RSPH Blogs - Finances!

  Learn to Calculate Profit & Loss Percentage on a Share Investment Calculating the profit or loss percentage on a share you've invested in is a genuinely useful way to keep track of your portfolio's performance. Here's a simple formula to do it. The Formula Profit/Loss % = [(Selling Price − Cost Price) ÷ Cost Price] × 100 Where: Cost Price (C.P.) — the price you bought the share at Selling Price (S.P.) — the price you sold the share at How It Works Step 1: Subtract the Cost Price from the Selling Price (S.P. − C.P.). If the result is positive , you've made a profit. If it's negative , you've taken a loss. Step 2: Take that result (positive or negative) and divide it by the Cost Price, then multiply by 100 to get the percentage. A Worked Example Say you bought a share at $5 (Cost Price) and later sold it at $15 (Selling Price). Step 1: 15 − 5 = 10 (positive, so this is a profit) Step 2: (10 ÷ 5) × 100 = 200% So in this example, you'd have ear...

Value Stocks vs. Growth Stocks: Value Investors vs. Growth Investors What Are Value Stocks and Growth Stocks? (The Basics) Value Stocks are shares trading below what their underlying business is actually worth — priced beneath their intrinsic value . Investing in these is essentially what value investing is about. → Related: What Is Value Investing? (#13) , How to Find the Intrinsic Value of a Share/Stock (#14)** Growth Stocks are shares of companies expected to grow revenue and earnings faster than the broader market average. Worth being precise here: this is about growth expectations baked into the price, not a guarantee that the stock will actually outperform — plenty of growth stocks disappoint relative to those expectations. The core difference: value stocks tend to be priced modestly, below their intrinsic worth. Growth stocks, by contrast, can be priced well above the average — investors are often willing to pay a premium today for the growth they expect tomorrow. In pract...

  How Do Investment Banks Work? What Are Investment Banks? An Investment Bank is an organization that partners with businesses to help them raise capital — while taking on much of the risk involved in that process itself. That definition will make a lot more sense by the end of this article — let's walk through what investment banks actually do. What Do Investment Banks Do? Say a company wants to raise funds quickly. It can approach an investment bank and ask it to find investors on its behalf. The investment bank goes out and finds suitable investors for the company, and — critically — guarantees both sides of the deal: the company that its shares (or bonds) will sell, and the investors that the company will follow through on its end. In doing so, the investment bank takes on real risk as an active participant in the deal, not just a matchmaker. This makes the investment bank a genuine intermediary between the buyer (investors) and the seller (the company). If either side fails ...

  Why Is Investing Important? Here's Why Everybody Should Start This ties in closely with an earlier piece on why building wealth matters in the first place — worth reading alongside this one. → Related: Why Is It Important for You to Be Rich? (#35) Here, let's get specifically into why investing — as opposed to just earning and saving — matters so much. The Core Reasons Doesn't require ongoing physical labor Your money works for you, generating more money The potential to earn passively, including while you sleep A realistic path toward earlier retirement Reduced dependence on others later in life Continued earning potential even in old age Historically, a strong hedge against inflation over the long run Let's walk through each one. No Ongoing Physical Labor Required Beyond the research and due diligence involved in choosing what to invest in, investing doesn't demand the kind of daily physical labor a traditional job does. That said — it's worth being...

  Basics of FMCG: FMCG Stocks What Does FMCG Stand For? FMCG stands for Fast-Moving Consumer Goods. What Kind of Sector Is FMCG? FMCG is one of the largest sectors in the economy. What Do FMCG Companies Make? FMCG companies manufacture relatively inexpensive products — but sell them in very large volumes, which is where the "fast-moving" part of the name comes from. Examples of FMCG Companies FMCG spans categories like food, household goods, and pharmaceuticals. Nestlé is a well-known example of a major FMCG company. How Do FMCG Stocks Perform During Inflation? FMCG stocks tend to hold up comparatively well during periods of high inflation. Even as prices rise, demand for these products stays relatively stable, since they're everyday necessities — people generally can't simply stop buying groceries or household essentials the way they might delay a bigger, non-essential purchase. → Related: How Does a Rise in Inflation Affect the Share Market? (#55) Than...

