INVESTMENT & INVESTMENT ALTERNATIVES

Choice

CHOICE CREATES CONFUSION!!!!!!

RIGHT SELECTION OR BALANCE SELECTION

THERE IS NOTHING LIKE RIGHT SELECTION

E.g. You need to balance your dressing E.g. Food If we care this much for these things What about our MONEY??? It is as precious as our Honey!!!

WE NEED TO MOVE FROM PIGGY BANK SAVING TO SMART SAVING

AND FOR THAT WE NEED TO LEARN INVESTMENT

INVESTMENT
Investment is the process of sacrificing something now for the prospect of gaining something later.

A government officer buys units of Unit Trust of India worth Rs. 10,000. A student buys 100 shares of Reliance for 1 Lakh Rs. A lady clerk deposits Rs. 5000 in Bank F.D. A cricket fan bats Rs. 100 on the outcome of cricket match in India

INVESTMENT OBJETIVES
NEAR TERM HIGH PRIORITY GOALS LONG TERM HIGH PRIORITY GOALS LOW PRIORITY GOALS MONEY MAKING GOALS

NEAR TERM HIGH PRIORITY GOALS

Goals which have a high emotional priority Invest in fixed income security

A new house

LONG TERM HIGH PRIORITY GOALS

For 10 or 15 years Retirement or

child education fee

LOW PRIORITY GOALS

Goals are lower priority and are not painful if not achieved Investment in risky securities

A world tour

MONEY MAKING GOALS

Want to maximize wealth Put all the spare money they have into stocks

INVESTMENT ATTRIBUTES
Risk Return Liquidity Age Need for regular income Time Horizon Tax liability

Give me the options

Investment in bank deposit

Traditionally the most favored investment avenue in India, bank deposits continue to hold fort even today. The total fixed deposits with banks in India amount to a whooping Rs. 35,68,435 crore as per RBI data.

Bank give a stable and fixed return on the invested money. The income comes to us in the form of "interest" for the deposit amount. The principal (initial amount invested) is returned back to us at the time of maturity.

The historical average return from fixed deposits in India is approximately 8% for long-term deposits (5 years). longThe highs and lows have been in the range of 13% to 4%. main reason for investment in bank deposits is the safety of the principal.

Bank deposits have good liquidity to take a loan on the fixed deposit Bank fixed deposits are not tax efficient. The interest is taxed.

Investment in public provided fund

Interest 8.0% p.a. (compounded annually) is credited to the PPF account at the end of each financial year. Min Amount :Rs. 500/- and additional 500/investment in multiples of Rs 5/ Max Amount Rs. 70,000/ A PPF account can be opened at anytime during the year.

The PPF account matures after 15 years. Tax benefits can be availed under sections 88 for the amount invested. Interest accrued is Tax free. Apart from a Post Office, a PPF account can also be opened in SBI & its associates and other select nationalized banks.

Investment in post office

Post Office Monthly Income Scheme Post Office Time Deposit Scheme Post Office Savings Account National Savings Certificate Kisan Vikas Patra

Post Office Monthly Income Scheme

Interest rate of 8% per annum payable monthly Maturity period is 6 years. Minimum investment amount is Rs.1000 Maximum amount is Rs. 3 lacs

Investment in N.S.C
Rate of interest 8% compounded half yearly. Minimum investment Rs. 500/- No 500/maximum limit. Tax Saving instrument - Rebate admissible under section 80 C of Income Tax Act.

Investment in stocks
Equity share Preference share

Equity share
Initial public offer (IPO) Secondary market

Return is high Risk is high Liquidity Marketability

Preference share
It is hybrid variety of security which have some feature of equity share and some of debenture It carry a fixed rate of dividend Dividend is payable only out of distributable profits

Debenture
A type of debt instrument that is not secured by physical asset or Collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer.

