{"id":15062,"date":"2024-03-15T15:11:00","date_gmt":"2024-03-15T09:41:00","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=15062"},"modified":"2024-03-15T18:52:55","modified_gmt":"2024-03-15T13:22:55","slug":"trading-actively-you-need-something-just-like-this","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/","title":{"rendered":"Trading Actively? You Need \u201cSomething Just Like This\u201d"},"content":{"rendered":"\n<p><strong><em>\u201cWhere is my sukha puri?\u201d<\/em><\/strong><\/p>\n\n\n\n<p>Lovers of pani puri (AKA \u2018golgappe\u2019, \u2018puchka\u2019, etc.) will know all about the ritual this line refers to. But if you\u2019re unfamiliar with the strange customs and jargon of chaat enthusiasts, what you need to know is that \u2018sukha puri\u2019 is a dry stuffed puri that\u2019s generally asked for at the end of a round of pani puri. It\u2019s not obligatory for a seller to provide sukha puris, but pani puri fans consider it to be their entitlement.<\/p>\n\n\n\n<p>Because sukha puris don\u2019t require any extra payment, they add to the joy of having pani puri.<\/p>\n\n\n\n<p><strong>Now, what if we told you that you can get a sukha puri in stock investing as well? Something that comes for free, can provide you with additional returns when investing or trading in stocks, and that carries extremely low risk?<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/blog.dspim.com\/hs-fs\/hubfs\/are-you-kidding-me-cat-meme.gif?width=580&amp;height=728&amp;name=are-you-kidding-me-cat-meme.gif\" alt=\"\" width=\"250\" height=\"350\"\/><\/figure>\n\n\n\n<p>Yes, we understand this reaction. And no, we\u2019re not kidding.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#How-is-this-possible\" title=\"How is this possible?&nbsp;\">How is this possible?&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#But-in-what-ways-can-liquid-ETFs-generate-additional-income\" title=\"But in what ways can liquid ETFs generate additional income?&nbsp;\">But in what ways can liquid ETFs generate additional income?&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#1-By-enabling-better-use-of-idle-money\" title=\"1. By enabling better use of idle money&nbsp;\">1. By enabling better use of idle money&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#2-By-acting-as-collateral-for-margin-requirements\" title=\"2. By acting as collateral for margin requirements&nbsp;\">2. By acting as collateral for margin requirements&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#3-By-enabling-strategic-asset-allocation-during-bear-markets\" title=\"3. By enabling strategic asset allocation during bear markets\">3. By enabling strategic asset allocation during bear markets<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#There-are-many-types-of-liquid-ETFs-available-which-one-should-I-buy\" title=\"There are many types of liquid ETFs available: which one should I buy?\">There are many types of liquid ETFs available: which one should I buy?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#So-enjoy-your-bonus-treat\" title=\"So enjoy your bonus treat!\">So enjoy your bonus treat!<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/trading-actively-you-need-something-just-like-this\/#Disclaimer\" title=\"Disclaimer\">Disclaimer<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How-is-this-possible\"><\/span><strong>How is this possible?&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is possible thanks to a category of funds called liquid ETFs (exchange-traded funds). Liquid ETFs are passive funds whose portfolio consists mainly of overnight securities having one-day maturity. The units of such ETFs are traded on stock exchanges just like individual stocks and have similar settlement mechanisms.<\/p>\n\n\n\n<p>Such ETFs don\u2019t carry any <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-equity\/\">equity<\/a> market risk as they don\u2019t <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-prioritise-investing\/\">invest<\/a> in equities, and they have extremely low <a href=\"https:\/\/www.tickertape.in\/blog\/flat-interest-rate-vs-reducing-balance-interest-rate\/\">interest rate<\/a> risk because the maturity of the underlying securities is very short i.e. one day. The returns of such ETFs are relatively stable and are associated with the risk-free rate prevailing in the country. They typically provide a higher <a href=\"https:\/\/www.tickertape.in\/blog\/rate-of-return\/\">rate of return<\/a> than bank savings accounts and <a href=\"https:\/\/www.tickertape.in\/blog\/margin-requirements\/\">margin<\/a> accounts held with