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Safal Niveshak’s Investing Classroom: Demystifying Return on Equity

I am not writing much today, but just sharing a video I’ve created to demystify the very important concept of Return on Equity or ROE.

For starters, ROE measures the return earned by a company on its equity capital, or the capital that belongs to equity shareholders of the company, which includes part of profit that the company retains every year after paying dividends.

A business that earns a high ROE is more likely to be one that is capable of generating cash internally and thus has lesser or no need of external capital (debt) to grow its operations.

There’s a lot of stuff that can be written on this subject, but here is the video that goes a bit beyond the basics…

Click here if you can’t see the video above.

Let me know your feedback on the video in the Comments section of this post. That will help me assess whether I should prepare similar videos in the future, or just settle with writing my wordy posts. 🙂

How to Read Financial Statements – Part 1

Ever since I wrote posts on the importance of reading annual reports and how to read annual reports, I’ve received a lot of emails from readers on a post on analyzing financial statements.

In a classic case of procrastination, I did not write that post so far.

But my guilt has got the better of me, and the result is this video that will help you with the basics of financial statements and how you can study the inter-linkages between the three – P&L account, balance sheet, and cash flow statement.

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Warren Buffett’s ‘Secret Holy Grail’ to Successful Investing

We discussed the importance of reading annual reports in the past two posts.

We also briefly discussed the importance of reading financial statements that convey the language of business.

Now here is a small quiz for you – What is that one thing you look for in a company’s financial statements?

Is it to know how much a company is leveraged? Is it to know how profitable the company is? Or is it something else?

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How to “Read” an Annual Report in 5 Minutes

“How can this be possible?” you must be wondering.

Indeed there’s a way – and you can get a lot of hints from this on whether to junk the annual report, or to explore it deeper.

Well, let me have this video do the talking.

In this video, I also talk about 8 warning signs you must watch out for while glancing through an annual report.
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Simplest Trick to Outsmart 99% of All Investors

If you have been an investor for long, you must have heard about Jim Rogers.

Rogers is a leading global investor and commodities guru, and has an amazing track record over the past few decades.

When someone once asked Rogers what was the best advice he ever got, he said it was the one he received from an old man in an airplane.

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Safal Niveshak Classroom: How to Read a Balance Sheet

You might remember Cuba Gooding Jr.’s immortal line from the movie Jerry Maguire, “Show me the money!”

That’s what financial statements do for investors – show the money that companies earn, own, and owe.

These statements appear in a company’s annual report, and are broadly classified into three categories:

  1. Balance Sheet
  2. Profit & Loss Account
  3. Cash Flow Statement

Over the next few weeks, we will discuss these key financial statements that companies use to communicate their performance with investors, and how you can use them to identify the best long-term investment opportunities.

Let’s start with the Balance Sheet, also known as the ‘Statement of Financial Position’ of a company.

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I Wish Someone Had Taught Me About ‘Present Value’ This Way

If the concepts of finance were to be listed down in order of their importance, the concept of ‘Present Value’ will be at the top of that list.

In simple words, present value describes the process of determining what a cash flow to be received in the future is worth in today’s rupees.

In simpler words, it is the value today of an amount of money in the future.

“I’m still not getting it!” you might say.

“How do you calculate present value?”

“What’s the relevance of present value in investing?”

Well, if these are some questions that crop up in your mind as soon as I use the term present value, and before you junk it as some ‘difficult to understand’ concept that you must not worry about, just check out this small video.
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Would You Prefer to Learn Investing Like This?

John Maynard Keynes and F. A. Hayek, two noted economists of the yesteryears, and with opposing views on most economic matters, fight it out in this rap video. It’s called the ‘Fight of the Century’ by EconStories, the brain behind this video.

Isn’t this an easy and wonderful way to make subjects like economics a little more interesting?

I wish this was made 16 years back when I was fighting hard to maintain my sanity during the economics lectures.

If you can’t see the video below, click here.

Anyways, would you prefer to learn stock market investing like this?

At Safal Niveshak, that will be my focus…to teach you the simple concepts of investing using simple ways.

Of course I won’t be making rap videos. But whatever I put up on this website will be simple, clear, and enriching for your mind.