If you are a long-term investor who wants to buy and hold stocks to sell them at a premium at a future date, you might have heard of CNC orders. To address the new investors, let me start with CNC full form is Cash and Carry, which means you can only buy stocks with the money available in your trading account.

CNC orders are an increasingly common product among investors who are more cautious or are beginning their financial journey. We mindlessly follow things, not knowing why we should use CNC orders for long-term investing. What are the advantages of CNC orders? And how can you obtain the best guidance on CNC orders from a SEBI Registered advisor? These are some of the questions that will be dealt with in this article.

What are CNC orders, and how do they work?

Only some investors know the CNC full form. Most people know CNC as delivery orders. CNC, or Cash and Carry, is an age-old practice of buying and holding stocks for the long term and selling them when the markets have reached new highs.

In CNC orders, you pay the total amount for the stocks you buy, and you get to keep them in your Demat account until you decide to sell them. CNC orders differ from MIS orders, which are used for intraday trading with leverage and are automatically squared off at the end of the day.

CNC orders are suitable for investors who want to take delivery of the stocks and have full ownership and control over their investments. However, CNC orders also have risks and challenges that we will discuss as we advance. Therefore, it is advisable to consult a SEBI registered advisor before placing CNC orders in the share market.

5 Ways a SEBI registered Advisor Can Help You Make Long-Term Profits from CNC Orders

A SEBI Registered Advisor, being approved and registered with SEBI, can be your growth partner through long-term investing via the CNC investing format in the five ways below:

• Objective Advice- Help you choose and keep the right stocks for the long term, depending on your risk tolerance, financial objectives, and current market situation.

• Systematic Portfolio Rebalancing- Helps you monitor your portfolio performance, review your holdings, and suggest changes or rebalancing per the changing market scenarios.

• Educate on Risks and Rewards- Educate you on the benefits and risks of CNC orders, such as liquidity, volatility, opportunity cost, value investing, compounding, and dividend income.

• Avoid Pitfalls– Help you avoid common mistakes and pitfalls that long-term investors may face, such as emotional trading, overtrading, chasing fads, ignoring fundamentals, and not diversifying.

• Comply Taxes- Help you comply with the regulatory and tax requirements related to CNC orders, such as filing returns, paying taxes, and reporting transactions.

5 Benefits of CNC Orders that Every Investor Must Know

1. No interest or brokerage charges

CNC orders do not incur any interest or brokerage charges, unlike MIS or margin trading. You only pay the transaction charges and taxes when you buy or sell the stocks. It reduces your investment cost and increases your returns in the long run.

2. Delivery of shares and full ownership

CNC orders let you take delivery and full ownership of the shares. It means you have complete control over your investments and can sell them whenever you want. You also get the benefits of dividend income and capital gains, which can boost your returns over time.

3. Value Investing

With CNC orders, you get an opportunity for value investing. Value Investing is a tried-and-tested strategy of buying undervalued stocks and holding them for a long time. Value investing requires patience, discipline, and research, so the need for the services of a SEBI registered advisor becomes all the more crucial here.

4. Compounding Benefits

CNC orders may benefit from compounding, which is the process of earning returns on your returns. You can grow your wealth exponentially over time by reinvesting your dividends and capital gains.

Dividend Income

CNC orders may generate dividend income, which is the periodic payment of profits by the company to its shareholders. Dividend income can provide a steady source of income and increase the return on investment.

Key Takeaways

We learned everything about CNC orders in this article, from the CNC full form to how it can help you save on interest and brokerage fees, take delivery of the shares and have full ownership, and apply methods such as compounding, value investing, and dividend income.

However, CNC orders also have risks and problems, such as difficulty buying and selling at the desired price, price variation, and the sacrifice of alternative returns.

You should do what most wise investors do to reduce your risks while increasing your rewards. And it is to consult a SEBI registered advisor instead of making wrong buy decisions in haste. It allows you to make more informed choices, avoid frequent errors, and profit from your investments.