brokers:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh7-us.googleusercontent.com\/pKw8o-xRZvmnyApExQgt8uCBDLdfipw1SAFBcyCOhvwHhMo67dNIXV7P7hcBZSgRCzcNY33zfUHXFZoFW8Kf1xvQiiNWInuttsqSrJLIVXIYHNTlQaVfLRgSCBQe6O1D1IvxExyZCkw-jLx-PTm9AtA\" alt=\"\"\/><\/figure>\n\n\n\n<p><strong><em>* Nifty 1D Rate <a href=\"https:\/\/www.tickertape.in\/blog\/stock-market-index\/\">Index<\/a> returns considered as proxy for liquid ETFs. Returns are pre-expense. ^ Savings interest rate of SBI considered. The comparison with bank savings accounts has been given for the purpose of general information only. Investments in <a href=\"https:\/\/www.tickertape.in\/blog\/mutual-funds\/\">mutual funds<\/a> should not be construed as a promise, guarantee on or a forecast of any minimum returns. Unlike traditional saving instruments, there is no capital protection guarantee or assurance of any return in mutual fund investment.). Investment in mutual funds carries high risk as compared to the traditional saving instruments and any investment decision needs to be taken only after consulting a tax consultant or financial advisor. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. These figures pertain to performance of the index\/Model and do not in any manner indicate the returns\/performance of this scheme.&nbsp;<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"But-in-what-ways-can-liquid-ETFs-generate-additional-income\"><\/span><strong>But in what ways can liquid ETFs generate additional income?&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1-By-enabling-better-use-of-idle-money\"><\/span><strong>1. By enabling better use of idle money&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In order to purchase stocks, an investor first needs to transfer money from their bank account to their broking account. Once a certain amount is available in their broking account, they can place orders to purchase stocks. Now, it often so happens that the money transferred to a broking account doesn\u2019t get utilised immediately, and just sits there for a while. Such idle money in a broking account doesn\u2019t earn any returns.&nbsp;<\/p>\n\n\n\n<p><strong>Thus, if an investor parks such unutilised idle funds meant for purchasing stocks in a liquid <a href=\"https:\/\/www.tickertape.in\/blog\/exchange-traded-funds\/\">ETF<\/a>, they can earn additional returns on it.<\/strong> Then, whenever the right opportunity arises to purchase a stock, the investor can sell their liquid ETF units and buy the desired stock.&nbsp;<\/p>\n\n\n\n<p>Similarly, whenever an investor sells some stock units, the proceeds get credited to their broker account and remain idle unless they\u2019re withdrawn to a bank account or used for another investment. This idle money, again, doesn\u2019t earn any returns if kept in a broking account, and earns nominal returns if kept in a savings account. <strong>Instead, whenever an investor sells some stock and is unsure of what their next purchase will be, they can park the proceeds in a liquid ETF and earn additional returns on uninvested capital.<\/strong><\/p>\n\n\n\n<p>This approach can, of course, be implemented by traders as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2-By-acting-as-collateral-for-margin-requirements\"><\/span><strong>2. By acting as collateral for margin requirements&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When investors \/ traders trade in derivatives, they often need margin money in their account. Liquid ETF holdings can be pledged to get margin money.<\/p>\n\n\n\n<p>After a haircut of 10%, the remaining 90% of the value of one\u2019s liquid ETF holdings can be used as <strong>cash margin money<\/strong>. Most importantly, investors \/ traders will keep earning returns on the pledged liquid ETF units. It should be noted, however, that the margin provided against liquid ETF units can differ from broker to broker.<\/p>\n\n\n\n<p><strong>Thus, active stock investors and traders can get additional returns by pledging liquid ETF over keeping cash as margin (depending on the broker).<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3-By-enabling-strategic-asset-allocation-during-bear-markets\"><\/span><strong>3. By enabling strategic asset allocation during bear markets<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>During bear markets, many investors and traders prefer to hold cash due to the absence of stock investing opportunities. <strong>Such investors can make use of liquid ETFs instead to park money and earn returns during phases when equities are providing negative returns.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"There-are-many-types-of-liquid-ETFs-available-which-one-should-I-buy\"><\/span><strong>There are many types of liquid ETFs available: which one should I buy?