• Top Story
  • Weekly
  • Latest
  • Editorial
  • Opinion
  • Interview
  • Feature
  • Sports
  • News
  • J&K
  • World
  • Education
  • Health
  • Economy
  • Culture
  • Literature
  • Lifestyle
  • Books
What's Hot

Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

January 8, 2025

Why Pegasus Report Must be Made Public

December 25, 2024

America’s Waning Global Position

November 4, 2024
Facebook X (Twitter) Instagram
Trending
  • Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?
  • Why Pegasus Report Must be Made Public
  • America’s Waning Global Position
  • Book Review—Shawls and Shawlbafs of Kashmir
  • Hundreds of Sheep Face Starvation as Forest Officials Bar Grazing
  • Photo Essay: Fire Fighting Service In Dal Lake
  • Pheran—How Kashmir’s Traditional Attire Evolved Through Centuries
  • Pheran—How Kashmir’s Traditional Attire Evolved Through Centuries
Facebook X (Twitter) Instagram
 Kashmir Newsline – Expression Unleashed Kashmir Newsline – Expression Unleashed
  • Weekly

    Weekly Dec 25 – Dec 31, 2022

    December 25, 2022

    Weekly Dec 05 – 11 Dec,2022

    December 7, 2022

    Weekly Nov 28 – Dec 04, 2022

    November 30, 2022

    Weekly November 21-27

    November 22, 2022

    Weekly November 14-20

    November 16, 2022
  • News
    1. India
    2. South Aisa
    3. World
    Featured
    Recent

    Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

    January 8, 2025

    Why Pegasus Report Must be Made Public

    December 25, 2024

    America’s Waning Global Position

    November 4, 2024
  • Feature
    1. Interview
    2. Literature
    3. Editorial
    4. Opinion
    5. Top Story
    6. Books
    7. View All

    Interview: ‘Travel, Observing and Tasting is the Best Way to Learn’

    October 2, 2023

    AS Dulat’s Kashmir Stories

    February 4, 2023

    Interview: ‘People are Deeply Pained by Mirwaiz’s Absence from Jamia Masjid’

    November 16, 2022

    ‘Abrogation of Article 370 has Made Kashmir More Dangerous than 1990s’

    October 18, 2022

    The Poet of Love—Daagh Dehlvi’s Poetry has Native Idiom and Sufi Undercurrent

    May 30, 2023

    The Breadth and Sweep of Sahir Ludhianvi’s Works

    March 8, 2023

    Memories of Gulmarg

    January 28, 2023

    ‘If This Language Lives On, Rahi Also Lives On’

    January 18, 2023

    Kashmir Needs Collective Fight against Glaring Drug Abuse

    December 27, 2022

    Healthcare Emergency

    December 7, 2022

    Traffic Mess: Who is to Blame? 

    November 30, 2022

    Give the Artists the Space They Need

    November 23, 2022

    Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

    January 8, 2025

    Why Pegasus Report Must be Made Public

    December 25, 2024

    America’s Waning Global Position

    November 4, 2024

    Writer’s Block What!

    October 8, 2023

    Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

    January 8, 2025

    Why Pegasus Report Must be Made Public

    December 25, 2024

    America’s Waning Global Position

    November 4, 2024

    Book Review—Shawls and Shawlbafs of Kashmir

    September 12, 2024

    Book Review—Shawls and Shawlbafs of Kashmir

    September 12, 2024

    Book Review: The Divine Dialect of Flowers

    October 5, 2023

    The Collision That Birthed Religion

    March 18, 2023

    Book Review: What is the Meter of the Dictionary?

    March 2, 2023

    Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

    January 8, 2025

    Why Pegasus Report Must be Made Public

    December 25, 2024

    America’s Waning Global Position

    November 4, 2024

    Book Review—Shawls and Shawlbafs of Kashmir

    September 12, 2024
  • J&K

    Hundreds of Sheep Face Starvation as Forest Officials Bar Grazing

    March 14, 2024

    Photo Essay: Fire Fighting Service In Dal Lake

    March 8, 2024

    Tatakooti—Challenges of Owning a Towering Peak

    October 5, 2023

    Interview: ‘Travel, Observing and Tasting is the Best Way to Learn’

    October 2, 2023

    What is Ailing the Apple Farming?

