Notesale: Turn your study into money

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There are two Friends named Kabir and Pratik
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One day they had a bonus of rupees 20000
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Pratik asked his friend Kabir what he would do with this bonus money
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Pratik didn't understand what investing
was
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So today we're going to learn
the difference between savings and investing that Kabir told to Pratik
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Ex - Bank , Fixed deposit , Physical commodity ( gold, silver, liquid funds) etc
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Ex - Shares , Mutual fund , Bonds , Insurance etc
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In savings you can withdraw money when you want or when it is necessary from the bank
very easily so savings has more liquidity
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In investing your money is less liquid because you are investing for a long term
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Here you can't take money
fast
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There is no single risk to take on the principal amount
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Ex - savings in bank and fixed deposit
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So it's very important to take calculated risk before
investing in any product
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Investing money works for you on the other hand in savings you work for money
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Where is More Return ?

In savings there is a very low return because there is a very low risk
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But when we consider the inflation rate of our country the returns come
very low
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2% it increased 1
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That means money
you put in savings can't give you a satisfactory return or it can degrow some year
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In Investing you get higher return but there is also high risk so if we take calculated risk or
moderate risk then we can also get much more return than savings
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We can't say that only one thing is important and the
other is not
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Ex - We want to put an Emergency fund in the bank so in an emergency situation we can get
money easily
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For a long period
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Now, in this book we are going to see which are those Investing products where we can
invest our money and get more return with calculated risk
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● Share market
● Index funds and other Funds
● Bonds
So, we are going to learn about these things deeply and step by step so let's get started
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He owns a restaurant which is famous all over
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Vikram wants to expand his restaurant business
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Everybody loved Vikram food
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So he went to the public and said pay
me 100 rupees and become the owner of my business
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So, now Vikram launched an IPO
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Investors pay a small
sum of money and become owners of a small share of the company with this idea
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Earlier people used to keep hard copies of share certificates in lokers
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Your Shares and locker too
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So Vikram uses that funds to grow their restaurant business
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Due to this the share price of Vikram
business started increasing
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He gives his investors a small portion of his profits and that small portion of
profits is called Dividends
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They are
so Interested that they are ready to pay 140 rupees for a share
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Essentially that's what Share Market is
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These transactions happen thousands of
times in each second
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Similarly, you have the share market to buy equity shares
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BSC means Bombay stock exchange and NSC means National stock
exchange
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Today, everything is done on computers just like fruits are stored in a warehouse and are
brought to the market using trucks and tempos
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And are traded through your trading account
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More sellers and less buyers = price of share goes down
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Sensex and Nifty 50
Sensex and Nifty 50 are the indices which are also very easy to understand
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Sensex - sensex is a 30 of the largest and most actively traded stocks on the BSE
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The price of tea 10 years ago was less than 5 rupees but now the price of tea is more than
10 rupees
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The money in your piggy bank doesn't grow on its own
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Investing is not a privilege, it is a necessity today
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We want to analyse stock by our own
opinion, logic
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But some people think it's risky
but they don't know that risk comes from lack of knowledge
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And that person is driving a car at
top gear then absolutely there is an accident that will happen
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Similarly, Stock market is a tool
and we want to learn this tool before use
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Like
them we can also buy stocks but we can't because we don't have proper knowledge about it
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We can gain a small profit from it but we can't make wealth
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This is the Quality analysis that you do first
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If schools, markets, hospitals etc are far from
your house then the price of housing will decrease
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After all of these things confermerd and you get that house at a high price then it's not a
good decision
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Similarly, we want to analyze the stocks
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In our generation, the process has been very simple
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So, Now we are going to see how we can analyze stocks step by step? and where we got
the information about stocks? and how can we buy stocks ? Let's see step by step
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Warren Buffet is a great investor
who built his wealth of 100 billion dollars with the share market and became the richest
person in the world
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Because if the business will grow in future then
the share price will automatically increase
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So Warren buffet at the time of buying stocks look at these 4
Qualities in that business
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Business Quality At the time of buying stocks we invested not in stocks but we actually we are Investing in
that business
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After that we want to improve our mindset
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it is not possible in reality but when we think like this and analyze the business
then it helps very well
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Analyzing the basics of business is very simple
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The
important thing is to analyze is it a business making profit ? Because if that business is not
making profit then the price of share will definitely come down in future
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Then we think about whether this business will make
money in the future ? And if business is able to make profit then at which speed ?
How many chances is that company will go bankrupt ? Because we are Investing in that
company and if it goes bankrupt then our money will also go
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Are you able to
understand it's business means it's 1
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operations in that business
3
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competitive advantage ( Moat )
Competitive advantage means that one thing in which your business is 10 times better than
other competitors
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Next is if we can estimate the profit and sales of that business for the next 10 to 20 years
then we can think about buying it after analysis
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So where do you get all of this information ?
