How to invest this 1 crore to get maximum trading margin from pledging?

[trendtrade]

Hello Friends

I have got 1 crore+ amount that is lying in my savings bank account, which is giving just 3.5 percent interest. I need to invest this amount into such instruments, which would give me the following benefits -

Safety of the principal amount that is invested.
Guaranteed minimum fixed returns on the investment.

Maximum % of this investment amount should be allowed to be PLEDGED as "CASH EQUIVALENT COLLATERAL" for getting the CASH COMPONENT of the overall Trading Margin, so that I can then use this margin for doing the investments as well as active intraday trading in the NSE Stocks, Futures and Options Segments. I do not trade into any other exchanges or instruments.


If any of you could please make some suggestions in this regard, that would be really helpful. Thank you so much for your time.

You may contact me on any of the following -

Email - [email protected]
Telegram - NiftyTrader12
Discord - trendtrade

Thank you.



PS:

For understanding the "CASH EQUIVALENT COLLATERAL" condition, please check out the following link - https://tradingqna.com/t/the-different-types-of-bonds-that-you-can-invest-in/58254/11?u=4autotrading


Please notice these notes given at the very bottom of the Excel sheet from the above link.


Notes
1) Haircut as applicable subject to a minimum of VaR+ELM+Adhoc
2) The clearing corporation has set a certain limit on the number of shares/units that can be pledged per security through a broker. If the broker limit is reached, you will not be able to further pledge such securities for margin.
3) For stocks pledged before 4pm, collateral margin will be available on T+1 day.
4) The collateral margin received by pledging cash component securities can be used fully towards any margin requirement for your open positions. You will not be required to maintain cash separately if the collateral from cash component securities covers the margin requirement.
5) The collateral margin received by pledging non-cash component securities can be used only up to 50% of the margin requirement for your open positions. The exchange stipulates for the remaining 50% margin to come in the form of cash or cash equivalent collateral. Any additional utilisation of the non-cash collateral, over and above 50% of the margin requirement will be liable to delayed payment charges.
6) Cost of pledge: Rs.30 + GST per scrip irrespective of quantity of stock pledged.
7) For all unpledge requests placed before 2 pm, stock will be available in demat account for trading on T+1 day.


https://i.postimg.cc/7YtW0wkT/To-pledge-for-Margin-GIF.gif

 

[Romeo1998]

Hello Friends

I have got 1 crore+ amount that is lying in my savings bank account, which is giving just 3.5 percent interest. I need to invest this amount into such instruments, which would give me the following benefits -

Safety of the principal amount that is invested.
Guaranteed minimum fixed returns on the investment.

Maximum % of this investment amount should be allowed to be PLEDGED as "CASH EQUIVALENT COLLATERAL" for getting the CASH COMPONENT of the overall Trading Margin, so that I can then use this margin for doing the investments as well as active intraday trading in the NSE Stocks, Futures and Options Segments. I do not trade into any other exchanges or instruments.


If any of you could please make some suggestions in this regard, that would be really helpful. Thank you so much for your time.

You may contact me on any of the following -

Email - [email protected]
Telegram - NiftyTrader12
Discord - trendtrade

Thank you.



PS:

For understanding the "CASH EQUIVALENT COLLATERAL" condition, please check out the following link - https://tradingqna.com/t/the-different-types-of-bonds-that-you-can-invest-in/58254/11?u=4autotrading


Please notice these notes given at the very bottom of the Excel sheet from the above link.


Notes
1) Haircut as applicable subject to a minimum of VaR+ELM+Adhoc
2) The clearing corporation has set a certain limit on the number of shares/units that can be pledged per security through a broker. If the broker limit is reached, you will not be able to further pledge such securities for margin.
3) For stocks pledged before 4pm, collateral margin will be available on T+1 day.
4) The collateral margin received by pledging cash component securities can be used fully towards any margin requirement for your open positions. You will not be required to maintain cash separately if the collateral from cash component securities covers the margin requirement.
5) The collateral margin received by pledging non-cash component securities can be used only up to 50% of the margin requirement for your open positions. The exchange stipulates for the remaining 50% margin to come in the form of cash or cash equivalent collateral. Any additional utilisation of the non-cash collateral, over and above 50% of the margin requirement will be liable to delayed payment charges.
6) Cost of pledge: Rs.30 + GST per scrip irrespective of quantity of stock pledged.
7) For all unpledge requests placed before 2 pm, stock will be available in demat account for trading on T+1 day.