    September 16, 2023
  • Lifestyle

    Eating Together Binds Families

    November 22, 2022

    How Smartphones are Harming Children

    October 25, 2022

    Raising a Champion

    October 11, 2022

    The Reluctant ‘Urban Poor’

    August 28, 2022

    The Reluctant ‘Urban Poor’

    August 21, 2022
  • Economy

    Explained: What is a Credit Score and Why is it Important?

    December 27, 2022

    Rights of Special Bank Customers

    November 30, 2022

    How to be a Socially Responsible Investor

    November 23, 2022

    Stock Exchange Crimes

    November 16, 2022

    Avoid Debt Trap

    November 8, 2022
  • Culture
  • Entertainment
  • Sports

    Tatakooti—Challenges of Owning a Towering Peak

    October 5, 2023

    When Salim was in the Mood

    July 12, 2023

    Why Does Team India Fail Consistently?

    December 27, 2022

    Hail Ben Stokes and Co.

    December 7, 2022

    England Tour of Pakistan

    November 30, 2022
 Kashmir Newsline – Expression Unleashed Kashmir Newsline – Expression Unleashed
Home»Economy»Borrowing to Invest
Economy

Borrowing to Invest

Kashmir NewslineBy Kashmir NewslineSeptember 12, 2022No Comments6 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
Share
Facebook Twitter LinkedIn Pinterest Email

It is a highly risky act that can leave you bankrupt.

by Sajjad Bazaz

A Kashmiri investor, after hearing overhyped stories of profits earned in the stock market, became a victim of his ambition. He invested in the stock market only to see his entire capital amount lost. However, he didn’t let the loss discourage him from investing further in the market.

He analyzed his mistakes and re-strategized his investment pattern in line with his risk bearing capacity. Today he is counted among trustworthy market analysts in India.

Some time back, I had an opportunity to talk to talk to him. Being an authority on the subject now, he narrated his own tale of losses. He ventured into the stock market when he saw some of his friends multiplying their money while investing in some shares of companies. To make quick bucks in the same stream, he obtained a cash loan of Rs.50,000 from Citibank and invested it in the stock market. To his delight, only after six months, his half a lakh rupees investment appreciated and stood at Rs.2 lakh. He started calculating appreciation on his investment at the same pace and without any planning and knowhow of the market mood. He reinvested the money in some other stocks with an objective to gain more and more. But after some time, he was shocked to see that the value of his portfolio of stocks had gone down considerably. He had even lost 50% of his original investment of Rs.50,000.

Even as he was shocked and surprised, he kept his cool and thoroughly tried to understand the market. After some time, he was able to hold a grip on the tricks of the trade which led him to becoming a leading analyst on the stock market in India. Not only this, he became country head (equities) and is one of the leadership members of a reputed new generation private sector bank in India. Today, he counsels investors by way of his expert comments on the movement of the stock market on various reputed television channels. But the story isn’t same when it comes to other Kashmiri investors, as most of them have turned out to be losers in the market.

The investor scenario in J&K as compared to the rest of India, such as markets in Mumbai and New Delhi, continues to be quite primitive. The investors are often unaware of the opportunities there in the market vis-à-vis their quality. After having easy access to the capital market, most of the local investors exercise investment options freely without properly assessing the quality of the options and the quantum of risk they may face.

We don’t have financial clinics for wealth management services here. Most of our investors are more into the business of trading. And borrowing money for trading is a passion catching up fast among these investors. If local market players are to be believed, most of these traders end up losers. Most of them don’t analyse their mistakes and consider investing in the stock market as a part time activity. They have turned themselves into a rudderless boat.

Investors use different ways to borrow money to pay for stocks. They take a personal loan or pledge their property or gold. They count on friends, borrow funds from them and invest in stocks. In this case, they don’t have to pay interest or any other charge. Brokerage firms have kept borrowing facilities at the disposal of their clients.

Why do investors borrow money to stay invested in the stock market? I have come across investors who resort to borrowing after working out some calculations on paper. They work out a handsome gap between the return on investment in stocks and interest payable on loan amount. Calculations on paper may look like they are practical. But in reality, borrowing money to pay for stocks is an extremely risky strategy. This strategy simply multiplies risk of losing money.

