Your Questions About How To Invest In Stocks

Sandra asks…

If a person residing in US invests in Indian stocks and get profit, what would be the income tax payable?

A person residing in US invests stocks in India. He has no other income except from stocks. If he is getting profit from short term(less than 365 days) gains, long term(more than 365 days) gains and dividends, does he need pay capital gains tax? If he does not need to pay does he need to file tax returns.

John answers:

The basic exemption limit of Rs. 1,60,000 is available to all Assessees, whether resident or non resident.

Therefore, if the short term profit on share trading is less than this amount, no Indian Income Tax needs to be paid and consequently no tax return also needs to be filed in India.

However, assuming that the Short Term Gains exceeds this basic limit, tax @ 15% with education cess of 0.45% is to be paid on the excess over 1,60,000.

Long term capital gains are tax free for both residents and non residents if the all sales have been effected through stock exchanges/brokers and securities transaction tax has been paid on all such deals.

If both long term and short term gains taken together exceed the basic limit, a tax return MUST BE filed even though no tax is payable.

James asks…

What is the best source of information for investing stocks around the world?

I try to search information for investing in stocks around the world but I can’t find any website provide required information such as financial statement highlight or fundamental ratio.

I have some requirements for investing such as industry sectors , P/E P/BV ratio , so could anyone recommend me the website that I can screen easily.

Thank you

John answers:

I do not know of any but since your broker allows you to trade stocks around the world ask them if they have any screening tools for those stocks.

US stocks have certain reporting requirements by the SEC in order to be listed on US stock exchanges. Any fraud will be prosecuted as shown by Enron and Worldcom in the past.

Most international stocks do not have the same requirements and do not adhere to SEC requirements and thus are not listed on US stock exchanges. Some international stocks that adhere to SEC requirements are listed as ADRs (American Depository Receipts).

Susan asks…

How do i start investing in stocks?

I want to start investing in stocks, but i have no idea how to. I heard its good money, but i don’t understand where i need to go to start trading stocks, and how old does one have to be to make an account for investing in stocks. Also could you explain to me what a mutual fund is and the basics of investing in stocks? Thank You.

John answers:

To invest in stocks all you need to do is:
a) Be 18 (if under 18 then you need your parents to cosign)
b) Talk to a stock broker to invest your money
c) Have money to invest

And that’s it, but that doesn’t mean you will make money in the stock market. In this case I will assume you want to make money so there are extra steps that need to be taken.

To make money from stocks you need to:
a) Find a company that is either starting out or is in an economic slump
-the stock prices should be low at that time
-a good example is Ford way back during the economic crisis and stocks were under $2
b) Research the company
-who is the ceo?
-does the ceo have experience with running a business?
-how good is the companies business plan?
-will the company thrive or go under?
-these are some good questions to ask. When I bought my Ford stock, I knew the government wasn’t going to let Ford go out of business and I researched and saw that the new ceo that was put in charge was put in situations like this before and saved companies from going out of business.
C) Decide how much you will invest
-how much can you afford to lose?
-how strongly do you believe in the company?
D) Talk to a stock broker
-fees will be charged with investing in stocks
-the lower the fees, the more you can invest
e) Watch the stock market and check your stock price every day
-when you buy at a low price, you can sell at a high price for bigger profits
-don’t gamble for the jackpot! Earlier this year, I could have sold my Ford stock for $18 share making a big profit considering i bought the stock at $2 a share and invested $1,000 for 500 shares. I was going to wait for it to hit $20 a share but it dropped quickly to $14 a share and now it is less than $10 because of the crisis in Europe and the amount of Ford cars sold there dropped.
F) If everything was done correctly, talk to your stock broker to withdraw your money into your savings account.
-this is where you make your money
g) If things look like they are headed in a bad direction and your company might go out of business, talk to your stock broker quick and with draw your money before you lose all of it!
-when things settle out at a lower price you can re-invest if you think the company might recover.

Here is a good link on mutual funds

Mary asks…

is it better to buy a business or invest in financial instruments ?

i dont see the point in buying businesses….isn’t it much more efficient to be investing directly into stocks, and other liquid financial instruments ? running business have lot more inefficiencies, such as communication break down, work social problems, and just as the same amount of uncertainty as investing. stocks or other type of financail instruments are usually done elctronically, it can operate as a one man business.

John answers:

Don’t buy a business if you’re not into it. If you read financial books by Donald Trump and Robert Kiyowaski , they wouldn’t advice you to invest in stocks also.

Stocks and other financial instruments are not under your control. It will always be at the mercy of the market.

With a business, you control everything. Its hard work.

Is there such financial instruments , stocks, mutual funds that guarantees a good gain? You should know by now, nothing in life is certain.

You want little action type of investment? Invest in real estate, houses, apartments that you can collect rent or lease out immediately.

Linda asks…

How can I get started investing in stocks?

I would like to invest in stocks or mutual funds, but I really don’t know where to start. What is a good broker to use? I would like to do it online, and I want minimal fees.

I am looking to invest about $5-8K.


John answers:

Try educating yourself first. Read “Investing for Dummies” available from your public library.

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