https://i.postimg.cc/7YtW0wkT/To-pledge-for-Margin-GIF.gif

First of all, congrats that u have accumulated 1 crore with your hard work

Safety of the principal amount that is invested.... nothing is safe in stock market, the moment u put money in stock market u r risking that money....

Guaranteed minimum fixed returns on the investment.....for this bank FD is best option....

I have seen several people who have lost 10 crores n even 50 crores in stock market.... in a span of few months to few years....

As long as a person is not fully autotrading, they will make emotional mistakes in their trading, be it intraday, positional or long term...

My suggestion is.... keep this amount in FD, lock it for 5 yrs or 10 yrs.... u will get around 6% annual return on 1 crore, that is 6 lakhs tax free income per year, and 50k per month....

u can every month use the 50K in stock market in investment or try n test different strategies, but please dont use the 1 crore in stock market if u r trading manually

if u still want to use 1 crore in stock market, i would suggest option shorting, with 1 crore u can short 5000 nifty contracts.... and if u only trade on every thursday n just make 5 points in option shorting by shorting far away OTM options, that would be 20 points per month, n that would be 1 lakh per month, and 80k per month after paying tax, which is good for monthly expenses
but this also i would recommend with automation only, but if u do it manually, u will tend to sell costlier ATM options and take more risk n that is the start of loss making

all this is just my suggestion, i might be wrong too... good luck

 

[trendtrade]

Thanks for your suggestions Romeo.

Yes, I have been told for using the Option Selling method to generate extra income on the margin money and I will keep various risk factors in my mind, while doing that.

Regarding Fixed Deposits, we are getting higher returns then 6% these days, but unfortunately, all of this interest income is fully taxable, therefor keeping the inflation into consideration, the Bank FD are not the best and safe investments these days. Moreover, contrary to the prevalent perception that most of us carry, these Bank FD are guaranteed only upto 5 lac per bank account, after that these are risky too.

That is why I am posting my requirement online, to get the ideas from different friends, who have some knowledge in this regards.

 

[godfather]

Hello Friends

I have got 1 crore+ amount that is lying in my savings bank account, which is giving just 3.5 percent interest. I need to invest this amount into such instruments, which would give me the following benefits -

Safety of the principal amount that is invested.
Guaranteed minimum fixed returns on the investment.

Maximum % of this investment amount should be allowed to be PLEDGED as "CASH EQUIVALENT COLLATERAL" for getting the CASH COMPONENT of the overall Trading Margin, so that I can then use this margin for doing the investments as well as active intraday trading in the NSE Stocks, Futures and Options Segments. I do not trade into any other exchanges or instruments.


If any of you could please make some suggestions in this regard, that would be really helpful. Thank you so much for your time.

You may contact me on any of the following -

Email - [email protected]
Telegram - NiftyTrader12
Discord - trendtrade

Thank you.



PS:

For understanding the "CASH EQUIVALENT COLLATERAL" condition, please check out the following link - https://tradingqna.com/t/the-different-types-of-bonds-that-you-can-invest-in/58254/11?u=4autotrading


Please notice these notes given at the very bottom of the Excel sheet from the above link.


