

The government has taken a lot of initiatives to improve personal finance practices in the country. One of those efforts is to promote savings accounts for everybody. To do so, they have paired a lot of their schemes to saving accounts. For example, the benefits and subsidies that you may receive from various government schemes will be deposited into your savings account. In such a case, not having a savings account could cause trouble in receiving those benefits. Moreover, having a savings account also helps you in getting these benefits directly. There are no middlemen to be concerned about and much less processing.

Income through interest

The main reason you save money is to spend it on something later. But until that time comes, leaving it lying around does not do you any good either. Hence, you need to make sure that your money works for you. You can use your savings account for this as well.

When you take a loan, you pay a certain percentage of the principal amount borrowed as interest. It serves as the fees for taking the loan in some way. This mechanism is reversed in the case of a savings account. When you open a savings account, you give your money to the bank for safekeeping. Hence, the bank pays you interest for holding that money. This means that you earn more money by simply putting your money into a savings account. Moreover, the interest you get paid is decided by the interest rate. This means that the more money you put into the savings account, the more interest you earn.

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