Looking to buy a Mutual Fund ? Most investors into Mutual Funds buy on the basis of recommendations from friends, from the broker / agent, or from some research. But if you want to buy a Mutual Fund, there are a lot of variables such as
- the industry into which the fund is investing,
- the aggressive / cautious nature of the Fund,
- the past history of the Fund Manager,
- the level of customer service orientation of the fund house
In a lot of cases, people overlook such information and then later are not happy with the performance of the Mutual Fund (for example, they bought an aggressive Fund that is more risky, and were shocked when it fell more than a cautious fund at the time of a crash).
There is a link on Economic Times that seeks to explain some of these concepts:

It is important to be well informed before you invest in a mutual fund on the premise that the fund will deliver. And when it comes to a fund in which you have already invested, it is even more crucial to be well up on numbers and facts. Sectoral allocation is also important. Excessive exposure to one sector can mar the returns if the sector underperforms. It is also important to compare the stock exposure norms and sectoral allocation over a sustained period of time. This gives you an idea as to how the funds have been deployed and the risk associated with such portfolio diversification.
Two key ratios you must keep in mind are portfolio-turnover ratio and expense ratio.
Portfolio-turnover ratio is a measure of churning the fund has undergone while the expense ratio tells us about the cost of managing the funds.
Higher portfolio turnover is seen in opportunities fund and in more actively-managed fund. Value funds are expected to show a low-portfolio turnover.

Read the whole article, and search for more information regarding such investments. Even though learning about Mutual Funds and their details could take some more time, it is worthwhile since you should make your investment when you are an informed investor. This will also help you to make decisions about investment or withdrawal in a better manner, and make you more money overall.

http://economictimes.indiatimes.com/quickiearticleshow/3279973.cms

Another useful email that I got was related to investing in the Indian stock market, especially after the crash and the learnings from that. Topic of the email: How to invest in stock markets?

1. Select businesses with good growth opportunities. Read business magazines that offer research on good businesses and read those articles thoroughly.
2. Select 1-2 good companies in those businesses.
3. Never enter into any stock at unreasonable valuations. Just because a company is good is no reason to buy the stock if it has already run up.
4. Penny stocks are manipulated by big brokers. Never look at them in your life. Take an oath.
5. Good stocks quickly regain their value.
6. Never be sentimental with any stock. A stock is not related to you, and there is no such thing as loyalty in the market.
7. Best stock ideas arise in day to day life like investing in ICICIC Bank stock in 2002 after experiencing their wonderful service when you fed up with Public sector banks. Always look for opportunities.
8. Invest in future sectors. How many of us invested in Infosys in 1997 and Bharti Airtel in 2002? But be careful and selective and do research.
9. Buy and forget will work only to some extent. Indian markets become high volatile zones. There is no reason in keeping your money after RPL reached 300 and RNRL reached 250.
10. If you can’t follow all these things, just put your money in good mutual funds.

I came across this post in an email about a sort of checklist about whether to invest in an IPO and thought that this was worth sharing; even if this helps a few people, it will be worth posting.

How to decide whether to invest in a particular IPO?
• First and foremost, find out the listed peers in the secondary markets and if IPO is at a higher valuation then there is no justification for investing.
• Check the results and growth rate in term of sales ,profit growth ,operating margins growth for the last 3-5 years and not only for 1 year as there are chances of financial engineering (manipulation) of balance sheets just before the launch of the IPO.
• Check the background of the promoters and if there are any serious criminal/income tax evasion cases against then avoid the IPO; typically crooked people are easily able to cook the books when trying to do an IPO
• Find out the purposes of raising the money. Some justified reasons are expansion of capacity, new projects, while if the sole purpose is meeting the working capital needs or repaying the debts then it does not inspire enough confidence to invest in that IPO.
• If the IPO is for a new project then we should check the turnaround /breakeven time. One example is Reliance power IPO where this time was huge and hence took a beating (projected capacity of Reliance power in next 3-4 years was less then current capacity of NTPC).
• Study the risk factors in the draft prospectus and see if they are of real concern or acceptable risks in the normal course of business.
• Check the subscription figures in QIB category as they are considered to be smart /intelligent and have access to lot of company information that retail investors do not have. Of course, this is not always true, but this is still a good indicator.
• Check the future growth prospects of the company and if the future expected growth is huge or they are operating in a niche segment or in a high growth sector for which no listed companies exists in secondary markets, then higher valuations may be justified.
• Never go by the grey market premium(GMP) of a particular IPO to make your investment decisions as they can vary daily and are mostly speculative in nature. (E.g. Reliance Power IPO having a GMP of 450 listed at a premium of Rs 10-15 only while TItagarh IPO having a GMP of Rs. 10-15 listed at a premium of Rs 150).
• Subscription figures in Employee quota can tell you whether the employees themselves are confident of the future prospects of the company.
• Some other indicators of the quality of an IPO can be the rating given by the agencies like ICRA, CRISIL or the reputation of the Book running lead managers(Example is Enam financials which manages only quality IPO’s)
• Keep in mind allotment chances as well besides the quality of the IPO. A medium quality IPO with good subscription chances can give you better returns then a very good IPO with very less subscription chances.
• Do not consider any of the above factors in isolation but look at them together to arrive at any conclusion.