Notes
1) Haircut as applicable subject to a minimum of VaR+ELM+Adhoc
2) The clearing corporation has set a certain limit on the number of shares/units that can be pledged per security through a broker. If the broker limit is reached, you will not be able to further pledge such securities for margin.
3) For stocks pledged before 4pm, collateral margin will be available on T+1 day.
4) The collateral margin received by pledging cash component securities can be used fully towards any margin requirement for your open positions. You will not be required to maintain cash separately if the collateral from cash component securities covers the margin requirement.
5) The collateral margin received by pledging non-cash component securities can be used only up to 50% of the margin requirement for your open positions. The exchange stipulates for the remaining 50% margin to come in the form of cash or cash equivalent collateral. Any additional utilisation of the non-cash collateral, over and above 50% of the margin requirement will be liable to delayed payment charges.
6) Cost of pledge: Rs.30 + GST per scrip irrespective of quantity of stock pledged.
7) For all unpledge requests placed before 2 pm, stock will be available in demat account for trading on T+1 day.


https://i.postimg.cc/7YtW0wkT/To-pledge-for-Margin-GIF.gif

Try these also
1. Annuities: These are financial products that offer a guaranteed stream of income in exchange for an upfront payment. There are several types of annuities, including fixed annuities, which offer a guaranteed rate of return, and variable annuities, which offer the potential for higher returns but also come with more risk.
2. Certificates of Deposit (CDs): These are offered by banks and credit unions and typically offer higher interest rates than traditional savings accounts. CDs have fixed terms, typically ranging from a few months to several years, and you agree to leave your money in the account for the entire term in exchange for a higher interest rate.
3. Money Market Funds: These are mutual funds that invest in short-term, high-quality debt securities, such as Treasury bills and commercial paper. They offer the potential for higher returns than traditional savings accounts, but also come with some degree of risk.
4. Government Securities: These are issued by the government and are considered to be very safe, as they are backed by the government. They offer guaranteed returns in the form of interest payments. However, they may not be suitable for margin trading as they are not highly liquid and may not be accepted as collateral by brokers.
5. Corporate Bonds: These are issued by companies and are considered relatively safe if they are issued by well-established companies with a good credit rating. They offer fixed returns in the form of interest payments. However, they may not be suitable for margin trading as they are not highly liquid and may not be accepted as collateral by brokers.

 

[trendtrade]

@godfather , thank you so much for sharing this information.

Out of these, which one's are allowed to be PLEDGED as "CASH EQUIVALENT COLLATERAL" for getting the trading margin from the broker? Because if it cannot be pledged, then I would not prefer to invest in it.

Best Regards

 

[godfather]

281506"] @godfather , Thank you so much for sharing this information.

Out of these, which ones are allowed to be pledged as "cash equivalent collateral" for getting the trading margin from the broker? Because if it cannot be pledged, then I would not prefer to invest in it.

Best Regards

@trendtrade ,

I would recommend you go through this link as well. Where can I find the list of Cash Equivalent Securities and Mutual Funds? If you are interested in using your investment as collateral for margin trading, you will need to invest in assets that are accepted as collateral by brokers. Some options that may be accepted as collateral include cash, government securities, and certain types of stocks or other securities. You will need to check with your broker to see what types of assets they accept as collateral and if they have any specific requirements or restrictions.

It's generally not possible to pledge most traditional investment products, such as fixed deposits, annuities, certificates of deposit, money market funds, government savings bonds, corporate savings bonds, and municipal bonds, as collateral for margin trading. These products are typically not accepted as collateral by brokers because they are not highly liquid and may not be easy to sell in the market.

Assets that are generally accepted as collateral for margin trading:

1. Cash: Cash is the most commonly accepted form of collateral for margin trading. It can be used to cover the margin requirement for your trades.
2. Government Securities: These are securities issued by the government and are considered to be very safe, as they are backed by the government. They may be accepted as collateral by brokers, depending on the specific terms and conditions of the brokerage.
3. Stocks: Some brokers may accept certain stocks as collateral for margin trading. The specific stocks that are accepted as collateral may vary by broker and may be subject to certain restrictions or requirements.
4. Mutual Funds: Some brokers may accept certain mutual funds as collateral for margin trading. The specific mutual funds that are accepted as collateral may vary by broker and may be subject to certain restrictions or requirements.

Some more data to ponder through
1. Haircut for Cash Component
2. Deposit collaterals
3. Sebi permits brokers to extend margin trading facility to equity ETFs

You should carefully consider whether this is a risk you are willing to take before proceeding. Pleading your investment as collateral for margin trading carries some additional risk, as you could potentially lose your investment if your trades do not go well.

