You’ve probably heard stories of people striking it rich overnight through futures and options (F&O) trading. It sounds exciting, right?
But here’s the truth: a recent study by SEBI reveals a different reality. Between 2022 and 2024, over 1 crore traders in India lost a jaw-dropping ₹1.81 lakh crore!
91% of Traders Face Losses — Could You Be Next?
In just FY24, a whopping 91% of F&O traders (that’s nearly 73 lakh people!) ended up losing money.
If you’re under 30, the numbers are even worse: 93% of younger traders faced losses. It turns out F&O trading is much riskier than most people realize, especially for those diving in without a plan.
Why Do People Keep Trading if They’re Losing?
Despite heavy losses, 75% of traders keep coming back, hoping to “win it back.” Sadly, most fall deeper into financial trouble, especially those earning less than ₹5 lakh a year. The odds just aren’t in their favor.
Big Players Win, Small Traders Struggle
While individual traders are losing, big players like institutional traders and foreign investors are cashing in at their expense. With high-tech tools and high frequency algorithms, they made ₹33,000 crore and ₹28,000 crore, respectively, leaving small traders in the dust.
The Hidden Costs
Transaction fees are another overlooked factor. Traders spent ₹50,000 crore on transaction costs in FY24 alone, averaging ₹26,000 per trader, further eroding any small profits they might make.
The Bottom Line
F&O trading can seem lucrative and easy, but for the majority, it’s a high-risk gamble. Without a solid plan and full awareness of the risks, the odds are s tacked against you. Proceed with caution!
(Contributed by MF Alam, Sr. Research Analyst, Hum Fauji Initiatives)
Life Insurance: Your protection umbrella for Studying Abroad
Every year, around a million Indian students take the exciting leap to study abroad, but preparation is the real key here. Just like a solid game plan in sports, having the right strategies can make all the difference.
The Importance of Life Insurance
Studying overseas is thrilling, but it can also be financially challenging. Many students need hefty education loans to make their dreams come true. In FY22 alone, public sector banks lent over ₹7,500 crore to students going for studies abroad.
That’s where life insurance – only the Term Insurance plan – comes into play! Think of it as your safety net—if the unexpected happens, it can cover your loans and provide support for your family back home. It’s like having a reliable teammate cheering you on. While we do not recommend a life insurance to anybody who does not have any financial dependents, this is a different case and situation altogether where your family could be saddled with a big burden even if you’re gone.
The Perks of Early Purchase
Buying life insurance early is like getting the freshest ingredients for your favorite dish—cheaper and better. The sooner you buy, the lower your premiums will be, and they’ll stay fixed for the whole duration of the plan. Waiting too long could lead to higher costs as risks increase.
India Vs Abroad: The Easier Choice
Opting for life insurance in India is often simpler than overseas. Indian insurers typically have fewer medical requirements and smoother claim processes, allowing you to focus on your studies rather than financial stress.
Make the Smart Move
As you gear up for this thrilling adventure, don’t overlook life insurance. It’s not just a policy —it’s a vital tool that protects your loved ones while you pursue your dreams. Secure that life insurance, and get ready to embark on your exciting journey—your future awaits!
(Contributed by Vishakha, Relationship Manager, Team Arjun, Hum Fauji Initiatives)
Breaking Down New PPF and SSY Rules for your Child
If you’re saving for your child’s future, options like the Sukanya Samriddhi Yojana (SSY) and Public Provident Fund (PPF) offer safe, steady growth—but are they enough on their own?
Let’s explore their benefits, and why mixing in some equity might be worth considering!
PPF: The Reliable Sidekick
Think of PPF as a steady companion—one account with consistent growth. You can deposit as little as ₹500 per year, up to ₹1.5 lakh. If you go over this limit, your extra funds might be returned without interest!
Important Note for NRIs for PPF
Non-Resident Indians (NRIs) can’t open new PPF accounts but can manage existing ones until maturity. However, if they haven’t disclosed their status, they’ll earn only Post-Office Savings interest rates until September 30, 2024.
Sukanya Samriddhi Account: A Secure Gift for Your Daughter!
Exclusively for a girl child, SSY offers a tax-saving way to invest. It allows one account per daughter (two per family, or three with twins), making it a stable choice with fixed returns that suit those who prefer a safe and steady, though low earning, approach.
Looking for More Spice? Consider Investments in Equity & Hybrid Funds
While PPF and SSY provide a consistent path, equity investments can pack a punch with potentially higher long-term returns. For example, equity funds have potential to generate more than 12% annually over a time period of 5-6 years or more.
Not keen on full market swings? Hybrid funds offer balanced growth at 8-10%, with a bit of equity and a dash of security.
So, What’s Your Flavor?
Think of SSY and PPF as cozy, comforting dishes—safe and satisfying.
Equity and hybrid funds? They’re more like spicy street food—exciting, with a bit of zing!
Whatever your appetite, it’s about finding the right blend of growth and security for your family’s future. What’s your choice?
(Contributed by Anjeeta Kumari, Financial Planner, Team Arjun, Hum Fauji Initiatives)
What did our clients ask us in the last 7 days?
Question – Is FD Laddering Beneficial? What Should You Do in the Current Interest Cycle?
Our Reply – FD laddering is like climbing a financial ladder to success! Instead of locking all your money in one Fixed Deposit (FD), you spread it across short, medium, and long-term FDs—each “rung” offering unique benefits. It gives you flexibility, stable returns, and helps manage changing interest rates.
Right now, interest rates are expected to decline in the near future, so locking in high rates on long-term FDs can help secure better returns for years to come. You might want to review current rates and choose the longest tenure that best aligns with your savings goals, ensuring you make the most of today’s higher rates.
For short-term needs, though, FDs may not be the only option. You could consider alternatives like mutual funds in short-duration and even arbitrage categories, short tenure government securities, etc which can be more responsive to market movements. These alternatives offer both flexibility and competitive returns for shorter horizons.
So, if you’re looking for stability over the long run, securing rates now may be a wise choice, and for short-term investments, exploring market-based options can add flexibility to your portfolio.
For more details, please contact your financial planner at Hum Fauji Initiatives to prepare a customized portfolio for you.
(Contributed by Team Sukhoi, Hum Fauji Initiatives)
