Investments Analysis HDFC

INTRODUCTION TO INVESTMENTS ANALYSIS
There are many different definitions of what ‘investment’ and ‘investing’ actually means.
One of the simplest ways of describing it is using your money to try and make more money.
This can happen in many different ways.
All investors are different. The common factor is that you would like to invest money to aim
to make it grow or to receive a regular income from it. We would like to show you that
choosing the most suitable investment for you does not need to be difficult. All you need is
the right help along the way.
The act committing money or capital to an endeavor with the expectation of obtaining an
additional income or profit is known as investment. Investing means putting your money to
work for you.
INVESTMENT DECISIONS
These days almost everyone is investing in something… even if it’s a savings account at the
local bank or a checking account the earns interest or the home they bought to live in.
However, many people are overwhelmed when they being to consider the concept of
investing, let alone the laundry list of choices for investment vehicles. Even though it may
seem the everyone and their brothers knows exactly who, what and when to invest in so they
can make killing, please don’t be fooled. Majorities of investor typically jump on the latest
investment bandwagon and probably don’t know as much about what’s out there as you
think.
Before you can confidently choose an investment path that will help you achieve your
personal goals and objectives, it’s vitally important that you understand the basics about the
types of investments available. Knowledge is your strongest ally when it comes to weeding
out bad investment advice and is crucial to successful investing whether you go at it alone or
use a professional.
The investment option before you is many. Pick the right investment tool based on the risk
profile, circumstance, time available etc. if you feel the market volatility is something, which
you can live with then buy stocks. If you do not want risk, the volatility and simply desire
some income, then you should consider fixed income securities. However, remember that risk
and returns are directly proportional to each other. Higher the risk, higher the returns.
TYPES OF INVESTMENT OPTIONS
A brief preview of different investment options is given below:
Equities: Investment in shares of companies is investing in equities.

Stocks can be brought/sold from the exchanges (secondary market) or via IPO’s – Initial
Public Offerings (primary market). Stocks are the best long-term investment options wherein
the market volatility and the resultant risk of losses, if given enough time, are mitigated by
the general upward momentum of the economy. There are two streams of revenue generation
from this from of investment.
1.Dividend: Periodic payments made out of the company’s profits are termed as dividends.
2.Growth: The price of the stock appreciates commensurate to the growth posted by the
company resulting in capital appreciation.
On an average an investment in equities in India has a return of 25%. Good portfolio
management, precise timing may ensure a return of 40% or more. Picking the right stock at
the right time would guarantee that your capital gains i.e. growth in market value of stock
possessions, will rise.
Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with
the purpose of raising capital. The central or state government, corporations and similar
institutions sell bonds. A bond is generally a promise to repay the principal along with fixed
rate of interest on a specified date, called as the maturity date. Other fixed income
instruments include bank deposits, debentures, preference shares etc.
The average rate of return on bond and securities in India has been around 10-13% p.a.
Mutual Fund: These are open and close-ended funds operated by an investment company,
which raises money from the public and invests in a group of assets, in accordance with a
stated set of objectives. It is a substitute for those who are unable to invest directly in equities
or debt because of resource, time or knowledge constraints. Benefits include diversification
and professional money management. Shares are issued and redeemed on demand, based on
the funs net asset value, which is determined at the end of each trading session. The average
rate of return as a combination of all mutual funds put together is not fixed but is generally
more than what earn is fixed deposits. However, each mutual fund will have its own average
rate of return based on several schemes that they have floated. In the recent past, Mutual
Funs have given a return of 18 – 35%.
Real Estate: For the bulk of investors the most important asset in their portfolio is a
residential house. In addition to a residential house, the more affluent investors are likely to
be interested in either agricultural land or may be in semi-urban land and the commercial
property.
Precious Projects: Precious objects are items that are generally small in size but highly
valuable in monetary terms. Some important precious objects are like the gold, silver,
precious stones and also the unique art objects.
Life insurance: In broad sense, life insurance may be reviewed as an investment. Insurance
premiums represent the sacrifice and the assured the sum the benefits. The important types of
insurance policies in India are:
 Endowment assurance policy.

 Money back policy.
 Whole life policy.
 Term assurance policy.
 Unit-linked insurance plan.
NEED FOR THE STUDY
Investment analysis is a broad term encompassing many different aspects of evaluating

financial assets, sectors, and trends. It can include analyzing past returns to predict future
performance, selecting the type of investment instrument that best suits an investor's needs, or
evaluating securities such as stocks and bonds, or a category of securities, for risk, yield
potential or price movements.
Investment analysis can help determine how an investment is likely to perform and how
suitable it is for a given investor.
OBJECTIVE OF THE STUDY
The primary objective of the project is to make an analysis of various investment decisions.
The aim is to compare the returns given by various investment decisions. To cater the
different needs of investor, these options are also compared on the basis of various
parameters like safety, liquidity, risk, entry/exit barriers, etc.
The project work was undertaken in order to have a reasonable understanding about the
investment industry. The project work includes knowing about the investment Decisions like
equity, bond, real estate, gold and mutual fund. All investment Decisions are discussed with
their types, workings and returns.
SCOPE OF THE STUDY
 Key factors in investment analysis include entry price, expected time horizon for
holding an investment, and the role the investment will play in the portfolio.
 Investment analysis can also involve evaluating an overall investment strategy, in
terms of the thought process that went into making it.
 Needs and financial situation at the time, how decisions affected a portfolio's
performance and the need for correction or adjustment if any.
 Investors who are not comfortable doing their investment analysis can seek advice
from an investment advisor or another financial professional.
LIMITATIONS OF THE STUDY
 The study was limited to only six investment options.

 Most of the information collected is secondary data.
 The data is compared and analyzed on the basis of performance of the investment
options over the past five years.
 While considering the returns from mutual funds only top performing schemes were
analyzed.
 It was very difficult to obtain the date regarding the returns yielded by real estate and
hence averages were taken.

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INTRODUCTION TO INVESTMENTS ANALYSIS

TYPES OF INVESTMENT OPTIONS

A brief preview of different investment options is given below:

Equities: Investment in shares of companies is investing in equities.

 Endowment assurance policy.

Investment analysis is a broad term encompassing many different aspects of evaluating

OBJECTIVE OF THE STUDY

LIMITATIONS OF THE STUDY

 The study was limited to only six investment options.

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