The answer is in that company's Annual report
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Annual report gives us total information about the company and its
business
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In that way you can clear the 1st process Business Quality analysis
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To analyze the business quality of a company for investing purposes, consider the following
key factors as well:
1
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Consider elements like distinctive goods or services,
well-known brands, patents or other forms of intellectual property, cost benefits, or high
levels of client loyalty
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Market Potential: Assess the size and expansion potential of the market that the
organisation is trying to reach
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3
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Take into account
elements like return on investment, profit margins, and cash flow creation, and debt levels
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4
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Analyse the company's ability to grow and adapt to shifting market conditions
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5
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For corporate objectives to
be carried out and long-term success to be achieved, strong and capable leadership is
necessary
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Product or Service Differentiation: Consider whether the business offers distinctive goods
or services that give it an edge over rivals
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Keep an eye out for creativity and adaptability to changing customer
demands
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Identify and evaluate potential risks and challenges that the company may face
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Assess the company's ability to manage and mitigate these risks
effectively
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Sustainability and ESG Factors: Consider the company's environmental, social, and
governance (ESG) practices
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By analyzing these aspects of a company's business quality, investors can gain a better
understanding of its potential for long-term success and make informed investment
decisions
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Management Quality –
Evaluation of the management team's skill and efficacy is a key component of management analysis
for investors
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Evaluate Leadership: Consider the experience and leadership skills of important executives, such
as the CEO and top management
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2
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To evaluate profitability, liquidity, and solvency, examine important financial ratios and
indicators
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3
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Examine the effectiveness of the checks and balances in place to
guarantee management responsibility and shareholder value protection
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Industry Knowledge: Take into account whether the management group exhibits a thorough
awareness of the sector in which the business works
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5
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Examine the accuracy and timeliness of business disclosures, financial reporting, and
decision-making process transparency
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Succession Planning: Examine the organization's strategies for replacing executives
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7
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Look for indications of moral behaviour, corporate social responsibility, and wholesome
interactions with staff, clients, and suppliers
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3
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Review Financial Statements: Look at the balance sheet, income statement, and cash flow
statement of the company's financial statements
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2
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If the company is making solid earnings,
compare these indicators to those of its competitors in the industry
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Examine Revenue Trends: Keep track of the company's recurring revenue patterns
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Determine if there have
been any significant changes to the customer or revenue sources
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Evaluate Liquidity and Solvency: Assess the company's liquidity position by reviewing its current
assets and liabilities
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Evaluate solvency by analyzing the
company's long-term debt levels and debt-to-equity ratio
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Cash Flow Analysis: Analyze the company's cash flow statement to understand its cash inflows and
outflows from operating activities, investing activities, and financing activities
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6
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Calculate metrics
like inventory turnover, accounts receivable turnover, and fixed asset turnover to assess the
effectiveness of asset management
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Analyze Financial Ratios: Calculate and analyze financial ratios like return on assets (ROA), return
on equity (ROE), and return on investment (ROI)
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8
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Compare key financial ratios, growth rates, and profitability metrics to assess how the company
stacks up in its sector
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Consider External Factors: Take into account any external factors that may impact the company's
financial performance, such as industry trends, economic conditions, regulatory changes, or
competitive landscape shifts
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Conduct Qualitative Analysis: Combine the financial analysis with qualitative factors such as
management quality, industry outlook, competitive advantage, and future growth prospects to develop
a holistic understanding of the company's financial position
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4
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Here is a quick breakdown of a few popular techniques:
1
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A
company's market capitalization gives a quick overview of its worth on the open markets
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Price-to-Earnings Ratio (P/E Ratio): This metric assesses the relationship between the stock price
and the earnings per share (EPS) of a company
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3
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It reveals the price that investors are willing to pay for every dollar that the
company makes in revenue
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Discounted Cash Flow (DCF) Analysis: Using the time value of money, this method calculates the
present value of a company's future cash flows
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5
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You can determine
whether a target firm is overvalued or undervalued in comparison to its competitors by examining
valuation multiples
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Asset-based Valuation: This approach concentrates on the company's net assets, including tangible
(such as real estate and equipment) and intangible (such as goodwill) assets
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It's important to note that valuation is a complex process and may involve combining multiple methods
or considering additional factors specific to the industry or company
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In summary, investing is a lifelong process that calls for wisdom, perseverance, and discipline
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Keep in mind that investing is a way to grow your money over time rather than a surefire way to
become wealthy
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The secret is to keep your eyes on your long-term objectives and to refrain from
acting rashly in response to short-term market swings
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You can lower risk and
possibly boost your chances of overall returns by distributing your assets among several asset
classes, industries, and geographical areas
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The key to success in the world of investing is education
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Your
decision-making skills will improve and you'll be better able to adjust to shifting market conditions if
you learn from both wins and failures
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Every person has
different financial situations, risk tolerances, and investing goals
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With the knowledge you've received from this book, I urge you to confidently start your investment
adventure
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Remember, investing is a marathon, not a sprint
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Happy investing!
[by, ROHAN]



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