Enlarge Your Investment Portfolio through Margin Trade Funding to Secure Future
Posted: Dec 03, 2015
If you are investment minded and has good equities in your kitty, then there is good news for you. If you want to invest in good equities, but don’t have the immediate fund you can access margin trade funding. It is an easy way to add good equities to your investment portfolio without selling out old ones. It is easy, and it is risky too. Before taking this path, you must make sure that you understand the basics of investments. And that is most vital. You must have heard the famous sayings on investment ‘you can’t build an empire on borrowed fund.'
Know margin trading
In margin trading, you are taking fund from the lender against your securities. It is more like an overdraft facility availed from the bank. The margin lending will set a limit to your drawing based on the values of your securities that will be with the lender. The limit will vary according to the values of your securities held by the lender, and your drawing limit will be set every day. If there is a shortfall you must bridge the gap. Now, the value of your securities held with the lender can rise or fall according to the market trend so you can be at par, above par, or below par.
Dynamics of margin trading
You are safe so long you are at par. You are within your limit. If you are above par, then you have funds at your disposal. If you are below par, then you have to fill the gap either paying up the excess drawing or adding fresh equities equivalent to the shortfall on that day's market rate. Meanwhile, you can enjoy the dividend, bonus, and right issues against your equities. The story has another part, and that may interest you. There are a few lending firms that will allow you to purchase security and lend you fund provided you bring the margin amount.
Leveraging investment portfolio
It is leveraging your investment portfolio. You can buy listed securities or can invest in Mutual funds. There is a limit fixed by SEBI how much you can stretch. That way there is a restraint on your portfolio and how far you can leverage. But, if you are serious about your investment portfolio then you must keep a close watch on the market trend. And don’t overshot recall is dreaded word. The market is volatile on the short-term basis, but it smoothes out in the long run. If your idea of investment is making quick bucks, then margin lending is probably not your cup of tea. For more information visit us : http://www.plindia.com/margin_funding_retail.aspx
The volatile market
In the world of investment, the main criteria are to guard two things. The first is the temptation to make quick buck and the second is the failure to understand and comprehend market dynamics. The market is highly volatile in the short term, and can at any point spring a surprise on you. If you strike the panic button and chicken out then, you have lost the game hands down. You have to understand that it may not hold too long. So, the trick is to select a good equity and analyze its past trend, present position, and the future plan then you will understand the strength of the company and safety of your investment. There is another way also you can go for penny stocks also, but space is too short to discuss so more about for another day. Meanwhile, hold your fort, don’t panic and don’t go overboard.