Let’s have a look at the facility made available by brokers where an investor can borrow money to pay for stocks. This debt trap is extended by the brokers under a palatable name: margin. This margin facility, of course, increases the purchasing power of the investors, but simultaneously exposes them to the potential for higher losses. Before taking a route of margin to maximize returns on investment, investors first need to understand its operational mechanism.

Primarily, margin facility is not suitable for everyone. An investor can lose more money in the market than he has invested. If the stock price decreases, substantial losses can mount quickly. For example, your stock which you bought for Rs.100 falls to Rs.50. If you fully paid for the stock, you’ll lose 50 percent of your money. But if you bought on margin, you’ll lose 100 percent, and you still have to come up with the interest you owe on the loan.

In case of loss, an investor whose portfolio consists of stocks bought on margins shall be asked by the broker to deposit additional cash or securities in his account that too on short notice to cover the losses. Brokerage firms may even sell some or all the stock without consulting the investor to pay off the loan extended in the shape of margin.

However, you can bank on margin facility for a temporary purpose. In case you are looking for a particular stock and that stock is now at the price where you want to enter. You have money in your bank, but you’re not in a position to transfer it now. Here you can avail margin facility from your broker and pay it back immediately.

Precisely, you should not borrow funds to pay for the stocks. It is a highly risky act and can leave you bankrupt.

Meanwhile, the financial market is flooded with varied financial instruments and it is impossible for an individual to understand everything that is available for them. In this crowd of financial instruments, individuals cannot pick what is best for them. Only a good financial advisor can help an investor to put the investments in the right place.

A financial advisor is like a medical doctor for an investor. You may think of yourself as a knowledgeable investor for having access to financial information, but the fact is that, in the present times, the advice of a financial advisor in the matters of money management, especially in the stock market, cannot be overlooked.  The advice based on your particular situation and goals can help you minimize financial risks. And remember, even though he may be sharing some investment tips with you, a stock broker is not a financial advisor.

 

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
Kashmir Newsline
  • Website

Related Posts

Explained: What is a Credit Score and Why is it Important?

December 27, 2022

Rights of Special Bank Customers

November 30, 2022

How to be a Socially Responsible Investor

November 23, 2022

Leave A Reply Cancel Reply

Top Posts

Team India’s Next Big Thing

July 6, 202227,463 Views

Why This Alpine Lake Trek Stands Out

July 6, 202225,423 Views

India’s Majoritarian Politics and the Role of Media

July 6, 202224,120 Views

Fragile Media Economies and Lack of Opportunities in Kashmir

July 6, 202223,225 Views
Don't Miss
Top Story

Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

By Kashmir NewslineJanuary 8, 20250

BRI’s transformative potential extends beyond economic development. It has the power to reshape global trade…

Why Pegasus Report Must be Made Public

December 25, 2024

America’s Waning Global Position

November 4, 2024

Book Review—Shawls and Shawlbafs of Kashmir

September 12, 2024
Stay In Touch
  • Facebook
  • Twitter
  • Pinterest
  • Instagram
  • YouTube
  • Vimeo

Subscribe to Updates

Get the latest creative news from SmartMag about art & design.

Based out of Srinagar (Jammu & Kashmir) and brought out in print as a weekly with online presence as well, Kashmir Newsline is solely committed to ethical, fearless journalism. We at Kashmir Newsline cover politics, geopolitics, international relations, social issues, health, sports and almost everything else as objectively as humanly possible. Kashmir Newsline carries detailed reports and in-depth analysis on multiple developments happening in Kashmir and around the world.

Facebook X (Twitter)
Our Picks

Belt and Road Initiative: How Real is ‘Debt-trap Diplomacy’?

January 8, 2025

Why Pegasus Report Must be Made Public

December 25, 2024

America’s Waning Global Position

November 4, 2024
Most Popular

Team India’s Next Big Thing

July 6, 202227,463 Views

Why This Alpine Lake Trek Stands Out

July 6, 202225,423 Views

India’s Majoritarian Politics and the Role of Media

July 6, 202224,120 Views
Facebook X (Twitter)
  • Home
  • About Us
  • Politics
  • J&K
  • E-Paper
  • Contact Us
© 2025 Kashmir Newsline. Designed by NexG IT Solutions.

Type above and press Enter to search. Press Esc to cancel.

Go to mobile version