IN-How to fill Demand Draft form of SBI

What is Inflation?

This post will shed some light on the questions like: What is Inflation? What causes inflation?

People usually complain about prices going up these days. This rise in prices in economic terms is called “inflation”.Inflation:” Inflation is a rise in the general level of prices of goods and services in an economy over a period of time”.-WikipediaThe higher the inflation, the lesser the value of our money. Inflation reduces the purchasing power of our money. Your money 5 years back cannot buy the same amount of goods now. We pay more money for the same quantity of goods.
Inflation is a sign that an economy is growing. The lack of inflation may be an indication that the economy is weakening.

Have you ever perhaps asked to anyone “What causes the inflation? "If you want to know then here’s a simple explanation:
There are many causes for inflation, depending on a number of factors. But there are broadly 3 causes:
Demand pull inflation: If demand is growing faster than supply, prices will increase. This usually occurs in growing economies like India. Prices are forced upwards because of the high demand.
Cost-push inflation: If there is drop in supply due to natural disaster (e.g. drought) or increased prices of inputs (raw material).
When a country experience natural disasters like excessive rain or drought, it destroys various crops, causing prices of these crops rise to high.
Let us say, if inputs/raw materials increase in price, this leads to the cost of production increasing. If there is a rise in production costs, which leads to an increase in the price of the final product of the company, which in turn leads to the company increasing prices to maintain their profits.
Built- in inflation: Rising labor costs can lead to inflation. As workers demand their wage increases, and companies usually chose to pass on those costs to their customers. It leads to a vicious circle.

Documents required to open DEMAT account

The following are the Documents required to open DEMAT account.

1.PAN Card (mandatory)
2.Proof of identity (copy of any one proof):
1) Passport
2) Voter ID Card
3) Driving license
4) PAN card with photograph
5) Identity card/document with applicant's photo
3.Proof of address (copy of any one proof):
1) Ration card
2) Passport
3) Voter ID card
4) Driving license
5) Bank passbook
6) Verified copies of electricity bills/ residence telephone bills (not more than two months old)/ Leave and license agreement .
7) Identity card/document with address, issued by Central/State government and its departments.
4. Photographs (passport size 2 or more. depends on the DP)
5. Bank account details (The one that needs to be linked to the DEMAT account) along with 3 Cheques i.e. Margin amount Cheque, Cancelled Cheque and DP Cheque.

The above mentioned docs should be sufficient to open a DEMAT account.
Above all PAN Card is extremely essential to open a demat Account. I advise you to carry original documents along with photocopies as they will ask the originals for verification.
So get your all documents in place.

Charges levied on a demat account

Before going to DP for opening a Demat account, We should know what all type of charges are levied for opening the account. Here I listed them.

Different types of Demat Account Charges:
There are 3 major charges charged on a demat account: >
1. Account Opening fee :> There may or may not be an opening account fee, depends on your DP.
2. Annual maintenance fee :> Charged in advance, for maintaining your portfolio.
3. Transaction fee :> Charged for crediting/debiting securities to and from the account on a monthly basis.

Do not confuse Demat account charges with brokerage charges.
Demat account charges are levied to your DP and Brokerage charges are paid to your Broker, in case if your DP and broker are 2 different entities.
There are also other type of charges levied on a demat account like Dematerialization, Rematerialization, Pledge Services, off market transfers, STT charges and they may or may not be applicable and varies from DP to DP.

Demat Account: First step to trade in share market

If you have ever been interested in learning about the stock market, this is your chance.
With growing share market awareness, more and more people now want to participate in the share market. To do this, we should understand the basic requirements to trade in shares. Let me take you along to the fantastic world of trading in shares.
So we will start with Demat Account.

A company listed on a stock exchange; have to offer the securities (e.g. shares) in both physical and dematerialized mode.
-Physical mode means actual certificates giving information about the shares of a company owned by a person.
-Dematerialization is the process of converting physical shares i.e. shares certificates into an electronic form.

Dematerialization of shares is optional and an investor can still hold shares in physical form.
But we have to demat the shares if we want to sell the shares through the Stock exchanges, because now a day’s almost all of the shares trading happens using the Demat mode of shares.
For trading through the Demat mode of shares, DEMAT account is required.
You need to maintain an account with a depository (for more info see note@ the end of this blog) if you intend to hold securities in demat form.

What is a DEMAT account?
DEMAT Account refers to a dematerialised account.
A DEMAT account is an account which we need for buying/selling the shares/stocks of a company and other equities like mutual funds, exchange traded funds - Gold ETFs etc.