Features of debenture
Less liquid More risky than government securities Higher return than government securities

Types of debenture
Convertible Non convertible

TREASURY BILLS
TREASURY BILLS are short term, issued by RBI on behalf of government of India. T-BILLS do not carry coupon rate they are issued at discount. 91 days AND 364 days bills

FEATURES
ZERO DEFAULT RISK ASSURED YIELD HIGH LIQUIDITY LOW RETURN

GOVERNMENT DATED SECURITIES

These are medium to long term gov. securities It carry a coupon rate Risk Is low Return is also low

Commercial paper
Commercial paper is an unsecured money market instrument issued in the form of promissory note issued at discount and transferable by endorsement and is of fixed maturity. It is for short term 7 days to 1 year Minimum investment is 5 lakh

High liquidity High return compare to bank F.D. Moderate risk

Certificates of Deposit
Certificates of Deposit are the instruments issued by banks in the form of promissory notes. Transferable from one party to the other CDs are for short term 7 days to 1 year CDs are issued at discount to face value. Minimum investment is 1 lakh

More liquidity Less risky compare to C.P. Return is low compare to C.P.

Company deposit
It is a fixed deposit scheme offered by a company. It works similar to a bank deposit where you earn interest income. It may not be as safe as a bank deposit company deposits are 'unsecured'

Company FDs offer much higher returns than bank FDs Short-term deposits Short1 to 3 years Lock-in period is only 6 months. Lock-

Mutual fund
An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets

Type of mutual fund

Equity fund Debt fund Balance fund

Equity fund
These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. deliver superior returns exposed to fluctuations in value

Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the shortshort-term. They are ideal for investors who have a long-term investment horizon long-

Debt fund
The aim of income funds is to provide regular and steady income to investors invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. opportunities of capital appreciation are also limited less risky compared to equity schemes

Balance fund
invest in both equities as well as debt. By investing in a mix of this nature objective of income and moderate capital appreciation ideal for investors with a conservative, long-term orientation long-

INSURANCE
Protection against loss for which you pay a certain sum periodically in exchange for a guarantee that you'll be compensated under stipulated conditions for any specified loss

LIFE INSURANCE GENERAL INSURANCE

TERM LIFE INSURANCE

Under a Term Life contract, the insurance company pays a specific lump sum to the designated beneficiary in case of the death of the insured. These policies are usually for 5, 10, 15, 20 or 30 years

ENDOWMENT POLICIES
These policies provide for period payment of premiums and a lump sum amount either in the event of death of the insured or on the date of expiry of the policy, whichever occurs earlier

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Gold as an investment

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INVESTMENT VEHICLES
GOLD BARS COINS ETFs DERIVATIES MINING COMPANIES

Silver as an investment

INVESTMENT VEHICLES
silver BARS COINS ETFs DERIVATIES

Diamonds as an investment

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INVESTMENT VEHICLES
POLISHED DIAMONDS FUNDS MINING COMPANIES

INVESTMENT IN FOREX

foreign exchange market is a global, worldwide decentralized financial market for trading currencies.

Foreign Exchange market is unique

Huge trading volume High liquidity 24 hours a day Geographical dispersion

INVESTMENT IN REAL ESATATE

Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. profit.

REASON FOR INVESTMENT

Diversification High return Hedge against inflation

INVESTMENT VEHICLES
LAND RESIDENTIAL COMPLEX COMMERCIAL BUILDING INDUSTRIAL BUILDING

COMMERCIAL BUILDING

Derivaties
Future Option commodity

Future
A 'Future' is a contract to buy or sell the underlying asset for a specific price at a prepredetermined time. If you buy a futures contract, it means that you promise to pay the price of the asset at a specified time. If you sell a future, you effectively make a promise to transfer the asset to the buyer of the future at a specified price at a particular time.

Options
Options contracts are instruments that give the holder of the instrument the right to buy or sell the underlying asset at a predetermined price. An option can be a 'call' option or a 'put' option.

A call option gives the buyer, the right to buy the asset at a given price. 'put' option gives the buyer a right to sell the asset at the given price.

INVESTMENT IN COMMODITY MARKET

Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on exchanges, regulated commodities exchanges, in which they are bought and sold in standardized contracts.

INVESTMENT VEHICLES
AGRICULTURE MARKET METAL MARKET ENERGY MARKET

Art

Put bet more on fledging painter Quality painting

Chor Bazar (Mumbai) Mullick Market (Calcutta) Burma Bazar (Chennai)