  How Do Mutual Funds Work? Basics of Mutual Funds What Are Mutual Funds? A Mutual Fund is, at its core, a company staffed with investing experts, pooling money from many individual investors to invest on their collective behalf. How Do Mutual Funds Work? Mutual fund companies employ investment professionals whose job is to manage money on behalf of a large pool of investors. Rather than each investor picking their own stocks individually, everyone's money is pooled together and invested collectively — across a mix of assets, depending on the specific type of mutual fund chosen. → Related: What Is the Share Market? (#2) , What Are ETFs? (#38)** — ETFs work on a related pooled-investment principle. Are Mutual Funds Risky? Mutual funds are generally considered lower-risk than picking individual stocks yourself — largely because professional fund managers bring real expertise and typically diversify investments across multiple assets rather than concentrating everything in one place....

  What Are Penny Stocks? What Are Penny Stocks? Penny Stocks are shares priced significantly lower than the average stock. The exact threshold varies by market: In India , stocks priced below roughly ₹100 are commonly referred to as penny stocks, though this isn't a strict official regulatory cutoff — more a widely used market convention. In the U.S. , the SEC's actual regulatory definition (under Exchange Act Rule 3a51-1) classifies any stock trading below $5 per share as a penny stock. The name comes from the idea that these shares are cheap enough to feel like they're priced in loose change — even though the actual dollar thresholds today are well above literal pennies. Should You Invest in Penny Stocks? Here's the key thing to understand: penny stocks being cheap doesn't automatically make them a good buy, and it doesn't automatically make them bad either. Both extremes are common misconceptions. Why are established companies' shares often more expe...

  What Is Short Selling? Explained in Simple Words Short selling has a reputation for sounding complicated — but the core concept is genuinely simple once you see it in action. By the end of this article, it should click. What Is Short Selling? The basic investing principle is: buy low, sell high. Short selling flips the order — you sell high first, and buy low later. Same underlying goal (profit from a price difference), just executed in reverse order. How Does Short Selling Work? When you invest through a broker (your Depository Participant , or DP), that broker holds shares of many different companies. Short selling lets you borrow shares from your broker, sell them, and buy them back later to return — profiting if the price falls in between. → Related: What Is the Share Market? (#2) — for more on DPs and how they work. A worked example: say a company's share is trading at $1,000, and you believe the price is about to fall. You don't own the share yourself, but your broke...

  What Are NCDs? Non-Convertible Debentures Explained What Does NCD Stand For, and What Does It Mean? NCD stands for Non-Convertible Debenture. Important correction to make upfront: the name itself tells you the key feature — these debentures cannot be converted into other assets like company shares. This is actually the defining characteristic that separates an NCD from its counterpart, a Convertible Debenture (which can be converted into equity shares under agreed terms). An NCD stays a pure debt instrument for its entire term — you lend money, earn interest, and get your principal back in cash at maturity, with no option to convert that into ownership in the company. → Related: What Are Bonds? Explained in Simple Words (#29) — NCDs work in a genuinely similar way to bonds. How Do NCDs Work? When a company needs funds for business expansion, it can raise that money by issuing NCDs to investors — similar in spirit to how companies raise money through the share market, j...

  Who Is an Enterprising Investor? According to Benjamin Graham In The Intelligent Investor , Benjamin Graham lays out two distinct investor archetypes: the Defensive Investor and the Enterprising Investor . Today, let's focus on the latter. → Related: What Is Value Investing? (#13) Graham's Definition An Enterprising Investor , according to Graham, is someone willing to dedicate real time, effort, and expertise to researching and analyzing individual companies — going well beyond the minimum required to simply hold a diversified, low-maintenance portfolio. This investor actively studies businesses, applies principles like value investing , and takes on the extra work in pursuit of stronger returns than a more passive approach would typically deliver. One clarification worth making : Graham's term "Intelligent Investor" — the title of his book — isn't specifically synonymous with the Enterprising Investor. It's a broader concept, referring to any investo...

  What Is Bond Yield? Meaning of Bond Yield Let's break "Bond Yield" down into its two parts: Bond , and Yield . What Is a Bond? (Quick Recap) A Bond is a fixed-income instrument representing a loan taken by a borrower (a company or government) from an investor. In simple terms, it's a formal agreement confirming that an investor has lent money to a business, with a promise of repayment. → Related: What Are Bonds? Explained in Simple Words (#29) , Bonds vs. Stocks: Are Bonds Safer Than Stocks? (#30)** What Is Yield? Yield refers to the return, or interest rate, an investment generates. When an investor lends money through a bond, that yield is the profit they earn — paid by the borrower as interest, alongside the return of the original amount lent. So — What Is Bond Yield? Bond Yield is the return (or interest rate) an investor earns by investing in a particular bond — expressed as a percentage of the amount invested. One important nuance worth knowing: a bond...

