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| Home : Investor's Guide |
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 Tips for Investing Wisely |
| When trading in the Stock Market, one should avoid, |
- Greed; being greedy can be a problem as it corrupts wisdom,
- Making the same mistake twice,
- Following the crowd, as the loss at the end is of the individual and not the crowd itself,
- Putting all your ‘eggs in one basket’. You should diversify and spread your investment,
- Using rumors as tips, as this can result in losses. A tip can end up as a ‘pit’,
- Emotions; being emotional can effect reasoning. Traders should use research backed by fundamental reasoning.
- Impatience; patience pays, perseverance gains,
- Over borrowing; loan repayment is not an investment.
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When trading in the Stock Market, one should remember, |
- Information; it must be checked. Opinion, facts or fiction? Act accordingly,
- Knowledge; Stock Market principles and practices are unique. Master its cycles, its ups and downs,
- Wisdom; success depends on your discipline and self improvement,
- Action plans; plan a scheme, act and follow through. Have options and tactics to win the Stock Market game,
- Shrewd and Thrifty; be prudent with your money. Avoid stocks that are overvalued but keep the cash or save for other investments,
- Stock Value; be aware of stock’s true value, despite its ups and downs,
- Risk Vs. Reward; minimize your risk, maximize your returns,
- Investment protection; safety of your portfolio and Share Capital is more important.
A good example of understanding the above can be in the case of Hershey’s. Just because the chocolate tastes good does not mean that the position of the company is strong. A point should be made that the product of a company does not provide merit to its strength in the index. |
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| Investor's
Protection |
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For
security reasons, AKD Trade insists
that all users, existing and new, should
not show their Passwords to other individuals.
The same is said for the PIN Code. |
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Investors should also not enter into transactions that involve financing and irregular Badla amounts that are not stated within the rules and regulations of the Karachi Stock Exchange. |
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All payments made to brokers and/or company staff should be crossed cheques (Payee’s Account Only) and obtain proper receipts of the payments made duly signed by the authorized persons. |
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| Ownership
of Shares |
| Each share
represents a small stake in the equity
of a company. You can buy large or small
lots to match the amount of money you
want to invest. A company’s share
price can rise or fall as a result of
its own performance or market conditions.
Once the
shares are brought and transferred
in your name your name will be entered
in the company’s share register,
which will entitle you to receive
all the benefits of share ownership
including the rights to receive dividends,
to vote at the company’s general
meetings and to receive the company’s
reports.
If you decide to
sell your shares you will need to
deliver share certificates to the
broker in time for the transaction
to be completed.
With the introduction
of the Central Depository System (CDS),
an investor can have shares in paper
form or can own shares in an electronic
book- entry form at the Central Depository
Company (CDC). |
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Studies have shown that over a twenty-year span, investment in shares has provided greater returns than most other forms of savings. Shares can provide you with a regular stream of income through dividends as well as the potential for your investments to grow in value. If the prices of shares go up, you can sell them for more than you paid. This is called capital gain. |
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Dividends are returns paid to shareholders out of the profits of the company. Returns can be in the form of cash or additional shares of the company called bonus shares. Dividends are usually paid once or twice a year depending upon the company’s profit distribution policy. |
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This is one of the ways in which shares differ from deposit accounts. The principal amount of money you put in a bank or any fixed income savings scheme always stays the same e.g. if you start with Rs.100,000 you will always have Rs.100,000 (other than any interest earned).changes in value according to the performance of the company. With good management, the value of your investment in shares of a company can grow over time so that your shares are worth more than you paid for them. This is capital growth. |
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Buying shares can offer advantages over saving in deposit accounts: your investment may increase in value besides paying you dividends. You share the rewards when the company does well and the price of the shares goes up. But if the company performs badly, the share price may go down and the value of your investment will be reduced. Other factors, such as the performance of the stock market as a whole and the general economic climate, may also affect the price of your shares. Investment in shares is therefore investment in ‘risk capital’. The shareholders can be rewarded for taking this risk and the potential return on your money can be higher than that on other investments. You can reduce your risks with careful planning.
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