BASICS OF INVESTING

STAGE #1

Preparing your Finance

A good savings plan can be tricky. Putting into Warren Buffet’s words – “If you buy things you do not need, soon you will have to sell things you need.” From living costs to credit card outstanding balances followed by monthly mortgage payments etc. can eat away a substantial portion of your earnings. However, an investment plan does not require you to start big.

STAGE #2

Learning the Basics

An understanding of finance is very helpful for your personal life, as it helps you steer through the traps of market manipulation, avoid rumors and feel more confident in making decisions.

STAGE #3

Determining Your Risk Tolerance

Never test the depth of water with both feet! Understand and determine the risk you are willing to take. A carefully diversified portfolio with negative correlations shields your investments from market risk.

STAGE #4

Finding a Broker or Advisor

Choosing a financial advisor/broker is a crucial decision. A good financial advisor not only understands your vision but also helps you make calculated risk to manage your investments.

STAGE #5

Design your portfolio based on your Risk Tolerance

Finally comes the stage where you get to write your success story. Design your portfolio based on your risk tolerance category, and choose your assets accordingly. Good Luck!

Pros and Cons

Diversified Portfolio

A well-diversified portfolio can help cover all the bases and safeguards your investments especially during recessions. Diversification shields an investor from daily market volatility and reduces overall risk. When investments in Stock A shows poor returns, Stock B in the portfolio can counterbalance losses. Therefore, it is advisable to hold assets that are negatively correlated with one another.

However, diversification can also have opposing effects on your portfolio. For instance, an investment portfolio of overdiversified stocks can significantly reduce the returns to average, even when certain sectors in the market booming. Besides, a widely diversified portfolio from separate asset classes is generally more trouble to monitor and adjust since the investor has to stay on top of many investments.

Pros and Cons

Concentrated Portfolio

Concentrated portfolio tends to be more aggressive in behavior, and while it does increase risk, it also increases potential gains. Many high-performance investments, are not usually widely diversified. Besides, a more concentrated portfolio helps investors to focus on a limited number of high-quality investments.

WHY INVEST?

According to a research conducted by PWC Global, Bangladesh is set to be the 23rd largest economy by 2050. By the end of 2021, Bangladesh is projected to achieve 20,000 MW of electricity to back its 7.00% GDP growth per annum. For the first time in the history of the nation’s primary Capital Market – Dhaka Stock Exchange, the capitalization has exceeded to over BDT 5 trillion. The success story of the Asian Tiger continues to rally with booming new sectors and companies springing into the Capital Market.

Did you know?

In developed economies like US, nearly 55% of the population own a BO account, however in Bangladesh it is just over 2% (35 lac BO accountholders). Hence, a huge portion of qualified investors in today’s fast-paced and promising economy is left behind from reaping its profits.

Managing your own investments has never been easier. A good portfolio helps you retain control over your own investment. We help you take controlled and calculated risks with personal funds which ensures you more freedom to expand your investment plan and set higher standards on top of your financial goals.

Contrasting between Stocks and FDR/National Savings Certificates:
  • RISK FACTORS
    STOCK
    FDR (or related)
  • Inflation Risk
    Protects your fund against value destruction. The Capital Market puts your investment ahead of inflation
    Fails to shield your investment against value destruction.
  • Liquidity Risk
    Withdraw your funds anytime and free of charge.
    Fund withdrawal takes time and includes additional charges/fines.
  • Risk-Return
    Higher risk-return ratio. (Plus, guaranteed return over IPO)
    Lower risk-return ratio.
  • Interest Rate Risk
    No interest rate risks.
    High interest rate risks.
  • Tax Benefits
    Higher Tax Benefits
    Very little Tax Benefits.
  • Default Risk
    Market Risk – Simpler to diversify
    Harder to diversify with rising NPL.

START INVESTING

Stage One

Preparing your Finance

A good savings plan can be tricky. Putting into Warren Buffet’s words – “If you buy things you do not need, soon you will have to sell things you need.” From living costs to credit card outstanding balances followed by monthly mortgage payments etc. can eat away a substantial portion of your earnings. However, an investment plan does not require you to start big.

Stage Two

Learning the Basics

An understanding of finance is very helpful for your personal life, as it helps you steer through the traps of market manipulation, avoid rumors and feel more confident in making decisions.

Stage Three

Determining Your Risk Tolerance

Never test the depth of water with both feet! Understand and determine the risk you are willing to take. A carefully diversified portfolio with negative correlations shields your investments from market risk.

Stage Four

Finding a Broker or Advisor

Choosing a financial advisor/broker is a crucial decision. A good financial advisor not only understands your vision but also helps you make calculated risk to manage your investments.

Stage Five

Design your portfolio based on your Risk Tolerance

Finally comes the stage where you get to write your success story. Design your portfolio based on your risk tolerance category, and choose your assets accordingly. Good Luck!