 

[TracerBullet]

I use overnight funds for pledging capital. They should give returns around inflation in long term atleast and are safest debt funds.
Another alternative is gilt funds which have no credit risk but can have duration risk depending on holding period. There are also gilt index funds from IDFC that can be pledged with Zerodha and they have lower duration risk as they hold till maturity, but will have to invest again once they mature.

Also, try to keep them invested for 3+ years and then you will get indexation + 20% tax.

 

[trendtrade]

@godfather , thanks a ton for the amazing explanations and the links that you have provided. They have been extremely helpful. I appreciate it a lot.

@TracerBullet thank you so much for sharing your practical insights in this regards.

These days there are so many different type of Mutual Funds available, that it could become very confusing overall. From the following link, should I simply look at the "Hybrid Funds and the Debt Funds only" if I want some safety of my principal amount ? Because in equity funds etc. there is a risk of loosing your investment as well. Kindly suggest.
https://groww.in/p


And I am also getting this thought that maybe I should simply move this 1 crore to some Savings Bank Account which is giving good interest in the range of 6-7 % as HDFC Bank is giving me just 3.5% interest only. This step will give me some more time to do the proper research for finding out those Mutual Funds, which will suite my requirements.

Please look at the very bottom table from this link - https://www.ujjivansfb.in/support-interest-rates which shows the Interest Rates for the - Savings Account of Ujjivan Small Finance Bank. I am thinking about moving my money to them today itself, and keep them there, till I reach a final decision.

Am I making some mistake in this and are there any better options to park the idle cash for a few days/weeks to get around 6 % interest? Please let me know.

Thanks a lot

 

[godfather]

@godfather , thanks a ton for the amazing explanations and the links that you have provided. They have been extremely helpful. I appreciate it a lot.

@TracerBullet thank you so much for sharing your practical insights in this regards.

These days there are so many different type of Mutual Funds available, that it could become very confusing overall. From the following link, should I simply look at the "Hybrid Funds and the Debt Funds only" if I want some safety of my principal amount ? Because in equity funds etc. there is a risk of loosing your investment as well. Kindly suggest.
https://groww.in/p


And I am also getting this thought that maybe I should simply move this 1 crore to some Savings Bank Account which is giving good interest in the range of 6-7 % as HDFC Bank is giving me just 3.5% interest only. This step will give me some more time to do the proper research for finding out those Mutual Funds, which will suite my requirements.

Please look at the very bottom table from this link - https://www.ujjivansfb.in/support-interest-rates which shows the Interest Rates for the - Savings Account of Ujjivan Small Finance Bank. I am thinking about moving my money to them today itself, and keep them there, till I reach a final decision.

Am I making some mistake in this and are there any better options to park the idle cash for a few days/weeks to get around 6 % interest? Please let me know.

Thanks a lot

I hope you may know about Sweepin FD facility provided which I am personally using, now there advantages as well as disadvantages for this let me expain this

A Sweep-in FD account is a financial product offered by HDFC Bank that combines a fixed deposit account with a savings account. The idea is to help you earn higher interest on your savings without having to manually transfer funds between accounts. Here's how it works:

1. You open a Sweep-in FD account with HDFC Bank and link it to your savings account.
2. You set a threshold amount in your savings account. This is the minimum balance that you want to maintain in your savings account at all times.
3. When the balance in your savings account exceeds the threshold amount, the excess funds are automatically transferred to your Sweep-in FD account and earn a higher interest rate than a regular savings account.
4. When you need to make a withdrawal from your savings account, the bank automatically transfers the necessary funds back from your Sweep-in FD account to your savings account.

The Sweep-in FD account allows you to earn higher interest on your savings without having to manually transfer funds between accounts or worry about falling below the threshold balance in your savings account

Read more about this

 

[trendtrade]

How come these Debt Funds are giving such high returns ?

Best Debt Mutual Funds in India in 2022
https://www.tickertape.in/blog/best-debt-mutual-funds-in-india/



Top Debt Funds
https://www.indmoney.com/mutual-funds/debt-funds

I thought all debt funds give the returns that are comparable to the Bank FD etc. but many of these funds are giving much higher returns. What do you guys think?