  What Is P/E Ratio? What Does It Mean? How Do You Use It? The P/E Ratio is one of the most fundamental metrics any investor should check when researching a company — yet it's also one of the most commonly misunderstood. Here's what we'll cover: What does P/E Ratio mean? How is it calculated? When should you invest based on it? Is a higher or lower P/E better? What Is P/E Ratio? P/E Ratio stands for Price-to-Earnings Ratio. In simple terms, it tells you how much investors are collectively willing to pay for ₹1 (or $1) of a company's profit. Put differently: it's a measure of how many times a company's earnings investors are willing to pay to own a share of it. How Is P/E Ratio Calculated? P/E Ratio = Current Share Price ÷ EPS (Earnings Per Share) To get there, you first need EPS: EPS = PAT (Profit After Tax) ÷ Total Number of Outstanding Shares A Worked Example Say a company has: Current Share Price = ₹20 PAT = ₹5,000 Outstanding Shares ...

  What Are ETFs? An Introduction to ETFs (Basics) What Does ETF Stand For? ETF stands for Exchange Traded Fund — and as the name suggests, it's a fund that's traded directly on a stock exchange. How Do ETFs Work? An ETF is essentially a basket of multiple assets — typically a mix of stocks, bonds, and sometimes commodities — bundled together into a single, tradable fund. Buying one ETF means you're getting exposure to everything inside that basket, all at once, in a single transaction. → Related: What Is the Share Market? (#2) , What Are Bonds? (#29)** A natural question: why buy an ETF instead of just buying the individual stocks or bonds yourself? Turns out, there are real advantages. What Are the Benefits of Investing in ETFs? 1. Diversification. Instead of researching and buying into multiple individual companies or assets separately, an ETF gives you a ready-made, diversified basket in one purchase — spreading your exposure across many holdings at once, rathe...

What Is Bitcoin? An Introduction to a Digital Currency What Is Bitcoin? Bitcoin is a digital currency (cryptocurrency) with no physical form — you can't hold it in your hand. The gold-coin-with-a-"B" imagery commonly associated with it is purely symbolic; it doesn't represent anything physical. Bitcoin runs on a peer-to-peer transaction system, meaning transactions happen directly between parties without a bank or other intermediary in the middle. Worth correcting a common misconception: Bitcoin transactions being peer-to-peer doesn't mean there's no risk of losing money. People genuinely do lose money with Bitcoin — through scams, lost or stolen private keys (with no way to recover access), exchange hacks, and simple price volatility. Removing a middleman changes how a transaction works, not whether the money involved is safe. Who Founded Bitcoin, and When? Bitcoin was introduced in 2008 (with the network launching in 2009) by a person or group oper...

  Bonds vs. Stocks: Are Bonds Safer Than Stocks? Both stocks and bonds are well-known investment assets — but when it comes to risk, they work quite differently. Since risk management is a core part of investing, it's worth understanding exactly how the two compare. One thing worth saying upfront: both stocks and bonds can be genuinely profitable, and both can lose you money. How well either works out often comes down to the specific investment and how much research and knowledge you bring to it. A Quick Recap Stocks/Shares: a stock represents partial ownership in a company. As an investor, its value grows as the company grows — and falls if the company underperforms. Share prices are also influenced by broader factors like the economy, government policy, and general market sentiment. → Related: What Is the Share Market? (#2) Bonds: a bond is a legal document representing a loan — money you've lent to a company (or government), documented with the amount lent, the repaymen...

What Are Bonds? Explained in Simple Words What Is a Bond, in Simple Words? A Bond is a legal document representing a loan — issued by a company (or government) to raise money, with a promise to pay that money back, with interest, by a fixed date. A Simple Example Say a friend of yours wants to start a business but doesn't have enough money to do it alone. They come to you for help, and you lend them some money. In return, they hand you a document confirming the amount you gave, when they'll pay it back, and at what interest rate. Between close friends, that kind of formal documentation might feel unnecessary — trust alone might be enough. But this is exactly how it works in the business world more broadly, where formal documentation protects both sides. You're not limited to lending money to friends or family, either — you can invest in bonds issued by any business you're interested in, after researching the interest rate on offer and the company's overall fi...