And of course, if there are additional factors that you use to evaluate IPO’s, please mention them in a comment.

The next time a stock broker defaults, you can make the stock exchange he operates in, pay. That is the summary of a landmark ruling of the National Consumer Disputes Redressal Commission. Investors can get up to a lakh of rupees from the stock exchange to which the defaulting broker is attached.
The ruling will provide additional security to investors over and above what is already offered by stock exchanges. It will also make stock exchanges more vigilant in examining broker records.
Since stock brokers charge a brokerage for services rendered by them, they are immediately liable to their customers (investors). However, it was not clear whether the stock exchange was also liable for the conduct of the brokers. The judgment delivered by Justice M B Shah on behalf of a bench comprising himself, Rajyalakshmi Rao and Anupam Dasgupta conclusively settled the issue on December 20, 2007.
Several consumers had filed complaints before the Delhi consumer forum against a broker as well as the Delhi Stock Exchange (DSE), for default with respect to the sale and purchase of shares. In all these matters, DSE tried to defend itself by claiming that it was merely a non-profit making organisation which regulated the business of sale and purchase of shares and debentures and that it was governed by the guidelines issued by SEBI. It also claimed that none of the complainants had hired the services of the stock exchange, as the investor merely pays a consideration in the form of brokerage to the broker and not to the DSE. So it was not rendering any service to investors and a claim against DSE would not be maintainable.
But could the stock exchange be held jointly responsible along with the broker? The district forum held that, indeed, the DSE was jointly liable, and so did the state commission in appeal. The matter then went in revision before the national commission, which was of the same opinion.

There are many incentives to buying your own property. You may be wanting to live in your own place after living in a rented property, or you may be wanting to buy property as an investment mechanism, or to take advantage of some of the tax laws. At the same time, while buying a property, it is necessary that you ensure that everything is above board, that you are not investing a large sum of money if things are not clear or the legal title is not clear. Here is an attempt to prepare a checklist for cross-checking before buying a property.

- Call for original property documents. The non-availability of such documents should be taken as a red signal. It could mean that the title of the seller is not clear and there could be a lien, mortgage or other encumbrance on the property.
- Ask for photocopies of all deeds of title related to the property to be purchased. A legal opinion through a good standing advocate is advisable. The legal counsel will examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable.
- For apartment. Check for approved layout plan and approved building plan with number of floors.
- Check the building bye-laws in that area to verify any issue with setback, side setback, height, etc.
- Confirm transfer fees, stamp duty and registration charges to be paid on purchase of the property as well as outgoings to be paid for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.
- The original sale agreement should have the municipal-approved plan of the flat, carpet area with the area of the balconies shown separately, price of the property including the proportionate price of common areas and facilities shown separately and intervals at which installments may be paid.
- Check if proper stamp duty has been paid.
- If the property is in a co-operative society, examine the original share certificate. It mentions the latest owner’s name.
- Obtaining a society’s NOC may not be mandatory under the new Model Bye-laws of the Co-operative Housing Society, but it is advisable as it offers clarity about the title of the property, pending society dues, property disputes and hypothecation, if any.
- An income tax clearance certificate would ensure that the seller has discharged his income tax liabilities to avoid attachment of the property.
- If possible, consult a property lawyer, especially where the sale is through a power of attorney. A good lawyer will undertake proper investigation and issue prominent public notices to clear interest of other properties in the property concerned.
- Getting a home loan sanctioned ensures that the documents are in place as banks or institutions conduct due diligence before disbursing loans.
- Ensure payment and discharge of encumbrances that are to be cleared before purchase.
- Obtain physical delivery of the property and of the title deeds.
- Complete the transaction of sale by executing and registering the deed. An unregistered sale agreement has no validity in a court of law.
- Financing capability. The debt-service ratio helps you assess to what extent you can take financial risks. For every Rs 100 earned, your EMI should not exceed Rs 40, and that includes EMIs taken for other purposes. Maintaining this ratio is important as it helps you deal with other expenses easily.
- Accessibility. Access to the property is critically important. If access is difficult, re-sale values will be affected, and may cause day to day inconvenience.
- Locality: Proximity to transport hubs, schools, hospitals, market, central business district, entertainment centres, hotels, restaurants, pollution levels, safety records of the neighbourhood.
- Reputation of the builder or seller. Check around with local sources to find out more of the builders reputation.
- Get a good idea of the costs of various components like price, stamp duty, registration charges, transfer fees, monthly outgoings, society charges & costs of utilities. These are not immediately available, but should be factored in to the total cost.
- Facilities. Adequate water, electricity and other utilities should be an important factor.
- If you believe in beliefs such as Vaastu, get consultation done before buying the property.
- If you are buying property on loan, get an insurance so that in case of your fatality, your family can clear the outstanding loan.

These may seem like a of steps, but it is better safe than to be sorry before buying a property.