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are three main types of liquid ETFs which differ in terms of how they handle returns \u2014 <a href=\"https:\/\/www.tickertape.in\/blog\/cash-dividend-vs-stock-dividend\/\">Dividend<\/a> Payout Plan, Dividend Reinvestment Plan, and Growth Plan. None of these types is inherently superior to the others, as the returns from each are generally comparable. Therefore, investors should choose the type of liquid ETF that best aligns with their individual needs and preferences.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh7-us.googleusercontent.com\/3vQRril--TF4NObPINc8I5e_W-HFbbgxdx7naI0JCPSZqLwA-Jgp15nRsvK6kXnpoE6NcNed0ewLuammS11Pr1VIllXIrsH68udCXwQnrt79RJqdbdfe7zsIT_B4bGpZgqToIRc-2uwYAmaqSV5Ww98\" alt=\"\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"So-enjoy-your-bonus-treat\"><\/span><strong>So enjoy your bonus treat!<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In sum, liquid ETFs are the sukha puris of investing, as they can provide investors \/ traders with extra income and help them manage their cash flow better without taking on any significant risks.&nbsp;<\/p>\n\n\n\n<p>If you\u2019d like to speak with us about how a liquid ETF can benefit you, please click the button below and we\u2019ll get in touch.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.dspim.com\/campaigns\/brand-page\/?utm_source=blog&amp;utm_medium=gart&amp;utm_campaign=dsp\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">SEEK GUIDANCE FROM AN EXPERT<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disclaimer\"><\/span><strong>Disclaimer<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>In this material DSP Asset Managers Pvt. Ltd. (the AMC) has used information that is publicly available, including information developed in-house. Information gathered and used in this material is believed to be from reliable sources. While utmost care has been exercised while preparing this document, the AMC nor any person connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient(s) before acting on any information herein should make his\/their own investigation and seek appropriate professional advice. The statements contained herein may include statements of future expectations and other forward looking statements that are based on prevailing market conditions \/ various other factors and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The sector(s)\/stock(s)\/issuer(s) mentioned in this presentation do not constitute any research report\/recommendation of the same and the schemes of <a href=\"https:\/\/www.tickertape.in\/blog\/netra-december-2023-market-analysis-report-5-key-takeaways\/\">DSP mutual fund<\/a> may or may not have any future position in these sector(s)\/stock(s)\/issuer(s). All opinions\/ figures\/ charts\/ graphs are as on date of publishing (or as at mentioned date) and are subject to change without notice. Any logos used may be trademarks\u2122 or registered\u00ae trademarks of their respective holders, our usage does not imply any affiliation with or endorsement by them. These figures pertain to performance of the index\/Model and do not in any manner indicate the returns\/performance of the Scheme. It is not possible to invest directly in an index.<\/em><\/p>\n\n\n\n<p><strong><em>Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.<\/em><\/strong><\/p>\n\n\n\n<p><strong><em>Mutual Fund investments are subject to market risks, read all scheme related documents carefully.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Discover the &#8220;sukha puri&#8221; of stock investing: Liquid ETFs. Secure, extra income with minimal risk, enhancing your investment journey.<\/p>\n","protected":false},"author":146,"featured_media":15064,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[1770],"tags":[],"acf":[],"modified_by":"Harshit Singh","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2024\/03\/Pani-puri-2800-x-620-scaled.webp?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/15062"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/146"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=15062"}],"version-history":[{"count":3,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/15062\/revisions"}],"predecessor-version":[{"id":15066,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/15062\/revisions\/15066"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/15064"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=15062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=15062"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=15062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}