Demat account hold equities, we cannot put money in demat account.
Let's say: If I buy shares like this: 50 of Infosys, 25 of Reliance, 15 of TCS. All these shares will be shown in my demat account.
So we don't have to possess any physical certificates showing that we own these shares. They are all held electronically in our account.
As we buy and sell the shares, they are adjusted in our account.
We have to contact the DPs (For information on DPs See note @the end of this blog), to open the demat account. He will give you all the required details for opening DEMAT.
After opening the demat account, the DP will provide you with periodic statements of holdings and transactions, just like a bank statement. However for sake of your own information, it is better to keep a record of the shares purchase prices of on your own as this information is not included in the statement.

There are several DPs in India for e.g. ICICIDirect,Kotak,SBI,Sharekhan,Reliance Money,Motilal Oswal etc.

There are many Benefits of holding shares in DEMAT form:
Benefits:

-Immediate transfer of shares. Demat avoids the time consuming and complex process of getting shares transferred in the name of buyers.
-Elimination of risks associated with physical certificates such as bad delivery, fake securities (in postal delivery), etc.
- Reduction in paperwork involved in transfer of shares.
- Holding investments in shares, debts and mutual fund units in a single account.
-Also automatic credits of shares into demat account, in case if a company declares bonus shares or split of shares.
-It is also safe, secure and convenient.
-No stamp duty for transfer of shares
-Transmission of securities is done by DPs.We don’t have to interact with companies.

The next blog will be on other DEMAT details like How to open DEMAT Account.

Note: Like bank holds money in a Bank account, Depository holds securities (i.e. Shares, Bonds, Mutual fund units etc.) in an account.
The Depository provides its services to investors through its agents called depository participants (DPs).Banks, Financial Institutions, and SEBI registered members can become DPs.

NEFT Vs RTGS

NEFT & RTGS are the online facilities for transferring money within the country. NEFT & RTGS allows accounts holders in the banks to electronically transfer the funds intra-bank.

NEFT Vs RTGS

 

Sr.No	Differences	NEFT	RTGS
1	Full Form	National Electronic Funds Transfer	Real Time Gross Settlement
2	Settlement	Deferred net settlement (DNS) and settles transactions in batches	Continuous Settlement of fund transfers on an order by order basis.[Real time basis]
3	Transactions processed till time	Only Transactions received till a particular cut-off time are processed	Transactions are processed continuously all the business time
4	How much can be transferred	No limit on maximum or minimum amount that can be transferred	Limit is Minimum of 2 lakhs and no limit on maximum amount but banks may restrict the amount you can transfer in one day
5	Charges on outward transfers	For transfers up to 1 lakh-Not more than RS 5	2 TO 5 Lakh -Not more than Rs 30
		1 to 2 lakh-Not more than Rs 10	Above rupees 5 lakhs -Not more than Rs 55
		More than 2 lakhs-Not more than Rs 15
6	Operating hours	It Operates in hourly batches twelve settlements from 8 am to 7 pm on week days (Monday through Friday) six settlements from 8 am to 1 pm on Saturdays.(for each bank / branch the above timings may sometimes vary)	From 9.00 hours to 16.30   hours on week days                                        from 9.00 hours to 13.30 hours on Saturdays(for each bank / branch the above timings may sometimes vary)
7	Processing Time	Transfers made are slow as compared to RTGS	Transfers made are quick as compared to NEFT

 

Collection of Quotes:The Richest Man in Babylon

This is a must read wealth building book. It is written in a story-like format. You may feel the language used a bit different, but the messages are very clear.
The wealth building principles like “Seven cures for a lean purse” and “The 5 laws of gold” are nicely explained and easy to understand.

Some of the financial quotes in this book are really nice and here I am giving you the collection.

Collection of some good quotes from a must read inspiring book on wealth building:

Money is the medium by which earthly success is measured.

Money makes possible the enjoyment of the best the earth affords.

Money is plentiful for those who understand the simple laws which govern its acquisition.

Action will lead thee forward to the successes you most desire.

To attract good luck to oneself, it is necessary to take advantages of opportunities.

Men of Action are favored by the GODDESS of good luck.

Wealth is power. With wealth many things are possible.

Every gold piece that you save is a slave to work for you. Every copper it earns is its child that also can earn for you.

Advice is one thing that is freely given away, but watch that you take only what is worth having.
Live on less than you earn.

Opportunity is a haughty goddess who wastes no time with those who are unprepared.

Good luck waits to come to that man who accepts opportunity.

Wealth that comes quickly goes the same way.

Wealth that stays to give enjoyment and satisfaction to its owner comes gradually.

Where the determination is, the way can be found.